Ladies and gentlemen, thank you for standing by, welcome to the Eaton fourth quarter earnings call. At this point, all participant lines are in a listen-only mode. However, there will be an opportunity for your questions. To queue up for a question, please press one then zero. Should you require assistance during the call, please press star zero and an operator will assist you offline. As a reminder, your conference is being recorded. I would now like to turn the conference over to Mr. Yan Jin, Senior Vice President, Investor Relations. Please go ahead. Hey, good morning, everyone. Thank you all for joining us for Eaton's fourth quarter 2022 earnings call. With me today are Craig Arnold, our Chairman and CEO, and Tom Okray, Executive Vice President and Chief Financial Officer. Our agenda today includes opening remarks by Craig. We will turn it over to Tom, who will highlight the company's performance in the fourth quarter. As we have done our past calls, we will be taking questions at the end of Craig's closing commentary. The press release and the presentation we'll go through today have been posted on our website. This presentation, including adjusted earnings per share, adjusted free cash flow, and other non-GAAP measures, are reconciled in the appendix. A webcast of this call is accessible on our website. It will be available for replay. I would like to remind you that our comments today will include statements related to the expected future results of the company and are therefore forward-looking statements. Our actual results may differ materially from our forecasted projection due to a wide range of risks and uncertainties that are described into our earnings release and the presentation. I will turn it over to Craig. Thanks, Yan. Hey, we'll begin with the highlights of the quarter on page three. I'll start by noting that, you know, we again delivered very strong results in the quarter and record performance for the year. We generated adjusted EPS of $2.06 for the quarter and $7.57 for the year, both all-time records in each period. Our Q4 adjusted EPS was up 20% from prior year. Our sales were $5.4 billion, up 15% organically, for the second quarter in a row, with particular strength in utility, industrial, commercial institutional, data center markets for electrical and commercial aerospace, vehicle and eMobility markets on the industrial side. We continue to post strong margins. Q4 margins of 20.8% were up 150 basis points from prior year and near the high end of our guidance range. Incremental margins were 33% in the quarter. For the full year, we delivered record segment margins of 20.2%, up 130 basis points from prior year. As noted here, orders continued to remain very strong. On a rolling 12-month basis, Electrical orders were up 25%, and aerospace orders increased 24%, you know, which led, quite frankly, to record backlogs as well, up 68% in Electrical and up 21% in aerospace. Now lastly, in what was an otherwise challenging year, we generated record free cash flow in the quarter, with adjusted free cash flow up 41%. Our free cash flow as a percentage of sales was 18.1% in the quarter. You know, while improved cash flow in the second half of the year, it wasn't enough to really achieve the full-year cash flow targets. As we indicated, we continued to prioritize supporting higher organic growth, winning new orders, and protecting our customers, which all contributed to higher levels of working capital. You know, we still have work to do and with a focus on those areas that don't impact revenue growth. On page four, I summarize our performance highlights for last year. Overall, I'd say in a challenging operating environment, our team delivered strong financial results. As noted here, we exceeded three of our three key financial metrics. First, for organic revenue, we posted 13% growth, which was actually more than 60% above our original guidance at the midpoint. Throughout 2022, we raised our organic revenue growth in all segments, and the team delivered on the organic growth expectations that we set. It's worth noting that our largest business, Electrical Americas, delivered 16% organic growth, 2x the midpoint of our original guidance. Second, I'd note that we continue to demonstrate our ability to drive profitable growth with record margins of 20.2% in 2022, which was 10 basis points above our original guidance at the midpoint. Third, adjusted EPS of $7.57 was $0.07 higher than the midpoint of our original guidance, and I'd note that we fully offset the impact of some $500 million of unfavorable currency, or roughly $0.20 a share. Lastly, I'd note that we did miss our free cash flow guidance for the year. Most of this miss went into working capital to support higher levels of sales and orders and the record backlogs, but I say here, once again, I know we can do better. As you might expect, supply chain disruptions and our decision to prioritize protecting customers with higher inventory played a major role in this inventory growth over the year. Overall, I'd say it was a good year despite a year filled with inflation, labor shortages, supply chain disruptions and FX headwinds, and the team delivered record financial results, and we go into 2023 with positive momentum. Turning to page five, you know, I hope at this point you would agree that 2022 wasn't an exceptional year, but just another year of delivering what we promised. As it reflects, you know, the fundamental changes that we've made to the company over the last decade, we are a very different company today than we were 10 years ago. We've embraced the realities of a changing world and the necessity for us to change as well. We're now an attractive, growth-oriented end markets, and we have a proven formula for how we run the company better through the Eaton Business System. With this transformation, we've become a stronger company that has delivered higher growth, higher margins, and better earnings consistency. We've continued to be a good steward of your capital. The end result is the new Eaton, where some 90% of our profits now come from electrical and aerospace businesses. Once again, we're not done. We'll continue to apply our operational model, our strategic framework, and our potential connect criteria, and we'd expect to continue to maximize value for all of our stakeholders. You know, as you can see on page six, what this transformation has delivered to our shareholders. As you would expect, our strong results have translated into very strong financial results. For the sake of comparison, we charted total shareholder returns for three, five, and seven years, and we've compared our results with the S&P 500, the medium of our peer group, and the XLI Industrial Index. In every case, Eaton has significantly outperformed our benchmarks. I'll explain in the next few slides, we do believe our best days are still in front of us. Turning to page seven, you know, our transformation into a global intelligent power management company has positioned Eaton at the center of some of what we think are some of the most important trends that we'll see in our lifetime. The most significant being climate change and all the downstream implications that it brings. As we all know, climate change is driving the need to transition from fossil fuels to renewables, and increased regulations are driving the demand for new solutions. These solutions will require tremendous investments in renewables, in grid infrastructure, for both new and existing buildings. This trend is also closely coupled to need to electrify the economy. Cars, trucks, planes, buildings are all requiring more electrical content. As we move away from fossil fuels, this allows us to take advantage of renewables. Digitalization is providing us access to data and insights that is allowing us to be more connected, more productive, and more efficient than ever. It's also, by the way, creating a need for more data centers, an important end market for Eaton. Additive to these trends, we're also on the front end of an aerospace recovery cycle that will drive growth in both our commercial and military markets. I don't know about you, but I can tell you, I can't think of a company with a better set of market dynamics than Eaton. While we're not ready to change our long-term growth goals, I'd be surprised if we didn't exceed our previously announced targets of 5%-8% annual growth. Next, on page eight, we highlight how these mega trends are supported by unprecedented government stimulus spending, really around the world. In fact, these programs will have a direct impact on the growth rate of more than half of our end markets. In the U.S. alone, the Infrastructure Act from 2021 and the Inflation Reduction Act from 2022 will fund some $450 billion of grid modernization and other climate-related programs. Of particular importance to Eaton is the $88 billion that are set aside for power grid updates and EV charging networks and incentives. In Europe, the EU recovery plan provides, excuse me, $244 billion of green energy transition, which member states are now working on implementing. In China, the government has set clear goals to lower carbon emissions. They've laid out plans to strengthen their grid by 2025, including investments in more wind and solar. China also continues to lead the world in the adoption of electric vehicles. Even if you exclude China, we still estimate that between the U.S. and the EU programs will expand Eaton's addressable market by some $11 billion-$14 billion over the next five years. I say this is just another powerful tailwind that supports our confidence in the growth outlook of the company. You know, Tom will pick it up here and take you through the numbers. Thanks, Craig. On page nine, I'll begin with highlighting a few key points regarding our Q4 results. Revenue was up 12% with organic growth of 15%, partially offset by a 4% foreign exchange headwind and a 1% favorable net impact from acquisitions. This outcome illustrates our focus of prioritizing growth in our customers. With total revenue growth of 12%, we posted solid operating leverage. Operating profit grew 21% and adjusted EPS grew 20%. Further, excluding the $0.05 impact from foreign exchange, growth in adjusted EPS would have been 23%. All in, strong organic growth and margins enabled us to report all-time record adjusted earnings of $825 million and adjusted EPS of $2.06. Which was above our guidance midpoint. Lastly, I'd like to note that we continue to raise the bar with our Q4 records for both segment operating margin and segment operating profit. Moving on to the next chart, we summarize strong financial performance for our Electrical Americas business. For yet another quarter, we have set all-time records for sales, operating profit, and margin. We've also set all-time records for these metrics for the full year. Organic sales growth accelerated from 18% in Q3 to 20% in Q4, with robust growth in every end market, and particular strength in utility, data center, and commercial and institutional markets. Operating margin of 23.7% was up 450 basis points versus prior year, benefiting from higher volumes. In addition, incremental margins were quite strong at 47%. We continue to manage price effectively to more than offset inflationary pressures. Further, it should be noted that Electrical Americas outperformed their original 2020 guidance by 100 basis points. Orders and backlog continued to be very strong. On a rolling 12-month basis, orders were up 34%, which remains at a high level, with strong growth across the board and particular strength in data center, utility, and industrial markets. Backlog ended the year up 87% versus prior year and increased sequentially from Q3. In addition to the robust trends in orders and backlog, our major project negotiations pipeline in Q4 was up nearly 100% versus prior year from especially strong growth in manufacturing, data center, industrial, and utility end markets. Overall, Electrical Americas had a strong quarter to round out a very good year and continues to be well-positioned as we start 2023. Moving to page 11, we show results for our Electrical Global segment, which produced another strong quarter, including record for Q4 and full year records for sales, operating profit, and margins. Organic growth was up 8%, which was entirely offset by headwinds from foreign exchange of 7% and divestiture of 1%. With respect to organic growth, we saw strength in utility, industrial, and data center end market. On a regional basis, we posted high single-digit organic growth in EMEA and mid-single digit organic growth in APAC. Operating margin of 18.7 was down 80 basis points versus prior year, primarily due to foreign exchange headwinds. We continue to see good order intake. Orders were up 11% on a rolling 12-month basis, with strength in data center and commercial and institutional markets. Backlog growth of 17% also remains strong. Before moving to our Industrial businesses, I'd like to briefly recap the combined Electrical segments. For Q4, we posted organic growth of 15%, incremental margins of 44%, and operating margin of 21.8%, which was 250 basis points of year-over-year margin improvement. For the full year, our Electrical segments grew 15% organically, generated 33% incremental margin, increased margin 140 basis points, posted 25% rolling 12 months order growth, and increased backlog 68%. We are confident that we're well-positioned for continued growth with strong margins in our overall Electrical business. The next chart recaps our Aerospace segments. We posted all-time record sales and operating profit for both the quarter and on a full year basis. Organic growth accelerated to 11% with a 4% headwind from foreign exchange. This growth was driven by strength in commercial markets, with commercial aftermarket up 35% and commercial OEM up more than 20%. Relative to profit, operating margin was strong at 24.5%. It's worth noting that Aerospace outperformed their original 2020 guidance by 100 basis points. Order growth and backlog are very encouraging. On a rolling 12-month basis, order acceleration continued, up 24% compared to 22% in Q3 and 19% in Q2, with strength across all end markets. Similar to Q3, we saw especially strong growth in military OEM orders, up 80% in the quarter, which positions us well for growth in 2023 and confirms our expectations for increased defense spending, including breakout performance in 2024. Year-over-year backlog increased from 17% in Q3 to up 21% in Q4. Moving on to our vehicle segment on page 13. Vehicle had strong revenue growth in the second half of the year. In Q4, revenue was up 16%, with 18% organic growth and 2% unfavorable foreign exchange. This coming off 19% organic growth in Q3. We saw growth across all markets, with particular strength in North America and South America light vehicle. We also saw double-digit growth in APAC. Operating margins came in at 15.2%, with unfavorability to prior year, primarily due to manufacturing inefficiencies. As expected, we were able to completely offset the impact of inflation with pricing in Q4. We also secured wins in new and sustainable technologies such as EV gearing and transmissions, with a large and growing opportunity pipeline. On page 14, we show results for our eMobility business. We generated very strong growth in the quarter. Revenue was up 58%, including 17% from organic growth and 44% from the acquisition of Royal Power, partially offset by 3% negative foreign exchange. Margin improved 780 basis points versus prior year, driven by higher volumes and the impact from Royal Power. We remain encouraged by the growth prospects of the eMobility segment. Since 2018, we've won $1.4 billion of mature year revenues in this business, including a recent $400 million win for power protection and distribution units with a European customer. This is a major new program win in both U.S. and European markets, with production starting in 2024. This win demonstrates Eaton's ability to leverage our capabilities across our entire portfolio, including core technology in both electrical and industrial businesses. We partnered with our customer to electrify their mobile platform with solutions, including Breaktor and Bussmann fuses. We also leveraged our extensive vehicle expertise and added content from our Royal Power acquisition. Overall, we continue to make progress toward our long-term goal to create a $2 billion-$4 billion business with 15% margins by 2030. We are now on track to exceed our expectation to deliver $1.2 billion of revenue and 11% margin by 2025. Moving to page 15, I'm gonna unpack a theme that Craig mentioned at the top of the call related to our strategic investments in working capital to support strong orders and backlog, which enables accelerated organic growth. Overall, in spite of supporting surging orders and backlog, we are driving working capital improvement. To illustrate the trend, I'll provide a couple of examples. Net working capital to orders and inventory as a percent of backlog. Focusing on the left side of the chart, the average value of our electrical and aerospace quarterly orders in 2022 was more than 20% higher than 2021, and 33% more than 2019. To support these increasing orders, we have only slightly increased the absolute value of our working capital. The result is shown in the graph on the left side of the page. Our ratio of net working capital at year-end to trailing 12-month orders has stepped down significantly from 2019 to 2022. Moving to the right side of the chart, another way to look at working capital efficiency is comparing backlog growth to inventory growth. At the end of 2022, our electrical and aerospace backlog reached approximately $11 billion, which is up almost 160% since the end of 2019. To support this much larger backlog, inventory for our electrical and aerospace businesses has only increased by 38% since 2019. The graph on the right side of the slide highlights the significant improvements since 2019. Our inventory as a percentage of backlog has been roughly cut in half from the end of 2019 to the end of 2022. We are supporting a much larger backlog with a smaller percentage of inventory. In summary, we have prudently prioritized taking care of our customers and capturing growth, which has required investments in working capital and has impacted free cash flow metrics in the short term. That said, we are managing working capital more efficiently. The 2023 guidance on page 16 shows that we are well-positioned for another strong year of financial performance. Our organic growth guidance for 2023 is a range of 7%-9%, with particular strength in Electrical Americas and Aerospace, with organic growth rates of 8%-10%. eMobility is also a standout, with 35% organic growth guidance at the midpoint tied to the ramp of new programs. These organic growth rates correspond to our end market growth assumptions that we provided on our Q3 earnings call and that Craig will update in a few slides. The end market growth combined with increased backlog provides tremendous visibility and confidence in our 2023 outlook. For segment margins, our guidance range of 20.7%-21.1% is a 70 basis points improvement at the midpoint from our 2022 all-time record margin of 20.2%. In addition to projecting strong organic growth for 2023, we're also growing margins and continue to invest in future organic growth. Moving to page 17, we have the balance of our guidance for 2023 and Q1. I'll touch on some highlights. For 2023, we're guiding adjusted EPS in the range of $8.04-$8.44, which has a midpoint of $8.24, is 9% growth over 2022. We expect continued foreign exchange headwinds, which we estimate between $100 million-$200 million adverse. For operating cash flow, our guidance of $3.2 billion-$3.6 billion is a 34% increase at the midpoint over 2022. The key drivers here are a combination of higher earnings and improved working capital, particularly lower inventory levels as supply chains normalize. While our plan includes significant improvement in free cash flow during 2023, I'll note that we anticipate, due to higher interest expense in CapEx in Q1, as well as timing-related headwinds such as taxes, that free cash flow in Q1 will be relatively flat year-over-year. For share repurchases, we anticipate a range of $300 million-$600 million. Moving to Q1. For Q1, we are guiding organic growth of 8%-10%, segment margins between 19.5% and 19.9%, and adjusted EPS in a range of $1.72-$1.82. I'll hand it back to Craig to walk us through a market outlook and wrap up the presentation. All right, thanks, Tom. Hey, turning to page 18, we provide a look at our current market assumptions for the year. This chart has been updated from what we shared in our Q3 earnings call, but we really don't see any material changes here. You know, I'll remind you that we do expect a milder recession in 2023. But given, you know, the secular growth trends that we've talked about, our strong orders and healthy backlog, we would expect to see growth in most of our end markets, with six of our end markets representing some 70% of the company up nicely. These markets are also, by the way, supported by a very strong negotiation pipeline. Of note, we now expect even stronger growth within our commercial and institutional segment, given the relatively strong orders growth in the quarter and the continued strength in Dodge non-residential construction contracts. The only down market is expected to be residential, which only accounts for 8% of our revenue. In total, we're encouraged to report that 85% of our markets are expected to see positive growth in 2023. Lastly, let me close on page 19, just with a few summary comments. First, I'd say our thesis for Eaton as a changed company has continued to even better than we expected. Second, the growth trends, the right investments have delivered better top line growth, and we continue to run the company better. We delivered 13% organic growth with record orders and backlogs. Despite supply chain challenges and inflationary environment and significant FX headwinds, 2022 was a year of record profits, record margins, record adjusted earnings, and adjusted EPS. I'm particularly encouraged by our 20% increase in adjusted EPS growth in Q4, which I see as a positive indicator for 2023. Despite the macro concerns, we expect 2023 to be another very strong year. The company is on track and likely ahead of schedule for delivering our 2025 goals for revenue, margins, free cash flow, and adjusted EPS. I'll stop here and open things up for any questions that you may have. Hey, thanks, Craig. Actually, for the Q&A today, please limit your opportunity just to 1 question and a follow-up. Thanks in advance for your cooperation. With that, I'll turn it over to the operators to give you guys the guidance. Thank you. ladies and gentlemen, if you wish to ask a question, please press one and then zero on your touch tone phone. You will hear an acknowledgment tone that you've been placed in a queue, and you may remove yourself from queue at any time by repeating the one-zero command. if you're on a speakerphone, please pick up your handset before pressing the numbers. Once again, it's one-zero for a question. Our first question is from the line of Nigel Coe from Wolfe Research. Please go ahead. Oh, good morning. Thanks for the question. Good morning, Nigel. Morning. Still very, very strong trends in Electrical Americas. I'm just curious, you know, we are seeing a divergence, especially in, on backlog, between Americas and global. Is that primarily macro in your opinion, or do you think there's more secular tailwinds hitting in the Americas with all the stimulus money coming through? Any details on the front log of projects in the Americas would be very helpful. Yeah, no. We're very pleased obviously with the growth that we're seeing in both our global business as well as in the Americas business. The Americas business is clearly performing extremely well. I think if you think about some of the things that we talked about, Nigel, whether it's, you know, this, you know, stimulus spending where the U.S. is really, you know, pumping fairly significant dollars into markets that are really important for us. You think about some of these large projects and let's call it reshoring that's taking place in the U.S. market, that's certainly strengthening the U.S. business as well. I just think there's a lot of macros today that are strong for the company across the board that are just, I say, intensified when you think about what's going on in the U.S. market right now. The secular trends are everywhere. You know, we talk about energy transition, electrification, it's taking place across the world. I just think the U.S., because of this increased focus on infrastructure, reindustrialization, is seeing an additional boost above some of the other regions of the world. Okay. I'm not, I'm not sure if there's any, you know, particular projects you would, you'd call out to end markets you call out on the front log. My follow-up question is probably for Tom. The $7 million of corporate expenses in 2023, maybe you could just break that out between, you know, between, you know, true corporate interest and pension. Yeah. Thanks, Nigel. Most of that is going to be in interest expense and pension with interest expense even being, you know, greater than pension. I would caution that there's a lot of moving parts on both of those. You know, what's gonna happen to interest rate? What's gonna happen to the shape of the yield curve, discount rates, those types of things. As we're projecting it now, the headwinds are really related to interest expense and pension with interest expense being the dominant one. Okay. Thanks, Tom. Thank you. The next question is from the line of Josh Pokrzywinski from Morgan Stanley. Please go ahead. Hi. Good morning, guys. Good morning, Josh. Morning. Craig, you mentioned, you know, kind of planning for a mild recession and guidance. Can you maybe put that in the context of backlog conversion? Maybe specifically, you know, I think data center and commercial construction, you're starting to hear a little bit more in the way of cyclical concerns. Obviously, the orders are still strong. Yeah, how would you think of, you know, how much backlog, you know, ideally you'd be converting, if any, this year, you know, in the context of that, of that recession outlook? Yeah, appreciate the question, Josh, and we've obviously spent a lot of time internally trying to sort that one through ourselves. I would tell you that, you know, orders have just stayed so strong in general. It's really tough to really put your finger on how much of this very large backlog that we'll be able to convert. It, it certainly will depend upon, you know, what happens during the course of 2023. I can just tell you what's actually baked into our, you know, our forecast for the year is relatively modest reductions in backlog, if at all. Because at this point, it looks like, you know, these markets, driven by the secular growth trends we talked about, are gonna stay stronger for even longer than what we anticipated. At, at this point, we'll have to wait and see. If, you know, we end up, you know, with perhaps a little bit of a respite here, in terms of some of the order intake or some of the supply chain challenges, we'll be able to convert more, and that could be upside, you know, on the revenue side. At this point, we're not anticipating that, we're gonna be burning a lot of backlog. Got it. That's helpful. Just follow up, really appreciate kind of the TAM expansion color you gave from some of the stimulus. I know not a lot of folks have taken a stab at that. If I remember from the Analyst Day correctly, I think you sized the TAM for Eaton before this in kind of the high $50s billion. Does this mean that we kind of take this extra, you know, $11 billion-$14 billion divided by five cause it's over five years, and you have sort of a 4% uplift to growth? Like, or is this an apples and oranges kind of discussion? Just any context for how the TAM increase, you know, relates to kind of the growth of tech would be helpful. You know, I think your simple logic there, you know, is the right logic that based upon this stimulus spending, you know, these are essentially incremental dollars that we would expect to be going into these end markets, which will increase the size of the TAM and our served market. I think your kind of, you know, high level assumption is the right working assumption to have. Obviously, there'll be, you know, lots of discussions around how it plays out and over what period of time do these investments play out. Is it, you know, is it three years, five years? I mean, what's the timeframe? I think it will be the more difficult call to make, but it absolutely increases the size of the market. Yeah. Just to add a little bit more color on that, I mean, going back to the prepared remarks, if you look at our major project U.S. pipeline. Many of the end markets quarter-over-quarter are up over 100%. That's also translating to order volume even higher than that. You know, we're just seeing some good tailwinds on these major projects. Yeah, just to build on Tom's point, you know, as I think everybody's aware, you know, we obviously have sales and orders, but we also look at negotiations and our negotiation pipeline. As Tom mentioned, the negotiation pipeline being up more than 100%. I say that that is supported by the other data point that I talked about, which is essentially, you know, non-residential construction contracts, which are also up quite dramatically through, once again, the fourth quarter. We continue to see, you know, very good strength in these underlying markets, especially in the Americas. All good color. That's all I got. Thank you. The next question is from Andrew Obin from Bank of America. Please go ahead. Oh, yes. Good morning. Morning. Morning, Andrew. Yeah. So the first question, I guess, we've been getting incoming calls on data centers. Just if you can talk as to, you know, how much visibility do you have, where you are in terms of capacity for 2023? Do you have any left? You know, the new one we're getting was all the focus on ChatGPT, right? Are you getting any inquiries sort of related to AI and more computing, you know, sort of required to do that? If you're having any conversations related to data centers of that topic. Yeah, as you can imagine, we anticipated this question because we too are reading some of the conflicting headlines in terms of what's going on in the data center market. As we talked about, you know, our data center business continues to be very strong. What you talked about, Josh, just in the context of, you know, AI and these other various, you know, technology platforms that continue to be rolled out, that's just, once again, generating the need for more data, more processing and ultimately more data centers. I know there's a little bit of a cause up for some concern given what some of the hyperscale guys did with respect to their own outlook. I can tell you that for us, the data center market continues to be very strong. Even, you know, the hyperscale guys are still talking about, you know, mid-teens kind of growth over the next three to four years. Those are very strong numbers. You know, we even talked about, you know, autonomous driving and expansion of 5G and every device that we make today and that is made by every company continues to get more intelligent, driving a greater need for data and processing. Yeah, we think the data center market is gonna be a great market for quite a number of years to come. Yeah. It's supported by our order intake and our negotiations. To your question specifically on capacity, at this point, we really don't have a lot of spare capacity. We're making investments to expand our capacity. But at this point, you know, we have, you know, lots of visibility into the data center market, and it feels good. Yeah. I would also. Yeah, sorry. Oh, sorry, Andrew. I would also point out that this isn't only an Americas phenomenon. We're seeing strong order growth across the entire globe. Wow. Just a follow-up question. It's both stimulus, I think, related IRA, but also, you know, what's happening with LNG in Europe. What's the latest out of Crouse-Hinds? Because I think it is exposed to all these trends. Also, you know, has Crouse-Hinds benefit from any decarbonization efforts, you know, hydrogen, carbon sequestration? Just as I said, just maybe talk a little bit about what you're seeing in Crouse-Hinds. Thanks so much. Yeah, appreciate the question. The first thing I'll just maybe give the team a little bit of a news announcement that we've changed the name of what was formerly known as Crouse-Hinds and B-Line is now we're calling it our Global Energy Infrastructure business, so GEIS. Just if you hear us talk about GEIS, that's the formerly known Crouse-Hinds and B-Line business. I'd say, you know, absolutely. I mean, if, you know, as the name implies, anything that has to do with energy infrastructure is a real positive for our, you know, our GEIS business. And we, you know, would expect that that business continues to perform well as we continue to see investments in energy. Certainly as we look at, you know, hydrogen and other new greener forms of energy, the, you know, all of the infrastructure that's required to support those investments will be very positive for our GEIS business as well. I mean, for example, if you look at trailing twelve-month orders in GEIS and utility, they were up close to 30%, so very strong. Thank you very much. Thank you. Thanks, Andrew. The next question is on the line of Stephen Volkmann from Jefferies. Please go ahead. Great. Good morning, guys. Thanks for taking the question. Craig, maybe just start off, could you provide a little bit more color on what you're seeing in commercial institutional that made you sort of bump that market outlook up? I'd say once again, you know, the, the very minimum, we saw very strong order intake in Q4. Also we talked about a little bit, you know, what's going on generally in non-res construction. We look at, you know, the commercial negotiate, non-res commercial contracts, construction contracts just really posting pretty significant numbers in the fourth quarter. You know, we thought and that that market would be positive. Given the activity level, our negotiations in that segment, as well as what's going on more broadly in the industry and some of the macro data, you know, it caused us to be even more positive on that market. It's a, I'd say, a good news story. We'll wait and see how it plays out in total, but, certainly, the data that we saw in the fourth quarter was definitely more positive than what we anticipated. Okay, great. And then, I know it's early for this question, but Tom, since you brought it up, I think you mentioned something about breakout performance in 2024. Not sure if that was sort of military aero specific, but just can you expand on that a little bit? Yeah. No, it is a little early, but I walked into it, and I mentioned it in the prepared remarks. We're just seeing significant order growth in military OEM, and we've been waiting to see that just given what's happening in the world. You know, now it's starting to come through in all of our order metrics, whether it's trailing 12 months or Q4 year-over-year or even sequentially up very, very high numbers. Yeah. In fact, our military OE orders, you know, for the last 12 months was up 45%-ish. Exactly. And, and, and- 80% in the quarter. ...% in the quarter. Really strong numbers. Really strong. Yep. Given the lead times in that business, it'll certainly support the growth assumption that we have baked in for 2023. We do expect that 2024 will be a. Yeah ... strong year. You know, it comes back to the way you know, Craig started out the presentation of with these mega trends, you know, maybe we'll have pockets of weakness here and there, but the portfolio is so sound that we've also got the aero mega trend with pent-up demand. We've got military that's growing. We have pent-up demand with vehicles. You know, we're really not susceptible to any one small thing that's going to knock us down. It's a very robust portfolio. Thank you, guys. Thank you. The next question is from the line of Jeff Sprague from Vertical Research. Please go ahead. Hey, good morning, everyone. Good morning. How's it going? Morning. I wonder if we could just drill into global electrical a little bit more, just the quarter itself and then the outlook. Could you possibly elaborate a little bit more on what happened in the margins in the quarter? I guess the perspective of my question is, there's a pretty sizable sequential step down in margins on similar revenues, and it looked like similar FX to me sequentially. Maybe I'm wrong there, is there something else going on with mix or some other factor in the margins in the quarter? Then I was wondering if you could also just address the top-line outlook in global, the 4%-6% is, you know, somewhat moderating. Just maybe a little color on the underlying demand trends you're seeing there or if anything's going on in the channels. Yeah. Thanks, Jeff. Let me start out with talking about the Americas margins. I mean, you know, this story is really, you know, when you look at it compared to electrical-. Global margins. No. Yeah. We had 20% in the Americas volume growth. We had 8% in Electrical Global. There's the real disparity going on there. If you look closer into Global as well, we had some transactional FX issue, not necessarily translational, but transactional, where we still have dollar-denominated costs and with the dollar weakening, that hurt us there. You know, that was part of also the compare and the hurting of the margins on Electrical Global. On the growth side of the equation, I'd say that, you know, we're looking at kind of, you know, mid-single digit growth in our global business. I'd say in the face of what we're saying today is likely a typical recession, we think mid-single digit growth is the right kind of place to kind of be thinking about that business. Once again, if the world turns out to be a little happier than what we're anticipating and on the margin, I would say that I think we're all feeling a little better today about 2023 than. You just. Sorry if you said it, I missed it. I know you're not gonna give us price. When I look at the margin, you know, bridge for next year, what does that kind of assume for the price cost gap there? I assume there is some lift. Maybe you could give us a little perspective on what you're expecting. Yeah. We're not gonna break it out specifically as is, you know, per, you know, our policy. What I will say is that we expect to continue to effectively manage price cost. You know, it's something we really focus on, and, we expect to manage it effectively. The only thing I would add to what Tom says is that, you know, I would not anticipate it would be accretive to margins, right? Clearly, there's still inflation that we have in the business. We are more than offsetting inflation. In terms of how it's impacting the margins in the business, I would not expect that it would be accretive to margins. That's really a function of what we're doing to drive improvements in efficiencies as well as the volume lift that we're getting from the company overall. Great. Thanks for that. Thank you. The next question is from the line of Nicole DeBlase from Deutsche Bank. Please go ahead. Yeah, thanks. Good morning, guys. Morning. Maybe just starting with channel inventory levels. Craig, have definitely heard some concern about distributors maybe having a little bit of excess inventory or inventory building. What are you guys seeing in your channels within electrical? Yeah. I'd say, you know, in aggregate, Nicole, I would say that we've not seen that, nor have we heard that from our big channel partners in aggregate. Today, if you look at, once again, you think about our order intake, our growth and backlog, and you throw that up against, you know, Tom did a great job of laying out what it's meant in the context of our own inventory. While we're building inventory, we're actually increasing our efficiency as it relates to, you know, a forward view of revenue. I think that would be true for many of our distributors as well, given the strength in the underlying market, certainly in the Americas. I would say that if you take a look at Europe specifically, while we're still seeing growth in our own orders in Europe, there has been a little bit of a slowdown in Europe. While still growth, we have seen a little bit of a slowdown and a bit of an inventory adjustment that's taking place with some of our European distributors. I think, you know, China, I think, will be going in the other direction as that market, you know, comes through COVID and begins to grow again. Very slightly regionally. In aggregate, I'd say no inventory destocking to speak of at all. Regionally, a little bit of destocking in Europe, with the U.S. and perhaps, you know, Asia markets still a little bit tight. Yeah. Okay. Just to punch a specific number, Nicole gave some numbers on the one chart. You know, our average quarterly orders in 2022 versus 2020 are up 55%. You know, very big number. Got it. Thanks, guys. I guess looking at the guidance for the first quarter, you've got organic decelerating to the 8%-10% range versus 15% in 4Q. I guess, can you just talk through some of the segment level drivers there, and is that mostly a function of just tougher comps? Yeah. The revenue guide for Q1 versus Q4, I just say, you know, one, we're anniversarying bigger numbers in Q1 last year. Certainly it's the, it's the anniversary effect of it. We certainly, you know, have gotten quite a bit of price during the course of 2022 to offset inflation. On a relative basis, you know, you maybe have as much lift on a quarter-over-quarter basis in price, and I'd say. You know, those are really the two. Then there's this whole question around, you know, recession and how that's gonna impact confidence and the outlook, and so lots of uncertainty. If you think about our growth for the year, you know, Q1 is very much aligned at 9% at the midpoint with our growth for the year, and we'll see how the year, you know, unfolds. Those are primarily the reasons. Thanks, Craig. I'll pass it on. Thank you. The next question is from the line of Scott Davis from Melius Research. Please go ahead. Hi. Good morning, Craig and Tom. Morning, Scott. Guys, you've been a little quiet on the M&A side since the Royal Power deal, which is fine, but there wasn't really anything in your slides on kinda target buybacks or anything, you know, where you're prioritizing capital allocation for 23. Can you comment on that, please? Sure, Scott. Nothing really in the prepared remarks because we're, you know, we're staying the course with our same capital allocation, you know, tenants. Obviously, first, we're prioritizing, you know, organic growth, which we think is so important, especially with all the mega trends and secular tailwinds that we're right in the middle of. You know, we're gonna pay a competitive dividend as well. It's important to our investors. Having said that, we continue to be in the market and look for good acquisitions. We're also, you know, if you noted, we're also shrinking the tail in terms of divestitures. We had a small one that we did in the quarter, so we're actively doing that. In terms of buying back shares, this year we did about $290 million. We guided $300 million-$600 million, and we'll be, you know, I mean, opportunistic there, as appropriate. It really hasn't changed. We're in the market. We're always looking. Yep, staying the course on our capital allocation tenet. Yeah. If I can just emphasize, you know, the point that Tom made is that, you know, we have just a lot of organic growth opportunities out there, more than ever, in terms of the history of the company. As we think about growing the enterprise, we don't need to go out and do acquisitions to grow the enterprise. There's plenty of organic growth opportunities in front of us that we're investing to support but we'll continue to be opportunistic. If we see something that helps us strategically, maybe geographically. One of the things that you've seen us do over the course of the last 12 months is we've really, I'd say, shored up our strategic position in China, we've entered into a number of joint ventures. That's really the way we're trying to play the China card right now, given some of the risk and uncertainties. We entered into a number of really interesting joint ventures with local companies who have a strong position in the local market. We've taken a minority position. We will basically sell those products in markets outside of China, but they really do fill some really key product gaps in emerging markets in low-cost countries. Yeah, we've done some things on the JV side that I think shore up our position where we've had gaps, but there's just so many organic growth opportunities out there that we're pursuing that really is the priority. Yeah. Just to punctuate that, Scott, with a number. You know, if you look at our backlog for electrical and aerospace back at the end of Q4 in 2019, it was roughly a little over $4 billion. As we said in the prepared remarks, we're at $11 billion now. There's a lot of food on the table. Good color and good context. Thank you, and best of luck in 2023. Thank you, Scott. The next question is from Julian Mitchell from Barclays. Please go ahead. Sorry, one moment. Please, go ahead. Thanks for squeezing me in. just wanted to understand on that cash flow guide, I think it's at the midpoint guided up about $900 million year-over-year. Net income is about $300 million, I think, of increase. That's sort of the delta of $600 there. Is that sort of just the $500 million miss from 2022? I'm assuming you capture it in 2023. Is that how we should think about it? Maybe on the working capital point, is it all inventory kind of shouldering that delta, or is receivables or payables doing anything interesting? Yeah. Thanks, Julian. You know, just a slight nuance in terms of how you characterized it. I mean, while we did miss, you know, if we go back to that one chart, if we were able to foretell the future perfectly in terms of the order growth and the backlog, you know, we might have guided a different number there. Coming back to the bridge from 2022 to 2023, in addition to the impact of higher income, it's going to be working capital performance. You know, as we noted in our prepared remarks, you know, we can do a lot better there. It's primarily inventory, but I would tell you it's not just inventory. We think we can do better on DSO in collections. We think we can do better on DPO as well. I think, you know, we've got a great continuous improvement focus in this area. We know where we're not where we wanna be. As we said, we invested prudently, but we can do a lot better, and we will do better this year in terms of net working capital. Thank you. That's clear. Just my quick follow-up. You talked about the first quarter sort of organic sales by segment a little bit. Maybe on the margins, I think you're calling for the segment margin to drop sequentially about 1 point from fourth quarter into first quarter. Are we assuming kind of every segment, you know, has that similar drop and then sort of builds from there through the year? You know, anything to call out on that front, the sort of margins as we start the year and then move on by segment? Yeah, I don't, I don't think there's anything particular to call out. I mean, I would take you to our full year guide where we're taking margins, and we're growing them 70 bips overall, and we've got, you know, margin growth in every single segment. You know, our EPS cadence is gonna match our historical cadence of 45, 55 to first half in second half. I don't think there's anything specific to read into Q1. Other than the volume piece, Julian. Yeah. As you know, there's certain cyclicality- Sure ...that we have in our various businesses, and that's generally the reason why the margins generally drop between Q4 and Q1. To the extent that we have more cyclicality in one business or the other, you could see a slightly different play through, by segment. Yeah. But that's really the primary issue. Yeah, that's a good point, Craig. I think we see that in terms of our aero segment, where we go down. In electrical in Q1, and Electrical Americas as well. Americas as well too. Yeah. That's very helpful. Thank you. Appreciate it, Julian. Thank you. Thank you. The next question is from David Raso from Evercore. Please go ahead. Hi. Thank you very much. The quarterly cadence of the organic sales growth, the 9% we've discussed in the first quarter, the way you're thinking about the rest of the year, is it all just sort of at the same kind of 7.5% level? I'm just trying to get a sense in particular about some markets where there's a little more concern about a slowdown in the back half and maybe other areas that could be accelerating. Can you first confirm, is that sort of how you think of the cadence? Yeah, I think that's a fair way to think about the cadence. I mean, I think, you know, the great news for us is, you know, we're sitting on very large backlogs. To the extent that we had, you know, a little bit of an air pocket someplace, you know, we can live off of our backlog for a very long time before it would actually impact our revenues. I think as we think about the year, we still think it's a year where we're constrained, where but for you know, labor constraints, capacity constraints, supply strains constraints, those numbers would be bigger than what we're currently forecasting. I do think, you know, a similar pattern of growth, is a good placeholder for now in terms of the way you should think about the year. Yes. Within vehicle, the thought of auto sort of later in the year and truck later in the year, the interplay there. In a similar question on Electrical Global, you know, Europe so far is proving a bit resilient. How to think about China and Europe in the back half of the year? Just those two interplays in those two divisions. I'll leave it at that. Thank you. You know, as I mentioned in my commentary, I think we're incrementally more optimistic on China. They came through COVID much quicker than what we anticipated. You know, the zero COVID policy went away overnight, it felt like. We're starting to see, you know, the Chinese government kind of reignite the economy over there. I think as the year builds, we think that China and therefore Asia continues to strengthen and has a relatively better second half than the first half. I think Europe is a little bit more difficult of a call to make. Europe, as you noted, has continued to hang in there and be better than what we anticipated, for most of 2022. We're incrementally, I'd say, sitting here today, more positive on 2023, you know. Difficult to really call, you know, whether or not we're gonna see a different first half versus the second half in Europe. We're kind of planning for steady as she goes and a more of a balanced view with respect to the year-over-year growth. Thank you very much. Thank you. The next question is from Chris Snyder from UBS. Please go ahead. Thank you, I appreciate you squeezing me in. Craig, I wanted to follow up on your comment in the prepared remarks that you would be surprised if the company does not beat the 5%-8% annual growth targets laid out at the Investor Day. Does this just reflect the fact that the company is running so far ahead of these targets, or do you think slower growth could continue to top this range through 2025? Yeah, I think, one, to your point, we are certainly running ahead. I mean, if you take a look at, you know, assuming the 2023 guidance is a good number, you know, for the, we've been running around 10% top line growth against a 5%-8% target, so well ahead on growth. Quite frankly, we've become incrementally, you know, more positive on some of these secular growth trends. I think, if you take a look at stimulus spending, that number has been topped up since we laid those goals out, you know, more than a year ago. I think today, you know, if you think about climate change and some of the investments that are going into grid resiliency, as we sit here today, I would tell you that, you know, these secular growth trends that we spent a lot of time talking about, we've become even incrementally more positive on what the longer term implications are of these secular growth trends. That may not play out completely between now and 2025. I think there are gonna be some capacity constraints in the industry. We're already experiencing some of those that could be a gating factor, but that just gives us, you know, a much longer runway on the back end of this thing in terms of, you know, what's gonna happen with these markets over the long term. Yeah, no, I appreciate that. It's really a combination. It certainly feels like it. Yeah. No, yeah. No, I appreciate that. It certainly feels like it's showing through with the orders and the pipeline. You know, kind of on that, you know, obviously global orders have decelerated. It sounds like the company is, you know, decently optimistic on the rate of change, and certainly in China, it sounds like maybe even Europe as well. With that, could we actually see global orders reaccelerate in 2023, just given, you know, those two economies maybe starting to move in the right direction? Thank you. Yeah. I mean, I think it's when you say reaccelerate, I think it's a question of, you know, relative numbers. We had a very strong year for the most part, a very strong first half of the year in our global business, we're still anticipating growth. We are anticipating that the rate of growth will have slowed from what we saw in 2022. You know, a lot of that tied to this assumption around a global recession that could hit, you know, Europe perhaps more impactfully than it maybe would in other regions of the world. It could. There's a possibility that we could see a reacceleration. That's not our base assumption. We assume that we're gonna still see growth, but growth at a slower rate. Yeah. Let me just punch some numbers on global 'cause we talked a lot about, you know, Americas. Just to punch a few numbers. You know, for trailing 12-month orders in our global segment, we have high double-digit in commercial and institution. We're over 20% in residential, and data centers is doing, you know, significantly well. I mean, utility is up high single-digits, so, you know, very, very strong growth also in global, not to the extent of Americas, but still very sporty. Thank you. I appreciate that. Thank you. Thank you. Our next question, which is the final one in queue, is from Brett Linzey from Mizuho Americas. Please go ahead. Hey, good afternoon, everyone. Thanks. Good afternoon. wanted to come back to electrical. The incremental margins reported 44% in the fourth quarter. You're only guiding about 30% for the year. I'm just. You know, just curious why Q4 would not be more reflective of, you know, an undisturbed result with supply chains resolving and price catching up. Curious if there's something, you know, else through the course of 2023 or just conservatism. Yeah, I mean, by the way, that's the same discussion I'm having with my operating leaders, by the way. Why isn't Q4 44% the new normal, you know? I say that, you know, as you can imagine, in every quarter, there's always, you know, a number of things that can go, you know, positively in your direction and things that could, you know, go against you. We just had a very strong, you know, quarter of execution and good mix in our Americas business in Q4 that drove those incrementals to be well above where they would normally run. We do think from a planning standpoint, you know, especially given some of the investments that we need to continue to make to support, you know, this growth in R&D and customer capture initiatives, that we think 30% is the right planning number to have and as you think about the business on a go-forward basis, and very much consistent with where we've been historically. Yeah, 30 is good for planning. Got it. Just go ahead. I'll just end on 30 is good for planning, but, you know, we take the coaching and we don't wanna disappoint the chairman, so we'll work hard to beat that. Just one last follow-up. You know, where are we in this pricing cycle? I mean, is there more to do here? Have you made announcements for this year? Maybe any context for, you know, what you're embedding for the, you know, the price component of the 7% to 9% growth this year. Thanks. Yeah, certainly, you know, price will be a contributor to the growth for 2023. It'll obviously contribute at a much lower rate than it's contributed in 2022. Yeah, there is some more to do. We are in fact, you know, expecting to see positive price over the course of the year. You know, today, commodities have, you know, certainly slowed their rate of ascent, in some cases retreated a little bit, but they're back up again. You see copper's back up again. The big challenge right now we're finding is really on the labor front. Labor inflation is certainly coming through the system. Yeah, clearly we still have work to do on the price front, and it's baked into the guidance that we laid out, but it'll certainly be at a much lower rate than what we experienced over the course of 2022. Most of what you're seeing in those growth numbers are volume. Got it. Best of luck. Thanks a lot. Thank you. All right. Hey, good. Hey, thanks, guys. We have reached to the end of our call, and do appreciate everybody's question. As always, Chip and I will be available to address your follow-up questions. Thank you for joining us today. Have a great day, guys. Thank you. That does conclude our conference for today. Thank you for your participation and for using AT&T Teleconference service. You may now disconnect.