All right. Good afternoon, everyone. Thank you for being with us. We are excited to continue the discussion with Emerson and very happy to have Ram Krishnan, COO of Emerson, and Colleen Mettler, who runs IR. Thank you both so much for being here with us. Great to be here. Thank you. We're just gonna jump into Q&A. If over the course of the discussion you have a question, please just raise your hand and I'll get to you. That way we won't pause periodically. To kick things off, we'll just do the standard start in terms of demand trends. Yeah. With the nature of the question, why has demand been resilient? When we think about the kind of elevated uncertainty that we are in, you see kind of PMI, new order index trends. What are your observations on demand and why it has been a little bit more resilient or better than feared here? Yeah. You know, I think we just finished a pretty strong quarter. You know, underlying sales for us were up 2%, driven by the process markets. And geographically, where we saw strength was North America, Middle East, India, and rest of Asia. Those have been strong markets. From an orders perspective, orders were up 4% in the quarter, process was up 6%. And that's really where the strength of our business lies. Discrete recovered nicely to 3% with TNM at +8%, and we're seeing the discrete recovery come back. To go back and answer your question, the fundamental strength we see is in the capital cycle and process for us still remains robust, albeit driven by North America, Middle East, India, and rest of Asia. In select markets where LNG, the capital cycle, is still very strong, our power generation investments—it powers about a $1.8 billion business for us, about 10% of overall Emerson—that capital cycle with new power generation capacity globally has been very strong, driven by data centers, of course. Fundamentally, that investment cycle still continues. Life sciences has been a strong end market for us. We still have a pretty robust capital funnel. It has not been impacted by tariffs, and we continue to see these projects progressing. Hence the confidence that, as we laid out in our earnings call, the orders momentum is strong. As we exit Q2, we expect the discrete recovery to continue into the second half, and the process dynamics still remain strong at about mid-single digits. Just in terms of, you know, monitoring of demand trends and the degree to which you think there was some concern on whether we would see some pull forward of demand or whether there was pause in demand, and now is there acceleration to try to take advantage of some of it? Just anything that you've seen in terms of distortions on demand trends versus it's actually just been pretty steady to trend? I think overall pretty steady. I mean, we have pockets of businesses which we sell through distribution, and we've seen a little bit of pre-buy, prior to the tariffs getting into impact and then maybe a slowing in the months subsequent to that. That is a very, very de minimis amount. Overall, I think demand trends are pretty stable globally. Certainly North America, where we should have seen the biggest impact, we have not seen anything. Let's talk about customer investments in particular in North America and what you're seeing on the greenfield, brownfield side of things, with a little bit of backstory on what the conversations have been like and if you're seeing any momentum building there with investments in the U.S. Yeah. Certainly, I mean, I think where the greenfield activity has been—the Maelstrom Boston, a biggest part of our project funnel—is LNG in Texas and Louisiana, continued investment in life sciences, modernization opportunities or digital transformation opportunities in chemical, petrochemical, and then greenfield power, gas-fired power capacity that is coming online in the U.S. All of those conversations continue to be pretty robust. Now, obviously, on some of the LNG projects, when the tariff discussions were at their height, certainly demand pricing of LNG from an export perspective, as well as the cost of inputs in building out these facilities, was an unknown. That, frankly, has certainly cleared in the last 30 days. There are many projects, and we've been in recent customer conversations where FIDs are getting approved, and those projects are regaining momentum. Certainly, more certainty in terms of price and demand for the LNG and more certainty as it relates to the cost of the input. If you think about that project-related demand, just talk about the maturity of those demand trends across something like life sciences, power, LNG, kinda where you think you are from, say, like a cycle maturity point, on the growth investments there. I would say certainly power, early cycle, in terms of the years of investment that has to happen if the data center vision has to play out and the amount of power generation capacity that has to come online, I would say early. Life sciences, you know, I would say mid-cycle, primarily driven by weight loss and GLP-1 and some. Now, you saw significant announcements by the life sciences majors on capacity that's gonna happen here. Now, is it net new or does it take away on investments that we would be getting if the investments were made in Europe? That's debatable. Will all of those manifest at the pace and scope that they have outlined? Debatable. But net-net, I would say early to mid-cycle on life sciences. Certainly similar on LNG, I think there is another 100 MTPA of capacity that has to be added over the next three years. I think that journey will still continue. None of these would be late cycle. I would say power is early. The other two would be early to mid. Yeah. I think I would add, you know, as you think about the LNG cycle, as we talked about in February's earnings, we were already in a third wave. It began in 2021. We were continuing to win at a clip, 50%, 50%+, you know, depending on where we play there, in terms of the competition on the automation content. As we look forward, obviously the moratorium, you know, slowed things up a little bit in terms of awards to EPCs. Where we sit today and looking forward over those next three years, it's a possibility of about $1 billion worth of orders for Emerson, considering our win rate, excuse me, and considering the automation content opportunity there. That's helpful. Let's shift it to back half of the year orders 'cause you gave those expectations with the most recent earnings. I wanna talk about on the process side and then the discrete side. The process side is mid-single digit type of growth. Just give us a sense of the visibility that you have into it and what it means for underlying demand trends. Is this an acceleration in demand from first half to second or steady? Just any color there. First off, simple math. If the absolute magnitude of orders holds flat to the first half, you're gonna see very close to the forecast we've given in terms of the orderly chart. Simply said, there's not a lot of sequential acceleration built into the overall dollar orders or dollar billion of orders that we have in the flat. That's a total comment, right? Not just a total. That's a total comment. Yeah. Now, process industry, again, going back to the confidence we have in the size of the funnel, the pace at which, I mean, in the last quarter, we won close to $350 million of that project funnel, the $11.5 billion, 1,500 project funnel we show. Nothing in that funnel or the pace at which projects are moving through the funnel gives us any pause as it relates to the mid-single digit process order forecast. That has remained consistent, and we feel pretty good. The discrete recovery, certainly the momentum in test and measurement is real. We see that momentum happening. The power of comparisons is gonna play out where T&M is gonna see double-digit orders growth as we get into the second half. Certainly, the discrete business, even if it holds flat to the current pace, we'll see high single-digit orders growth in the second half. The only caution we had in the earnings call was Germany, which is Europe, and then China. Factory automation is something we're watching. We would have hoped we would have seen a little more momentum in that in Q2. Now, we'll see how Q3 pans out. That's probably the only area within the scope of our discrete business that we're watching. The power of easier comparisons is gonna drive good order momentum and consistent with the chart we laid out in the earnings call. I was gonna say we've consistently seen sequential improvement. As we think about the performance Q4, Q1, Q2, and you look at both of those discrete businesses, we've continued to see sequential improvement. You know, as we look at the second half, you look at the numbers that we have on the chart as we laid it out in earnings, not only is it on a low base of comparison, but as you march continuous with that sequential improvement, it helps to, you know, better define how we see the outlook of, of that line. That sequential improvement, it comes back to the first question, but is this, like, do you attribute this to, hey, we're taking share in the market? Do you attribute this to customer budgets were just better this year and those dollars are flowing? Just to understand kinda what's driving the sequential improvement. Yeah. I think in the process industries and LNG and certainly life sciences and power, it's a combination of good customer activity as well as share gains. The power of the technology stack that we now have as an automation company is certainly bearing fruit in many of these end markets where I think the power of Emerson's solutions are panning out in share gain. I think in T&M, it's certainly customer spending, which has been depressed for a long period of time, unlocking with more confidence in end markets, which is aerospace and defense, which I think is an important end market where everybody is spending and spending with confidence now that new administrations are in play. The portfolio business, which is the 35,000 customers that test and measurement sells to, I think restocking, integrators getting more confident. Certainly, the only segment we have not seen any momentum in the test and measurement side, which is in the discrete side, is EVs. Outside of that, I think, more confidence in the end markets and more confidence in where the economy is going. It's a good segue to kinda the next topic, which is Project Beyond and some recent announcements there. I wanna kind of work through this in a few different questions, but basically announcements that you made around software-defined enterprise operations and a platform that you're building there, and this news was coming out in May. First, just put some perspective around this for us and how big a deal this announcement is for Emerson. Yeah. It is obviously a very important deal, big deal for us and a big deal for the industry. Simply said, I mean, today, Emerson, we deploy software-defined automation solutions to automate mission-critical industries: power, life sciences, refining, chemical, you name it. Any industry that has the flow of fluids and requires model predictive control to run production operations, we have the complete tech stack of all the measurement and analytical sensors, the brains, which is the control systems, our DeltaV Innovation Control Systems, all of the final control elements that bring the process back into control, the valves and the regulators. Most importantly, the optimization software with AspenTech that truly extracts productivity and helps customers deliver top quartile production operations. First off, that complete tech stack provides the foundation for our vision of boundless automation. Now, over the last 20 years, most importantly, in the last 10 years, we've accelerated the industry from analog control to digital control. Today, many of our customers run digitally connected plants with digital protocols, microprocessor-based valve control or instrumentation or sensing points, and certainly a digital architecture for the control system, be it DeltaV Innovation. That's been a fundamental technology shift with a lot of innovation like electronic marshaling and wireless and capabilities that we built into DeltaV Innovation that drove that technology transformation. Today, we are poised now with AspenTech in our portfolio to take that to the next level, a digitally connected plant to a journey through a journey towards autonomy, a vision for an autonomous refinery, an autonomous power plant, data-centric and software-defined. That's our vision. Simply said, there's a lot of data. In order for autonomy, what do you need? You need data. You need that data, which is trapped in a control system, trapped in their reliability systems, all the OT silos that exist in a plant, in a refinery, at a power plant. We have to have the ability to liberate that data, contextualize that data, democratize it for use and applications that can reside in the edge of the cloud, which modern computing allows us the ability to do that. We have laid out an architecture for a data-centric software-defined approach to enterprise automation. That is our vision of boundless automation. The enterprise operations platform, which is simply said, DeltaV Innovation and Aspen coming together in a software platform that allows customers to deploy automation at an enterprise level, working on a unified data platform, is our enablement of this boundless automation vision. That is the journey we are driving. What does that mean? What that means is today, control systems and optimization software is a $30 billion market. 1/3 of it is software. 2/3 of it is hardware and services. We have an opportunity to move that to 2/3 software, 1/3 hardware and services to deliver on this vision. That enables our $4 billion business to grow at a differentiated rate and fundamentally transform to a more software-centric business. Your percent of software revenue today? Today is 13% of the overall company. It's 1/3 of this $4 billion business. Now, we still need all of the sensors and final control elements, which are $4.5 billion businesses each. They will remain and they will grow with innovation within what is happening there and benefit from the overall tech stack share gains we drive. The manifestation of the enterprise operations platform and the value unlock will come in our software and control business. We're talking about that $4 billion opportunity, and that's growing, and then the. Differentiated growth, differentiated margin, rule of 45. Yep. When do we start hearing about this and you start saying, "Hey, we just, we just like really moved the needle," you know, revenue related to boundless automation or software mix? Great question. I think the whole, it's a 10-year journey, but you're gonna start to see manifestations of it in product launches, margin unlock, and growth of the $4 billion segment. Watch that closely. There are six key elements of what it takes for us to bring the vision of the enterprise operations platform to light: a modern computing environment, which our product launches like DeltaV Edge and DeltaV PK Flex that you're gonna see; networking and connectivity; unified data operations; cybersecurity delivered in a software-defined way; zero trust architecture; AI orchestration, so a lot more AI launches with our product lines; and then an app marketplace where our customers can deploy applications in the cloud. You're gonna start to see product releases in these six areas that build to this ultimate vision. Our industry certainly wants to see momentum in these technologies being deployed. You're gonna start hearing about more holistic implementations of the enterprise operations platform over time. You'll start seeing the results as building blocks. Eventually, this is a journey. It's the same journey. The analogy I use is when ERP companies 20 years ago came into an Emerson or other companies that used multiple, not even ERP systems, fundamentally finance systems or workflows that weren't automated, and sold the vision of a relational database, which captured all the finance, HR, supply chain data and gave you an end-to-end Oracle or an SAP solution to automate finance, HR, procurement. That is exactly what we're trying to do on the OT side when it comes to production, reliability, sustainability, and safety. It is a journey, but I think it's been achieved on the office side, and we will have an opportunity to deploy that on the OT side. I think as you think about the 10-year journey as you get there, tomorrow in the future, you wanna create a project, you can flip the switch, you can, you know, apply this, you know, new solution. We are going to bring our customers along. We understand and recognize customers have made investments, 10, 20, 30 years' worth of investments, and they can't flip the light switch tomorrow. They can't rip and replace everything they have there today. A lot of the product launches, the innovation is also being put into place to bring our customers along with us on that journey, putting in new products that they can quite literally set it on top of the infrastructure that they have today to bring out the software, to bring out the data that they have so that they can have old facilities and new facilities leveraging kind of that same architecture that we're going to be bringing. I think that's really important to understand as well. It's a journey to get to that future end state, but we're going to bring those customers along with us. They're going to have to take time to adopt it. There's gonna be certain industries that move faster than others. We know and understand and recognize all of those. We hear an analogy to ERP systems, and it's like that could be very disruptive for a period of time. What you're saying is it sounds like likening it in terms of the magnitude of impact, but the actual implementation. Yeah. It's gonna be a more. Is easier. It's a focused implementation where we're deploying innovation to help customers protect their existing investments, mostly on the sensing and final control side because they don't have to, that generates the data and performs the function of sensing and actuation, but they can keep all those assets protected. We have technol and even their own control systems or even competitive control systems. We have a product called IO. Connect that brings all that data to our enterprise operations platform without ripping and replacing because the magic is in actually liberating that data, contextualizing it, running insights, which is algorithms on that data to drive action to up the performance or reliability or safety. That magic happens with software, which is what the software-driven, data-centric approach is. That doesn't mean you have to rip and replace the data sources. The sensors are good, the actuation is good, the valves are good. The old control systems have a role to play. I think it's a, and when customers see that vision, they'll obviously over time displace and modernize control systems and other parts of their infrastructure. Last one for you on this topic is just where, where is the competition on this path? You know, I mean, I think the competition sees the vision. I think Schneider, for example, with the capabilities they have, are certainly thinking through that. I think Honeywell, I would argue that our technology stack with the See-Decide-Act architecture, which is the sensing, the controls capability with Aspen, which I think is the true differentiator, and frankly, our final control elements, I think we are, we've got the breadth and the technology leadership position to leapfrog. I think the competition is also well-positioned, and I think they'll come along in this journey because I think it's good for the industry and good for our customers. Wanted to shift to kind of overall growth algorithm for the business. When we think about, you know, back to the last investor day, and you talked about a 4%-7% kind of target growth range. Mm-hmm. From 2022 to 2024, you did better than that, right? In 2025, we're talking about 4%. I think there's a lot of focus on comps. You know, having grown at the pace you grew, what is the growth algorithm moving forward? Just talk about how you're thinking through that and the growth opportunity for Emerson moving forward. Yeah. I think, given the secular tailwinds that we see around automation, digital transformation, sustainability, and decarbonization, certainly the investments that are being put in place for energy security and affordability and sovereign self-sufficiency that you see and reshoring of industries like life sciences or LNG for that matter in the pockets, I think we feel very confident that the growth algorithm of 4%-7% can continue. Now, simply put, you have this year's underlying 4%, but the order exit rates are well in the 4%-7% band, just the discussion we just went through recently, which then sets up 2026 in that framework. This is multiple years we are putting back to back in that 4%-7% algorithm. Simply put, I would go back to the secular drivers driving automation, our unique position with leadership positions in each of the capabilities that we have in this automation industry. 65% of our business MRO, 13% software, capital cycle still pretty robust with really the need for LNG or life sciences, metals and mining, power not going away in the near term. We feel pretty confident in that growth dynamic, going into 2026 and beyond. What, what's the growth range on, on MRO? It's gonna be a narrower range than what you would see on, you know, the brownfield, greenfield side of things, but just trying to think kind of through cycle ranges that you would typically, 'cause I'm trying to think about, you know, low 60% and then 13%. So 3/4 is gonna have decent growth. Yeah. I would say the MROs, you can underwrite mid-single digits with price as a growth vector. 13%, you could underwrite double-digit, high single digit to low double-digit from a software perspective. I mean, we just exited the quarter with 11% ACV growth in, in our, it was $1.4 billion. We're trending towards $1.5 billion ACV in software. So you're gonna see that. And so really the wild card is the capital cycle as it relates to the piece that is not software, not MRO. And the MRO business for us over the last 20 years, but for a black swan event like COVID or the financial crisis, has been pretty resilient. I mean, we've not seen customers back off on MRO spending. I mean, we did see the energy markets correct in 2015 and 2016 where we saw a little impact to MRO. At the end of the day, I think MRO is gonna be pretty resilient. That is the new growth algorithm for the new Emerson with 65% MRO and 13% software. Really the variable for our growth rates of 4%-7% is how robust is the capital cycle. Yep. That's very helpful. Let's shift to energy. There's a fair amount of focus on that as an end market, roughly 20% of revenue. Mm-hmm. Just unpack it for us a little bit in terms of what, what sits within that 20% and the different end markets that you're serving within energy. Yeah. 10% is gas, 10% is oil. The gas, the gas piece has LNG built into it. That 10% certainly has a capital cycle associated with it: pipeline investments, the LNG new capital formations. The oil piece, which is refining as well as upstream production, is predominantly an MRO play for us. The capital cycle has been very disciplined since 2017. There has not been an over-investment in oil production capacity, but for a few pockets in Saudi or some of the economies that truly rely on oil. I do not anticipate a correction. Those oil assets, it is more exploitation of existing capacity than new exploration. That is good business for us. It is high-margin business for us. It will not contribute in a meaningful way to our growth algorithm, but it does not hurt our growth algorithm, and we make a lot of margin in that business. I think simply put, 10% of the new company is exposed to MRO oil. I think that's a great position for us to be in. Everything else is going to benefit from a capital cycle. Yeah. Yeah. I was gonna say, we have not given out an industry split, you know, since 2023, but as you know, Ram described it, oil is gonna kind of play in that band of 10%+, maybe 10%-15%, depending on the timeframe. Absolutely, I think it is a bit of a misnomer. I know I constantly have conversations with investors, you know, concerned about oil prices in our business. I think it comes as a surprise to many as we talk about the MRO exposure and really where that piece of the business is exposed to in terms of that recurring maintenance and repair type of activity. When you think about those verticals that would be, you know, most well-positioned as early adopters on this future state of automation and more software, how would energy fit into that? I would say energy would be at the back of the line. I would say life sciences would lead. Power, I think, is a very important market that would make the transition. Metals and mining, where autonomous operations are gonna play a very important part, just given the nature of the industry, would play in. I think refining would probably be one of the industries that would be last to get in. Digital transformation of upstream, I think, would also be at the back part of the cycle. So let's shift it to, to margins. You've got, you know, 2025, it's pacing about 400 bps ahead of, of 2022. Yep. North of like a 50% incremental margin. Talk about some of what you've, and you've been doing this, by the way, through all the transactions you've done as well. Right. A few disruptions out there. It has been really impressive. Talk about what has driven that, from kind of Emerson just operating system and then other initiatives that would have been contributing. I think a lot of factors, right? I think the underpinning of it is certainly our management system and the way we manage price, price staying ahead of cost and inflation, a programmatic approach to cost reductions. Obviously, in the last three years, we saw the benefits of T&M synergies come through, $200 million of certainly synergies that helps in the margin, the mix associated with software, and obviously the new entrants into the portfolio coming in at a creative margin. So combination of factors to truly drive world-class incremental leverage well north of the 35% we guided when we laid out the framework. I think the last quarter we delivered 180% that was driven by outperformance at Aspen. Certainly, the software mix had a role to play. You know, I would, the company now sits at 52% segment GPs. I think we will, as we go into this cycle and lay out plans for 2026 and beyond, now that the portfolio transformation is complete, we will revisit our leverage algorithm. It'll be in the 40s. You know, we'll get that out as we lay out the plans for 2026 and beyond. Just historical performance has truly demonstrated that. I mean, this year, I think we're gonna, we guided in the 60s for the full year. We obviously outperformed in the first half. I think the power, I think going back, the important metrics are 65% MRO, where we have the ability to get at least two points of price a year, maybe a little more, and software, which gets escalation and obviously is a high-margin business and a faster growth as the mix element in how it contributes to leverage. I think we're well-positioned on margins. I think 28% EBITDA margins in the quarter were really good. At this point, if growth continues in the 4%-7% algorithm, I wouldn't be concerned about margins. I think we're well-positioned. Let's leave it that way. Let's shift to capital deployment, just where you are at this juncture, with the portfolio and I think some recent, kind of developments on safety and productivity and how you're thinking about that within the portfolio, but also just, you know, appetite for, for inorganic growth. Yeah. Very simply put, I mean, we've laid out our plan until 2027. Right now, we'll exit the year at net debt to EBITDA at 2.3. Our programmatic approach to paying down that debt, our commitment is to get net debt to EBITDA less than 2 by 2027, exiting 2027. Commitment to the dividend, $1.2 billion of dividend will continue, with high focus on protecting our dividend over 2025, 2026, and 2027 and beyond, which fundamentally with the debt paydown leaves about $2.5 billion of capital to be deployed between share buybacks and bolt-on M&A in 2026 and 2027. We'll throttle that based on opportunities we see. I think, certainly we'll be disciplined. I think bolt-on acquisitions for us is about $1 billion as definition of bolt-ons. I mean, obviously other companies have other definitions. We'll stay in that range. We do believe the power of our technology stack, what we've assembled in the last three years, is unmatched, and we've gotta really put our head down and execute and pivot our investments towards making the enterprise operations platform a reality because the value unlock with organic investment, 8% of our investment is in innovation and R&D, and that's really where we're gonna be focused, delivering on operational execution, getting the EOP launched and manifesting in value unlock for the company, driving the migration to software revenue. That's really where we're focused. We don't have a lot of gaps. With that said, we see opportunities in software. We always will. We'll see opportunities in select markets in T&M. I, we won't give up any opportunities, but I don't see clearly big transformational investments in inorganic M&A outside of bolt-on, at least until the end of 2027. That, I mean, there was software that moved to Aspen and now back. Correct. Correct. Exactly. How much better are you at running software businesses today? I know a lot more. Yeah. I would say a lot better. I think one of the benefits where even when we had the Aspen structure is the DeltaV business learned a lot from how Aspen drove subscriptions, how they drove customer success, how they managed gross retention, net retention. I mean, terminologies which were alien to us, we have a better grasp of, and we have a great software business outside of Aspen. I mean, DeltaV and Ovation standalone software, certainly the software within NI are great software businesses. I think we have learned a lot and we'll continue to get better in managing software going forward. I'd be remiss if I didn't ask about tariffs and just what's developed kind of over the past month or so. I think you sized it at kind of a $445 million annualized rate. Yep. When you announced earnings, just based on development since then, any way you're thinking about the current kind of tariff cost impact to you? Yeah. It, so we sized it at, I think, $455 million annually, $245 million this year. All of the $245 million covered with $190 million of price and $ 55 million of cost-out actions. We are still staying focused on surcharges and pricing, even though the $245 million in theory has been alleviated given if, if the China dynamics stick. We have not changed our course of action until we see how all this ends up in the month of July or August. At this point, our demand has held, the pricing is holding. In theory, the $245 million exposure should be a little lower, and certainly the $455 million should be lower if the current direction holds. We have not really changed our viewpoint until we hear or see where that ends. And for us, we're just forging ahead with the plan that we communicated in our earnings call until we see things differently. Yeah. I think a lot of it has been temporary pauses or nothing permanent. I think from our stance, we're gonna continue to drive ahead with the programs that we laid out at earnings until, you know, more permanent type of finality comes to some of those decisions. How have you managed the pricing approach to those costs from a product perspective in terms of one-for-one pricing where this product faces 145% tariff or a little bit more of spread it out? What have been the biggest price increases you have put in? Yeah. I think, I think our price increases haven't, I mean, I remember, I think obviously the, the cost impact, I mean, it's 145% on a particular part, but when it all translates, $245 million or, or even $445 million only represents 2.5% of sales. We've been able to, on an annualized basis. Most of our price increases on select product categories have been in the 5%-7% range, and that has been well understood and accepted by customers. Many implemented as surcharges, some implemented as permanent price increases. The magnitude for us hasn't, nothing's been double digits, and a few have been high single digits, most have been mid-single digits. Perfect. Do you guys know how to take vacations? You're gonna have some time on your hands with all the portfolio move. What are you gonna do? Execute, man. We gotta get this enterprise operations platform launched and customers migrating in that journey. There will be a few more geopolitical curveballs that will be thrown, so we'll be ready for it. Keep you on your toes. Thank you very much. Thank you. Appreciate it. Thank you. Thanks. Bye. Thanks. Bye.