Ladies and gentlemen, thank you for standing by, and welcome to the Eaton First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. Should you require assistance during the conference, please press star then zero, and an operator will assist you offline. As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host, Yan Jin. Please go ahead. Hey, good morning. Thank you all for joining us for Eaton's fourth quarter 2024 earnings call. With me today are Craig Arnold, our Chairman and CEO, and Olivier Leonetti, Executive Vice President and Chief Financial Officer. Our agenda today includes the opening remarks by Craig, then he will turn it over to Olivier, who will highlight the company's performance in the fourth quarter. As we have done on our past calls, we'll 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 includes adjusted earnings per share, adjusted free cash flow, and other non-GAAP measures. They're all reconciled in the appendix. A webcast of this call is accessible on our website and will be available for replay. I would like to remind you that our comments today will include a statement related to the expected future results of the company and are therefore forward-looking statements. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our earnings release and the presentation. With that, I will turn it over to Craig. Okay, thanks, Yan. Hey, we'll start with some highlights on page 3, and I'll lead off by noting that we've delivered another strong quarter this year. Our adjusted EPS was $2.40 in the quarter, well above our guidance range, a record for the quarter, and up 28% from prior year. I'd also note that our orders came in ahead of expectations, with strong order growth in electrical, both the Americas and global. On a rolling 12-month basis, total electrical orders were up 7%, and aerospace orders increased by 2%. This led to another quarter of growing and record backlogs, up 27% for electrical and 11% for aerospace, with strong book-to-bill ratios. The growth in orders and backlogs support our point of view on the strength of the megatrends, that we're in the early stages, and that our market should be strong for years to come. Given our Q1 results, we're raising our guidance for organic growth, segment margins, and adjusted EPS for the year. On balance, we're very pleased with our start to the year. In the last few quarters, we shared our framework on how we think about key growth drivers for the company. This chart reflects the six circular growth trends that are positively impacting our businesses today, and quite frankly, for years to come. We continue to think Eaton is uniquely positioned in most of our businesses and are expected to see an acceleration in market-driven growth opportunities for years to come. In the last three earnings calls, we provided a summary of progress on infrastructure spending, reindustrialization, utility, and data center markets. We also shared the data center, the data, excuse me, we're tracking on mega projects, including when they are expected to have a material impact on our revenue, and an overview on the growth expectations and drivers for our aerospace business. Today, we'll once again provide you an update on what we're seeing on mega projects. We'll also take a moment to show you the momentum that we're seeing in the non-residential construction project market for those projects under $1 billion. Additionally, we'll provide you with a summary of the growth outlook for industrial facilities and how we're positioned in this market. And lastly, because it's such a dynamic topic, we'll provide an updated view on how our now higher growth expectation for the data center market is unfolding. Turning to slide 5 in the presentation, we summarize the number of mega projects that have been announced since January of 2021. And as a reminder, a mega project is a project with an announced value of $1 billion or more, and the number is now 415 projects. Once again, this is North America data, but we are seeing a similar trend in Europe, although the dollars are not as large. Just a few points to note: we've now surpassed $1 trillion in announced mega projects, double what we saw this time last year, and 3x the normal run rate. Approximately 16% of these projects have started, but it does vary by type of project. For example, a large percentage of semiconductor and EV battery projects have started, but downstream chemical, power generation, renewables, and data center projects have some of the lowest project start rates to date. And cancellation rates continue to be modest, around 10% and below historical rates. Using the current forecast, we expect over $100 billion-$150 billion of these projects to start this year. It's also worth noting that mega projects represent 15% of total non-residential construction starts in 2023, a number that we expect to grow over the next 5 years. For projects that have started, we've won $1 billion of orders, and our win rate is approximately 40%. We remained active in negotiations on another $1.4 billion of electrical content. Most of the projects represented here have not yet reached a negotiation stage.... Turning to slide 6, we want to highlight the largest part of non-residential construction market, projects under $1 billion. This market is projected to be over $500 billion in 2024, and represents around 50% of the US market. 56% increase since 2021, and a 16% CAGR. The market was actually up also 10% through Q1 of this year. You know, so while mega projects grab a lot of the headlines, we're seeing significant strength in projects under $1 billion as well. And for projects less than $100 million, construction starts were up 15%, so once again, strength across the entire market. This momentum is naturally being driven by the same set of mega trends and stimulus spending that we're seeing on mega projects. The primary markets here include utility, power generation, renewable, water, wastewater, manufacturing, and data centers. Our win rate in this segment is approximately 35%. Turning to slide 7, we highlight the industrial facilities end market. As we've reported, this end market accounted for approximately 12% of Eaton's total revenue in 2023. Reindustrialization and nearshoring are having a particularly large impact on this market. Examples include semiconductor fabrication, EV and EV battery plants, as well as LNG terminals. At the same time, industrial markets are undergoing growing pressure to decarbonize, to lower costs, and develop more sustainable operations. These challenges are naturally driving a significant increase in CapEx investment. It's also coming at a time when technology and digitalization are providing more value through data as a service, software, and therefore, the ability to provide operational intelligence. This allows customers to move from being reactive to proactive when managing energy and uptime, saving them time and money. For us, we increase both our content per project and our average selling price. These are the drivers that support our belief that industrial facilities end market will grow by some 7% between now, 2023 and 2026. Slide 8 provides an overview of the products and software that we sell as part of our industrial solutions portfolio. As noted, we think we have the broadest portfolio of products in the market. Our solutions are sold in both process and discrete manufacturing industries, and are especially well suited to take advantage of the trends we discussed on the prior page. Our solutions help industrial companies optimize performance by lowering the cost of ownership and reducing complexity. They increase operational predictability with data-driven insights and enhance safety, protecting people and assets. In addition to hardware and software, we provide a full suite of project management services, including design, specifying, commissioning, training, remote monitoring, and obviously, aftermarket service. Our Brightlayer industrial software platforms enables customers to preempt operational challenges because of the data and insights that come from our electrical equipment. Moving to slide 9, you'll see an updated view on the data center market. Last fall, in our Q3 2023 earnings call, we highlighted the data center market and shared our view that we expected the market to grow at a 16% compounded growth rate between 2022 and 2025. We wanted to provide an update as we've seen continued momentum in this market, driven by the rise of AI, big data, and certainly edge computing. As expected, the biggest increase is coming from the very strong demand for AI data centers, which is reflected both in our orders and in our negotiation pipeline. Here, orders on a trailing twelve-month basis have more than doubled, and our negotiations in the U.S. have increased by more than 4x. We now think the overall market grows at a 25% compounded growth rate between 2022 and 2025. And as you know, we have a strong position in the data center market, and the data center/IT channel accounted for 14% of our revenue last year. Now, I'll turn the presentation over to Olivier to cover the financials. Thanks, Craig. I'll start by providing a summary of our Q1 results. We posted a Q1 sales record of $5.9 billion, up 8% in total and organically. This represents 8 quarters of growth, over 20% on a 2-year stack. We posted Q1 segment profit and margins records. Operating profit grew 27%, and segment margin expanded 340 basis points to 23.1%. Adjusted EPS of $2.40 increased by 28% year-over-year. This is a Q1 record and well above the high end of our guidance range. This performance resulted in operating cash flow of $475 million, up 42% on a year-over-year basis, and free cash flow of $292 million, up 40% versus prior year. As a percentage of full-year guidance, both operating cash flow and free cash flow are improved versus prior year. On slide 11, we summarize Electrical Americas' very strong results. We continue to raise the bar, setting new all-time records for sales, operating profit, and margins. Organic sales growth remained strong at 17%, which reflect broad-based strength in our end markets, with particular strength in industrial, data center, and institutional end markets. On a two-year stack, organic growth was up 39%. Electrical Americas has generated double-digit organic growth for nine consecutive quarters. All-time record operating margin of 29.2% was up 630 basis points versus the prior year, benefiting primarily from higher volumes, effective management of price cost, and improved manufacturing efficiency, partially offset by higher costs to support growth initiatives. On a rolling twelve-month basis, orders were up 8%, demonstrating a positive inflection as a result of the impacts of the various mega trends. We had particular strength in data center end market. Also, our major project negotiations pipeline in Q1 was up 169% versus prior year, and up 197% since Q1 2022. Electrical Americas backlog increased 31% year-over-year and was up 21% sequentially, resulting in a book-to-bill ratio of 1.2 on a rolling twelve-month basis. These results underscore the tailwinds from secular trends, strong execution, and robust backlog that have allowed us to increase growth and margin guidance for the year, which we will discuss later in the presentation. The next chart summarizes the results for our Electrical Global segment. Coincidentally, global results are mostly flat to last year. Organic growth was up 1%, offset entirely by FX headwinds. We have strength in data center, industrial, as well as commercial and institutional end markets. Regionally, we saw strength in our APAC and GEIS businesses, partially offset by weakness in our EMEA business. Operating margin was 18.3%, which was flat to the prior year. Orders were up 4% on a rolling 12-month basis, with strength in data center and utility end markets. Book-to-bill continues to remain strong. Q1 was 1.1 on a rolling 12-month basis. Before moving to our industrial businesses, I'd like to briefly recap the combined electrical segments. For Q1, we posted organic growth of 11% and segment margin of 25.3%, which was 430 basis points over prior year. On a rolling twelve-month basis, orders inflected strongly positive, up 7%, and our book-to-bill ratio for our electrical sector remains very strong at 1.2. We remain quite confident in our positioning for continued growth with strong margins in our overall electrical business. Page 13 highlights our Aerospace segment. We posted Q1 sales, operating profit, and operating margin records. Organic growth was 9% for the quarter. Growth was driven by broad strength across all markets, with particular strength in commercial OEM and aftermarket end markets, which were up 17% and 15% respectively. Operating margin of 23.1% was up 60 basis points year-over-year, benefiting from higher volumes and effective management of price cost. On a rolling twelve-month basis, orders increased 2%. Commercial OEM and aftermarket orders were particularly strong, and we expect that the military OEM order patterns will normalize in the second half. Year-over-year backlog increased 11% and was up 4% sequentially. On a rolling twelve-month basis, our book-to-bill for our Aerospace segment remained strong at 1.1. Moving on to our Vehicle segment on page 14. In the quarter, total revenue was down 2%, including a 3% organic decline, partially offset by 1% favorable FX. Weakness in the North America region was partially offset by strength in Asia Pacific. Operating margin came in at 16%, 150 basis points above prior year, driven by effective management of price cost and improvement in manufacturing efficiencies, offset by lower sales volume. On page 15, we show results for our e-mobility business. Sales were up 7% on an organic and total basis. Our organic growth significantly outperformed the market, driven by new program ramp-ups. Our OEM customers continue to face execution challenges, and while we anticipate improvements throughout the year, we have remained pragmatic in our volume forecast. As a result, we will discuss shortly that our full-year growth guidance of 25%-35% remains unchanged. Growth programs and investments drove the operating loss of $4 million. We continue to incur launch costs related to our growth programs, expected to ramp up over the next coming quarters. In 2023, we won new programs with more than $1.3 billion of mature year revenue, and we continue to expand our pipeline of new opportunities in 2024 with our unique technologies, driven by our electrical pedigree. This will continue to drive our growth well above the market. Moving to page 16, we show our electrical and aerospace backlog updated through Q1. As you can see, we continue to build backlog, with electrical stepping up to $11.3 billion and aerospace reaching $3.4 billion, for a total backlog of $14.7 billion. Versus prior year, our backlogs have grown by 27% in electrical and 11% in aerospace. Electrical backlog benefited from acceleration in order intake from tailwinds from the secular trends, including hyperscale orders within the data center end market. As noted earlier, book-to-bill ratios for electrical and aerospace are 1.2 and 1.1, respectively. The continued growth in our backlog underscores our confidence in 2024 and beyond. Now, I'll turn it back to Craig for the end market outlook and financial guidance updates. Okay, thanks, Olivier. Okay, turning to page 17, we show a summary of our end market growth assumptions. Overall, our markets continue to perform as expected, and most of these indicators have not changed from what we shared in our Q4 earnings call. We are, however, seeing stronger-than-expected growth in data center and in commercial and institutional markets in the U.S., which is why we're raising our revenue guidance for the year. In contrast to what many are seeing in the macroeconomy, we continue to expect growth in 80% of our end markets, and much of this growth is supported by the large backlog numbers that Olivier shared. Moving to page 18, we show our financial year organic growth and operating margin guidance. Overall, our 2024 organic growth is now expected to be between 7% and 9%, which is an increase of 50 basis points at the midpoint. We're raising our organic growth guidance in the Electrical Americas to 10%-12% from 9%-11%, and we're reiterating the growth guidance for the remaining segments. For segment margins, we're increasing the company's margin guidance range by 40 basis points at the midpoint to 23%. This is a result of the improved outlook in Electrical Americas, where we're seeing strong demand and strong performance. Here, we're increasing our margin outlook to 28%, a 100 basis point increase at the midpoint, and we're reiterating our guidance for the remaining segments. On the next page, we have the balance of our guidance metric for 2024 and Q2. For 2024, our adjusted EPS is expected to be between $10.20 and $10.60 a share. The $10.40 midpoint represents a 14% growth in adjusted EPS over prior year and a $0.25 increase over the initial 2024 guidance. The other elements of our guidance are unchanged. For Q2, we expect organic growth to be between 6.5% and 8.5%, segment margins to be between 22.4% and 22.8%, and adjusted EPS to be in a range of $2.52-$2.62 a share. So let me just close with a summary on page 20. Once again, the trends driving growth in our end markets continue to play out as expected, and even better in our Electrical Americas business, driven by the data center market. We also delivered a strong quarter financial results on the back of strong execution across the company. As a result, we raised our guidance for organic growth by 50 basis points, segment margins by 40 basis points, and adjusted EPS by $0.25 at the midpoint. In the quarter, we were especially pleased to see strength in our negotiations, our orders, and the growth in our backlog, all of which hit all-time records, validating our medium and long-term growth outlook. We leave the quarter with a high level of confidence. Eaton will deliver higher growth, higher margins, and consistent earnings growth for years to come. Our expectations are high, and that's exactly where they should be. With that, I'll open things up for any questions you may have. Thanks, Craig. For the Q&A today, please limit your opportunity to one question and a follow-up. Thanks in advance for your cooperation. With that, I will turn it over to the operator to give you guys the instruction. Thank you. Ladies and gentlemen, if you wish to ask a question, please press one then zero on your touchtone phone. You will hear a tone indicating 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, if you have a question, it's one then zero. The first question will come from the line of Joe Ritchie from Goldman Sachs. Please go ahead. Hey, guys. Good morning. Hey, Joe. Morning. Morning. Craig, look, it's incredible to see the pipeline now over $1 trillion on the mega projects. I'm just curious, like, as you, as you talk to your customers, as you think about, you know, maybe labor as a constraint, like, how do you see this all playing out over the next couple of years? And like, what are you hearing from your customers in terms of like whether there are either additional products that you need to come to market with, just given all the activity that's happening here? I know we appreciate the question, Joe, and it's obviously one that we're spending a lot of time internally looking at, and it's one of the things that's, quite frankly, tempering, you know, our outlook for, you know, the year, is the fact that we do believe that, you know, labor continues to be a bottleneck in certain industries and really in the economy overall. So at this point, I think it's really too early to say to what extent it's gonna resolve itself. One of the things that we're looking at as well is, if you take a look, total labor participation rates in general, those numbers, I would say, you know, have been, you know, growing over time at a rate of, you know, 2%-3%. I will tell you that, you know, the construction industry, the industries that we're participating in, really reversing what had been a long-term trend, are actually growing at a faster rate. And so our industries are, in fact, you know, growing at a faster rate in terms of labor participation than the underlying economy, which is really an encouraging sign. I mean, I think in many ways, skilled trade today, you know, whether it's, you know, plumbers, contractors, electricians, welders, these are really good jobs and I think some of that's playing out in this shift that we're seeing. But it's one of the things that we continue to watch, and it's one of the things, like I said, once again, that really tempers our outlook. We could obviously grow faster if these constraints are fully resolved and don't become a gaining item for the industry overall. Got it. That's, that's super helpful. And then, and then I guess maybe, maybe I'll... I know you'll get a bunch of growth questions from others, so maybe I'll, I'll turn to margins for a second. So you announced a restructuring program last quarter. You know, there's a pretty wide gap right now between the, you know, really stellar margins you're putting up in the Electrical Americas business versus the Electrical Global business. Can you maybe just elaborate a little bit more on the restructuring plans? Is there some sense that you're gonna try to maybe narrow the gap on the margin trajectory for those two businesses today? Yeah, I mean, I think the short answer is absolutely. We would, we would intend and anticipate to narrow the gap between those two businesses and narrow the gap the right way, which is, the global business needs to do significantly better. We have no expectations at all that we'd see retrenchment in our Americas business. And so... But I will say, you know, as you think about the restructuring program that we launched, you know, $375 million of spending, $325 million of benefits, two-thirds of that, more or less, will be in the electrical segment with a heavy concentration in global. So we are clearly working hard to improve margins in the electrical global business. You know, one of the reasons why this gap kind of widened and opened up is that, you know, as we're all aware, in the US market, the North America market is doing very well right now. There's a lot of activity, there's a lot of growth. You know, we have a very strong strategic position in the North America market overall. And so there are just a lot of things today that are really positive in the Americas market that are allowing us to continue to expand margins there. And as you know, a lot of the European markets have been much weaker than we anticipated. You see some of the macroeconomic data coming out of, you know, Europe, Germany specifically, and a lot of the market segments in Europe where we have a strong position are some of the weaker parts of the market. If you think about the MOEM segment, you see it in some of the automation data from some of the other electrical peer companies, the residential market. And so I think today, you know, those margins will get better. If we look, you know, forward, we're obviously anticipating margins getting better. There's, you know, easier comps in the second half of the year as well. But without a doubt, there's plenty of opportunity to expand our margins in our global segment. Great. Thanks, Craig. Thank you. Thank you. The next question is from Jeff Sprague from Vertical Research. Please go ahead. Hey, thanks. Good morning, everyone. Morning, Jeff. Morning. Good morning. Hey, just curious on data centers, Craig, your comment about, like, some of the mega projects haven't started yet. They are obviously, data center's been strong and a revenue driver for, for you there. So can you just elaborate on that? Are you kinda, you know, talking about you really haven't seen maybe kind of the AI-oriented investments coming through? Just kind of an interesting, curious comment. And, you know, in last quarter, when you did provide that kind of order conversion data for semi and other related, you know, investments, you, you didn't put data centers on that slide. So, maybe you could address that element of the question also. Yeah, no, you know, I'd say that, you know, to your point, Jeff, data center markets have been good and strong for a long time. And I think, our data center numbers, I think we talk about growth, you know, in excess of 20%. But the order growth in the data center market, as we talked about, is much higher than that. Much, much higher than that. And so if you think about a lot of these big mega projects and where we're seeing, you know, this outsized growth in projects announced in our negotiations, you know, data centers is obviously one of the big contributors, and the underlying rate of growth that we're seeing in negotiations and orders is outstripping this, the very strong growth that we're seeing in our business. And so we were just trying to provide some color in terms of mega projects and which of those are already showing up today in orders, which of those are already showing up somewhat in revenue, although most of it's not in revenue yet, and where we expect to continue to see even outsized growth as we move forward in the ensuing years. And data centers is clearly gonna be a big contributor. We talk about, you know, negotiations up four times. So it is the market just continues to grow, and we expect that market to be a much bigger piece of the total company as we look forward. And then, Towards- Oh, yeah, go ahead. What was the second question? I didn't quite- Yeah, when you provided that handy chart last quarter showing kind of the negotiation to order to sales conversion timeline, actually, you did not put data centers on that chart. Does it differ significantly from those figures? You know, I think, and correct me, and the team can correct me around the room if I'm wrong, I think data centers were embedded in that data. We gave you the, the aggregate data. I thought data centers were embedded in what we gave you. Yeah, I'm looking at slide six. Different- Slide- We have different kinds of projects, and we were showing you some examples- Yeah ... of different kinds of projects, but embedded in the overall data, I think that definitely included data centers. Okay. Yeah, we... Data centers are less than that. Yeah, we can, we can follow up after this call. Okay. Yeah. Yeah, yeah. Thank you. And then just a second question, I'm sorry. Just on Electrical Americas margins, what would cause the margins to go down sequentially, right? Usually, Q1 is actually the lowest margin quarter of the year. It's the lowest revenue quarter, and, you know, in dollar value. You know, is there something in mix or otherwise that would cause it to step down from these levels? You know, I'd say, as we look forward, as you know, we've made a number of announcements around capacity expansion. We're making some investments in commercial front end. We're making investments in technology. So there's a number of programs that we've made announcements last year and that we're investing in this year, that will certainly be a bit of a gating factor in terms of margin expansion. I think the implied number is, it's close to what it was in Q1, but do take your point that we typically see margin expansion. We'll certainly see volume expansion in terms of the absolute revenue in the out quarters. But really, it's more a function of spending and investments that we're making in the business. Great. Thank you. Thank you. The next question is from Dean Dray from RBC Capital Markets. Please go ahead. One moment. Your line is now open. Thank you. Good morning, everyone. Good morning, Dean. Good morning. Morning. I just wanna circle back on the data center demand here. And the idea here is you talk about labor constraints, but the industry and the folks that we're talking to on the data center planning side is they're nervous about the bottlenecks and some of the basic electrical backbone that you all provide. And so we saw this quarter an announcement in Europe with one of your European competitors signing a 5-year supply agreement to one of these data center operators. And then they've also, we've heard about transformers being backlogged for 2 years. So are there opportunities for you? I know you're increasing capacity and transformers, but are you looking at any of these longer-term supply agreements? Yeah, the short answer is, Dean, it's absolutely, yes. We are living in an environment right now where, you know, the market has a number of constraints, including electrical equipment. It's one of the reasons why we, you know, we announced that $1 billion of incremental investments that we're making in the company to deal with the specific bottlenecks that we have in our own manufacturing operation, so that we can address the demand that we see in front of us. And quite frankly, given the demand that we've-- we're seeing even today in the business, those numbers will likely go up. So data centers continues to grow. You know, I was responding to a specific question earlier around labor, but to your point, you know, there are other constraints around electrical equipment, and we are, in fact, signing multiyear agreements with our customers to ensure that we have capacity in place to support the demand that they need from us. And so we are fully confident that we will not be the bottleneck in the industry. We will resolve the bottlenecks that we have in terms of our own electrical equipment. Difficult to say where those other constraints will surface. All right. That's really helpful. And then just away from data centers, just the idea of these mega projects, do you anticipate any mix change in what you are doing for direct ship versus going through distribution? You know, and I'd say, you know, you know, distribution is really an important part of our go-to-market strategy, and we have really strong, you know, distributor partnerships that will always be an important part of our formula in terms of the way we go to market. Now, there are, in fact, you know, some market dynamics that suggest that there are certain kinds of projects and certain markets that do tend to be more of a direct serve market than a market that is served through a distribution. In some cases, data centers are a great example of that, where there are certain data center customers who want to be served direct. I do think there'll be a bit of a mix shift, not so much because it's a function of strategically we're changing our approach, as much as it is because there are certain market segments that are growing, big mega projects being a piece of that, that tend to be more direct serve markets. That's helpful. Thank you. Thank you. Our next question is from Julian Mitchell from Barclays. Please go ahead. Maybe just wanted to start with Electrical Global. You know, you started out the year with a sort of fairly soft, you know, top line there. Just maybe help us understand sort of the confidence of getting to that, you know, low, mid-single digit organic growth for the year. You know, how quickly do we expect that acceleration, say, in the second quarter in EG, and if there's any particular region or end market that's doing the sort of heavy lifting on that sales growth improvement? Yeah, appreciate the question, Nigel. I mean, I'd say that, you know, we have, I would say, relatively modest growth assumptions for our Electrical Global segment. And we really, in Q1, performed largely in line with our expectations. A little weaker, quite frankly, in Europe than what we expected, but largely in line. And as I mentioned in my opening commentary, the comps get a bit easier as well in the second half of the year for global. But today, I'd say, you know, we're growing in Asia. You know, we had, you know, nice growth in our China and Asia Pacific business overall. Our Geist business is growing, doing just fine. You know, the weak spot, as we talked about, is what's happening today in the European electrical business, where very much like you saw in some of the peer data, those markets have been weaker than what we anticipated. But I would say today fairly, you know, conservative set of assumptions that we're using internally in terms of what we're anticipating from our Europe business overall, our global business overall, and really, it's largely a function of the comps getting easier as we, you know, continue throughout the balance of the year. We're not anticipating a significant, you know, change in the trajectory of the business, but some modest improvement in the second half. That's helpful. Thank you. And just my second question was really to circle back on the margin outlook. So yes, your second quarter, you've got the implied sort of total company margin down 50 basis points sequentially with, you know, some sales growth sequentially. So is the delta all in that sort of higher investment in Electrical Americas pulling down that margin sequentially? Is that what, is that what's going on there in Q2? Yeah, no, I'd say that, that's really what the, the difference is. There's nothing else in, that's embedded in our assumptions that would suggest that margins should fall off other than the incremental spending and investments that we're making in the business. You know, as, as you saw in our Q1 results, very strong execution by the team, you know, 60+% incrementals, and so the, the team is really executing well. We anticipate that, you know, that, you know, execution will continue for the balance of the year, and it really is simply a reflection of the investments that we're making in the business for future growth. Great. Thank you. Thank you. Our next question is from Steve Tusa from JPMorgan. Please go ahead. Good morning, guys. Good morning. Good morning. Good morning. Just on that last question, can you maybe just be a little bit more specific about, you know, what you mean there, on the, you know, the amount of headwind from these investments? I mean, you guys, is there, like, an abrupt start-up cost in one of these facilities or something? Maybe just a little more color and maybe quantify that headwind. Yeah, and I wouldn't call it an abrupt start-up cost, but as you know, we made some announcements last year around capacity expansions. And those, you know, those new capacity expansions start to come online, so obviously, you turn on, you know, all the depreciation, you have start-up costs associated with, you know, commissioning new lines and new plants. We're making additional investments in some of these commercial opportunities to deal with, you know, the better growth outlook that we've talked about. And so in terms of, you know, the specifics, you know, obviously, we're not gonna give you an exact dollar amount, but I would tell you that it's really tied specifically to supporting the outlook for growth. And quite frankly, we could do better. I mean, the reality is, you know, we did better in Q1. Our team is executing extremely well, so we could do better than what's currently reflected, but it is today reflective of our best thinking. Got it. And then, and then just on the, on, on the order front, you know, one of your peers talked about some of these orders being delivered a little bit further out. You're adding the capacity, so maybe you can deliver, you know, in a bit more of an expedited way over the next couple of years. Should we think about this orders quarter converting further out than normal? Or are we now at kind of a more of a consistent lead time, albeit still probably a relatively long lead time, but are we still at kind of a consistent lead time that's been established over the last couple of years? You know, I would say that, you know, lead times have not pushed out further. We talked over the last couple of years, the fact that, you know, this surge that we're seeing in orders has, in fact, extended lead times and for many of our markets overall. And I would say today, you know, depending upon the product line, we've made some progress in terms of lead times, but we've also seen, as you saw in the data, also a resurgence, quite frankly, of orders, with very strong orders in Q1, that I would say, and backlogs that continue to grow. So I would say, in general, you know, lead times have not changed materially. They've- Yeah ... not gotten materially worse. They've not gotten materially better. Yeah. So in other words, the orders that you booked this quarter should kinda convert at, you know, at the same lead time as we've seen in the last, you know, year-and-a-half type of thing? Yeah, I mean, I'd say, you know, it varies, you know, depending upon which market segment. I mean, in some cases, we are getting for, you know, some of the hyperscale data center guys are trying to get out in front and maybe placing some orders earlier than they normally would. But for the most part, there's been no significant change in the order pattern. Yeah, yeah. Great. Thanks a lot. All right. Thank you. Thank you. The next question is from Scott Davis, from Melius Research. Please go ahead. Hey, good morning, guys. Good morning, Scott. Morning. Kind of intrigued by this concept of long-term supply agreements, 'cause I don't believe that's really been something that we've seen in the past in this industry. But can you, for whatever you're willing to share here, help us understand, are these, like, take-or-pay type contracts? What is kind of the vision in forming these type of partnerships? I saw the Schneider Compass announcement a few months ago, but, haven't, not exactly sure what you guys are doing. Thanks. I mean, and as you can imagine, Scott, you know, we're living in an environment today where, you know, these industries are growing much faster than they, they have historically, and the outlook for growth, you know, continues to strengthen and, in many cases, get better, and you have capacity constraints. So we are in a very different world today with respect to ensuring that we work with our customers and our suppliers on a multi-year basis, and to ensure that we have capacity to support the demand that's out in front of us. And that's really what's driving this change in the way we contract and partner with many of our customers. So I think it's a perfectly logical thing to do. It's a needed thing to do in this environment. To your point, I mean, most of these contracts are contracts that are structured in a way that ensures that, you know, while, you know, they won't necessarily be exactly take or pay, but they ensure that we have protections for the investments that we're making, so that we're not putting capacity in that's not needed. So we feel very good. Got it ... about the nature of the contracts, the way they're structured to ensure that, that the company is protected. Wow, that's, that's interesting, and congrats on that. So, I'm not looking for an exact number. I'm just trying to get a sense. You know, you think about, you know, we all know transformers are lead times are long, but when you think about the percentage of your SKUs that are sold out right now, is there some sort of number that you could guess, you know, 30, 40% of your SKUs? I mean, I know it's broader than just transformers and switchgear, but any estimate there? I'm just kind of curious to see if that's the majority or still kind of sub 50% of SKUs. Yeah, you know, I'd say that we, you know, we really haven't run the math, to be honest with you, Scott, in terms of what percent. I will tell you that maybe an easy way to think about it is that, you know, the long cycle parts of our portfolio, generally today, we have capacity constraints on the long cycle stuff and on the short cycle stuff, not so much. I think our split is roughly 75, 25 between long cycle and short cycle. So maybe that's a good proxy for, you know, where we're actually at capacity or close to sold out and where we're not. Okay. Congrats on the start of the year, guys. Good luck. Thank you very much. Appreciate it. Thank you. The next question is from Nicole DeBlase, from Deutsche Bank. Please go ahead. Guys. Hey, Nicole. Hello. Just maybe starting with Electrical Americas, obviously, really impressive 17% organic growth this quarter. You guys raised the guidance, but still embeds pretty big decel throughout the year. So is that just, you know, can we kind of chalk that up to conservatism, Craig, or is there something that you guys are seeing with respect to growth in the rest of the year that kind of causes that step down? Hey, you know, I appreciate the question, Nicole, and, and obviously, it was a really strong start to the year for our Electrical Americas business, and, and they posted, you know, really, really positive numbers. And I'd say, I'd say maybe, you know, it's early in the year and, you know, we, we have one quarter behind us, and, and we just thought it's prudent at this point, given the fact that it's early in the year, to let's see how the rest of the year unfolds. Certainly, you know, if things continue with what we've seen, you know, there could be upside to that number. I would say as well, that as you think about as the year goes on, the comps get, in some cases, a little bit more challenging. There's a little bit less contribution from price in some of the subsequent quarters. But once again, you know, the business outperformed our expectation across the board, most of which is obviously on the volume side, in Q1. And so there is certainly the potential that the business does better than what we're currently forecasting. Got it. That's very fair. Thanks, Craig. And then similar question on free cash. You didn't raise the guidance for the full year despite higher earnings. Is there something going on with working capital or some other line item that causes the offset, or is it just a bit early in the year, and you kind of wanna see how that line item trends? No, I'd say largely, it's early in the year, and just really, we just thought it's prudent at this juncture not to take the number up. We'll obviously revisit it as we get through Q2, but it's just early in the year. Understood. Thank you. I'll pass it on. Thank you. And the next question is from the line of Andrew Obin from Bank of America. Please go ahead. Yeah, sure. Good morning. How are you? Good morning. Morning. Yeah, I guess the question is, you know, everybody's asking about data centers, but maybe slightly different direction. China, what are we seeing? How is your electrical business in China performing within electrical global? And, you know, you have a very specific strategy there on JVs. Just maybe just talk about how the deals are performing relative to your expectations. So the two-part question. Great. No, I appreciate the question, Andrew, and I would say our China business continues to perform very well. In fact, you know, we grew, you know, high single digits in Q1 in our China business. And to your point, we do have a very specific strategy for how we play the China market, specifically through joint ventures. And in many cases, as you know, these are minority joint ventures. And our joint ventures, by the way, if you just take a look at our joint venture performance, we obviously don't consolidate this revenue, but they grew some 35% in 2023. So we're getting a lot of great growth in the joint ventures in China, and as you know, strategically, what we tried to do there is really, you know, finding a way to partner with local Chinese companies, who then give us the ability to broaden our portfolio, to compete in tier two and tier three markets, both in China and around the world. And so we're absolutely thrilled with how well these JVs are playing out and our team is executing, and it just gives us, you know, a lot of additional capabilities as we think about, you know, future growth of the company. Excellent. Just a more technical question. I don't know if, I apologize if I missed it, but can you just talk about electrical channel inventories on the product side? Where are we? Thank you. Yeah, I would say that once again, you know, I think, you know, inventories are largely, you know, well-balanced and well-aligned right now. I mean, as you can, as you can tell by the growth in our backlogs, you know, our backlogs continue to grow, and, and lead times are, are not getting better, and our book-to-bills, you know, 1.2 in electrical, which I think is a great indicator of, you know, where we sit today with respect to inventory in the channel. So today, I would say there's obviously gonna be the odd product line or two where, the, the dealer inventories could be a little long. But overall, inventories, I think today are very well-balanced, and given the backlogs that we continue to build, and certainly all the conversations that I'm in with our distributors and customers, is that they're looking for more stuff sooner, and they're looking for shorter lead times than we can currently deliver to. Thanks so much. Thank you. Thank you. Sorry, our next question is from the line of Jeff Hammond from KeyBanc. Please go ahead. Hey, guys. Good morning. Hey, Jeff. Morning. Morning. Craig, just on this data center growth curve, you know, in the slides, you kind of bump it from 16 to 25, and I think, you know, the technology day, you had a different time frame, but I think the pushback of the ten point eight percent growth was like, why isn't it higher? So, just wondering, you know, how maybe we should think about that ten eight differently, and how to kinda incorporate, you know, capacity constraints or labor constraints versus kind of the numbers you put in the deck today. You know, I would say that, what we've seen since we posted those other numbers, which were, quite frankly, a little bit stale, was that we certainly have seen, you know, just fundamental data center market, independent of what's happening with, you know, AI, has been accelerating. You know, the world, as we've talked about before, just continues to generate, process, store, you know, increasing amounts of data. And then on top of that, you have this, you know, explosive trend in AI, and these AI, training data centers, just require and consume just orders of magnitude, more power than a traditional data center. And we're obviously starting to see, those orders and those negotiations come through now. And so that's really what's driving the, the change in the outlook for the market. Not so much that we've decided that, you know, the labor constraints have been resolved, particularly, or any particular power constraints overall have been resolved. It's really simply a function of the fact that what we're seeing in our negotiations, what we're seeing in our orders, have just accelerated that much between the old number and the new number. ... Okay, that's helpful. And then just on the capacity expansion, I think in the three key, you laid out kind of the areas you're bucketing for investment. Can you just talk about what starts to phase in earlier? Do you get any capacity online this year, or is this, you know, more into 2025? And then, you know, if anything is kind of baked into the guide, you know, for these capacity adds this year. Yeah, we do start to see, as I mentioned, in terms of, you know, kind of, you know, what holds, you know, the margin expansion back a little bit, is the fact that we are in fact bringing on and starting up new lines and new facilities, you know, beginning, you know, certainly a lot of the spending in Q1, but certainly in the second half of the year, we start to see some of that capacity come free to the point where we actually have the ability to deliver more. So it's really, you know, second half of this year and then into 2025 in earnest. Okay, thanks. All right, thank you. Thank you. Our next question is from Phil Buller from Berenberg. Please go ahead. Oh, hi. Thanks for the question. We've talked about capacity constraints several times. It sounds like you're pretty much at capacity in places, and I know you flagged this $1 billion of investment. I guess I'm wondering if $1 billion is actually sufficient to capture all that, that growth that's yours to, to lose, I guess, as I'm sure you get a, a really nice return on making those kinds of investments. So do you see an opportunity to invest more beyond $1 billion, for CapEx expansion, or are you choosing not to do so because of these bottlenecks, like other people's labor, perhaps, meaning you don't necessarily need to invest today and instead can, do a bit more on the pricing side? That's question one. Thanks. Yeah, you know, appreciate the question, and, and as you can imagine, we're spending a lot of time right now internally reassessing and reevaluating whether or not we're doing enough. The $1 billion, by the way, that's an incremental number. It's on, on top of the base, so it's just wanna make sure I, I clarified that. Yeah, sure. But we don't intend to be the bottleneck here. We wanna make sure that we have all of the capacity in place to deal with the growth that we see, the forecast that we're getting from our customers, so we are not constraining ourselves with respect to the investments. You know, one of the good things about our business model overall, and I remind the group, is that we do tend to be relatively asset light. A lot of what we do in the electrical business is assembly and test. So we can bring on, you know, relatively, you know, significant amounts of capacity for relatively speaking, not a lot of CapEx dollars. So we do intend to revisit the number, given the fact that our forecasts are going up, especially in certain verticals like data center, to make sure that we do have enough capacity. Thank you. And on that topic, I guess, or an extension of it, the competitive landscape. When markets are as great as this, normally someone tries to find a way to play, perhaps by adding capacity. Are you seeing any shift in market shares, either from traditional players or from new entrants, please? Thanks. Yeah, no, I mean, and it... No, not particularly. I mean, everybody's obviously adding capacity. The market is good for everyone right now. One of the things that we try to give you a sense for how we're doing is that by providing some of these win rate numbers that we showed you for mega projects, some of the win rate numbers that we showed you for non-res construction projects, as an indicator of the fact that we think we're doing very well in the context of this expanding market. So I don't anticipate dramatic share shifts in the market, especially in a period of time when the industry is sold out in so many places. And the other thing I would say in terms of, we oftentimes get the question around new entrants, you know, Chinese competitors and others coming into our market, and I would say that we really are not seeing any material impact from, let's say, the Chinese or other electrical equipment providers in the North America market. We have a strong position here. We have an outstanding channel. We're absolutely well known in the market. The bigger, the more complex the project, the more likely they are to pick a company like Eaton. So I think we're just very well positioned for the future here. Makes sense. Thanks very much. Thank you. Our next question is from Nigel Coe from Wolfe Research. Please go ahead. Thanks. Good, good afternoon. It's just 12 o'clock. Thanks for the question. But these negotiation numbers are just extraordinary. Just wanna make sure I understand, you know, the definition. So would a negotiation be where you have an active negotiation or RFP in place, you know, with a... And this represents the dollar number of potential contracts under negotiation? And then, you know, when you think about, say, a data center or especially a data center, just given the permitting and power challenges, would that project be fully permitted before you get into negotiation situation? Thanks. Yeah. The answer is yes and yes. A negotiation would be a place where we are actually in an active negotiating in response to an RFP, a request for proposal, request for a quote. And certainly, if you think about, you know, data centers and others, once again, these projects tend to be, you know, already permitted down the road. As I did mention in some of the outbound data, you know, there's always been a level of cancellations, especially when you look at some of these mega projects. And we talked about in my outbound commentary, that the cancellation rate that we're seeing is around 10%. That rate's actually below what we've seen historically, but there's always gonna be a certain level of cancellations in any of these projects, but they absolutely, these tend to be, or generally approved projects before we get to a negotiation. Okay. I know you've had about 10 questions on capacity, so let's throw another one. You know, get away from the new greenfield capacity, but think about your existing footprint. Are there opportunities to add another line or another shift, you know, extend over time to increase capacity in the existing footprint? Or is there just severe labor constraints and that's just not on the table? Yeah, I mean, I think it varies depending upon which product line you're talking about. In some cases, it is in fact us adding a line in existing footprint, 'cause we do have capacity to do it. In some cases, it's adding additional shifts, utilizing existing assets. But in some cases it means, you know, a new greenfield facility, and we've had to, in fact, stand up some additional manufacturing plants to deal with the growth that we're seeing. So it's really a combination of all of those and varies, you know, depending upon which particular product line or business you're referring to. Okay, great. Thanks, Craig. Great. Thank you. Okay. Hey, thanks, guys. We have reached to the end of the call. As always, our team will be available to address any follow-up questions. Thanks for joining us, and have a great day, guys. All right, thank you. Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you for your participation using AT&T teleconference. You may now disconnect.