Ladies and gentlemen, thank you for standing by, and welcome to the Eaton second quarter 2024 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you wish to ask a question, please press one, then zero on your touchtone phone. You will hear acknowledgement that you have been placed in the queue, and you may remove yourself from queue at any time by repeating the one-zero command. Should you require assistance during the conference, please press star then zero, and an operator will assist you offline. And as a reminder, today's call 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 second 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 opening remarks by Craig. Then he will turn it over to Olivier, who will highlight the company's performance in the second quarter. As we have done in 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, including adjusted earnings per share, adjusted free cash flow, and other non-GAAP measures. They're reconciled in 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 commentary 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 in our earnings release and the presentation. With that, I will turn it over to Craig. Okay, thanks, Yan. We'll start with some highlights on page 3, and I'll lead off by noting that we delivered another strong quarter, and we're pleased with the first half of the year. Our teams continued to deliver on our commitments, propelled by strong markets and good execution, exceeding our expectations and consensus on strong revenue, margins, and earnings per share growth. We generated adjusted EPS of $2.73 on the quarter, an all-time record, and up 24% from prior year. We also delivered record segment margins of 23.7%, up 210 basis points from last year. Our markets continue to be strong. On a rolling 12-month basis, electrical orders were up 9%, and Aerospace orders increased by 4%. This led to another quarter of growing and record backlogs, up 27% in electrical and 14% in Aerospace, with strong book-to-bill ratios. The strength in our orders and backlogs continue to support our view that the megatrends will keep the company growing for some time to come. We're in the early stages, and once again, our markets are well positioned for the future. And our growing backlog allows us to once again raise our full year guidance. We're raising our guidance on organic growth, segment margins, adjusted EPS, and cash flow for the year. On balance, we're very pleased with our results, and we're well positioned for the second half of the year. Turning to page 4, we once again are sharing the key trends in end markets that are expected to drive Eaton's long-term growth. The broad number of megatrends noted on this chart have created and will continue to create a strong growth environment for the above end markets. Eaton is uniquely positioned in that these are our primary end markets. As a reminder, we're in the early phase and expect to see growth for years to come. Today, we'll continue our practice of covering one of these megatrends and how it's impacting growth in one of our key markets. Last quarter, we gave an end market update on our industrial facilities end markets, as well as our latest view on growth expectations in the rapidly growing data center market. Today, we'll once again provide an update on reindustrialization through the lens of mega projects, where the activity just remains extremely robust. We'll provide a summary of our growth outlook for our single largest end market, commercial and institutional facilities. Before turning our attention to a specific market, we did want to once again remind you of the broad-based nature of our growth expectations. So turning to slide 5, we summarize the growth rates in our key end markets. This data has not changed from what we shared in recent quarters or at our technology showcase earlier this year. And I'd say in many ways, this is a once-in-a-lifetime opportunity in that the megatrends we shared are having a broad and significant impact on the growth outlook for most of our end markets. And we're seeing the benefit in our sales results, and more significantly, in our orders, backlog, and negotiation pipeline, all of which are at record levels and growing. And we'll share on a few slides, we're investing to support the orders and commitments that we received from our customers. Turning to slide 6 in the presentation, we once again provide a summary of mega projects that have been announced in January of 2021 in the North America market. As a reminder, a mega project is a project with an announced value of $1 billion or more, and the list now includes 444 projects and $1.4 trillion of cumulative value. This is double where we were this time last year, and the backlog for mega projects now stands at $1.6 trillion, up some 25%. You know, it's important to point out that we have not seen any slowdown in the number of announced projects. In fact, Q2 was one of the strongest quarters ever. Recently, we've seen data center and power generation/renewable projects take the lead in new project announcements. These two project types represent some 40% of announced projects in the last 12 months, and the cancellation rate continues to be modest, around 11%, which is well below historical levels. Note that only 15% of these projects have started, and for projects that have started, we've won over $1.4 billion of orders, and our win rate has been approximately 40%. We're actively negotiating another $1.3 billion of electrical, there's lots more to come here. Turning to slide 7, we continue to highlight the commercial and industrial end markets. For 2023, commercial and industrial institutional end markets represented 20% of total Eaton sales and 28% of our electrical sales. For Eaton overall, we estimate that new office real estate exposure is only 2%-3% of our revenues. We know that this has been a concerning point for some of you, but as you can see, it represents a very small part of our sales. While the entire category is growing, we expect to see significant strength in the Institutional/I nfrastructure segments, which represent 50% of our C&I exposure in Electrical Americas. Institutional infrastructure includes education, healthcare, government, and includes waste and wastewater. I'd also point out that the electrical content in these two segments is much higher than office buildings and other light industrial projects. Excuse me, light commercial projects. And as noted, the same set of megatrends, including digitalization, energy transition, and stimulus spending, are also driving outgrowth in this segment, and something that we expect to continue for years to come. On slide 8, we provide an overview of the products and software that we sell as a part of our commercial and institutional building portfolio. We include this slide to provide a perspective on how broadly we play across the electrical infrastructure and buildings. In fact, we have the industry's broadest set of electrical solutions. Some of the newer categories for us include energy storage, EV charging network managers, microgrids, and microgrid controllers that control energy behind the meter. In addition to the entire suite of digitally enabled hardware, we have our Brightlayer software suite that does energy management across the building and campuses, all of which are supported by our comprehensive service organization. On slide 9, we want to provide an update on our incremental growth investments. As a reminder, we're investing more than $1 billion of incremental capital to support growth, with $750 million in North America over the next few years. These investments expand our production capacity for a variety of products and support most of our electrical end markets. As you're aware, the market has several capacity constraints, so we're working closely with customers to ensure that our capacity additions are in line with the demand and, in many cases, our contractual agreements. To provide you with a feeling of the magnitude of these investments, we'll impact 25 of our sites and add over 2 million sq ft of manufacturing space. Overall, these projects remain on track, with many sites already ramping up new capacity. Additional production capacity will be coming online later this year and into the first half of 2025. To note a couple of recent milestones, we recently opened a new state-of-the-art campus in Helsinki to increase capacity of UPS systems, and this obviously includes our latest EnergyAware UPS. This is actually the industry's leading UPS and is 30% smaller than most of the competitive products. Most recently, we signed an agreement to build a new electrical campus in Dubai to expand our commercial, manufacturing, and support functions in the rapidly growing Middle East region. Turning to page 10, we're excited to have closed a strategic investment in NordicEPOD. NordicEPOD designs and assembles standardized power modules for the European data center market. What's unique about their solution is that it's a design that's standardized, and it's a pre-engineered system that allows for faster market response. The standard power module, or EPOD, contains all the critical power, electrical gear, backup power, cooling, and control systems needed to support a data center. The EPODs are manufactured in Norway, are designed to operate in harsh weather environments, and can supply up to 2 MW of electrical power. I'd also note that the power modules are increasingly preferred approach for many of the data center customers in Europe, and Eaton will naturally supply a significant amount of the electrical equipment and services. This is an outstanding new platform that will allow Eaton to increase our participation in the rapidly growing European data center market. Now, I'll turn it over to Olivier, who will take us through the financial results for the quarter. Thanks, Craig. I'll start by providing a summary of our Q2 results. We posted record sales of $6.4 billion, up 8% in total and up 9% organically. This represents 9 quarters of growth, over 20% on a 2-year stack. We posted record segment profit and margins. Operating profit grew 90%, and segment margin expanded 210 basis points to 23.7%. Adjusted EPS of $2.73 increased by 24% over the prior year. This is a quarterly record and well above the high end of our guidance range. This performance resulted in Q2 record operating cash flow of $946 million, up 11% year-over-year, and Q2 record free cash flow of $759 million, up 10% versus prior year. On slide 12, we summarize Electrical Americas' very strong results. We continue to raise the bar, setting new records for sales, operating profit, and margin. Organic sales growth remained strong at 13%, which reflects strength in data center and industrial end markets. On 2-year stack, organic growth is up 32%. Electrical Americas has generated double-digit organic growth for 10 consecutive quarters. Record operating margin of 29.9% was up 350 basis points versus prior year, benefiting from higher sales and manufacturing efficiencies that were partially offset by higher costs to support growth initiatives. On a rolling 12-month basis, orders were up 11%, demonstrating strength across the various megatrends. We had particular strength in the data center end market. Also, our major project negotiations pipeline in Q2 was up 18% versus prior year and up 42% since Q2 2022. Electrical Americas' backlog increased 29% year-over-year, with a book-to-bill ratio of 1.2 on a rolling 12-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. Next chart summarizes the results for our Electrical Global segment. Organic growth was up 3.5%, partially offset by FX headwinds. We had strength in data center markets, partially offset by weaknesses in residential end markets. Regionally, we continue to see strength in our APAC and GEIS businesses, partially offset by weakness in our EMEA business. Operating margin of 19% was up 50 basis points versus prior year, driven by higher sales and operating efficiencies, partially offset by wage inflation. Orders were up 7% on a rolling 12-month basis, with strength in data center and utility end markets. Book-to-bill continues to remain strong. Q2 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 Q2, we posted organic growth of 10% and segment margin of 26%, which was up 260 basis points over prior year. On a rolling 12-month basis, orders were up 9%, and our book-to-bill ratio for our electrical sector remains very strong at 1.1. We remain confident in our positioning for continued growth with strong margins in our overall electrical business. Page 14 highlights our Aerospace segment. We posted record sales and a Q2 record operating profit. Organic growth was 13% for the quarter, driven by strength in Commercial OEM, Commercial Aftermarket, and Military OEM. Operating margin of 21.5% was down 100 basis points year-over-year, driven by operating inefficiencies and higher cost to support growth initiatives that were partially offset by higher sales. On a rolling 12-month basis, orders increased 4%, driven by Commercial OEM and Aftermarket. Within the quarter, orders increased 21% year-over-year, with Commercial OEM up 22% and Military OEM up 53%. Year-over-year backlog increased 14% and was up 3% sequentially. On a rolling 12-month basis, our book-to-bill for our Aerospace segment remains strong at 1.1, and we are pleased with more than $2 billion life of program wins in the quarter. Moving to our Vehicle segment on page 15. In the quarter, total revenue was down 4%, including a 3% organic decline and one percentage point of unfavorable effects. Weakness in the North America light vehicle market and European truck was partially offset by strength in South America. Operating margin came in at 18%, 270 basis points above prior year, driven by operating efficiencies offsetting lower volume. We are pleased to have won $83 million in multi-year sales across our commercial and passenger vehicle portfolio. On page 16, we show results for our eMobility business. Sales were up 18% on an organic and total basis. Our organic growth significantly outperformed the market, driven by new program ramp-ups in the European market. Operating profit was $2 million, and we continue to incur launch costs related to new programs expected to ramp up over the next coming quarters. In the quarter, we also launched major power protection programs, battery disconnect units, and breaker, and were awarded additional $82 million in multi-year sales. Moving to page 17, we show our Electrical and Aerospace backlog updated through Q2. As you can see, we continue to build backlog, with Electrical stepping up to $11.4 billion and Aerospace reaching $3.5 billion, for a total of $14.9 billion. Versus prior year, our backlogs have grown by 27% in Electrical and 14% in Aerospace. Electrical backlog benefited from acceleration in order intake from tailwinds of the secular trends, including hyperscale orders within the data center end market. As noted earlier, book-to-bill ratios for Electrical and Aerospace are 1.1 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. Thanks, Olivier. In turning to page 18, we show a summary of our end market growth assumptions for the year. Overall, our markets continue to perform as expected, and most of these indicators have not changed from what we shared during our last two earnings calls. We are, however, seeing stronger than expected growth in data centers and in commercial and institutional markets in the U.S., which is why we're raising our revenue growth guidance for the year. We continue to expect growth in about 80% of our end markets, supported by the key megatrends of electrification, energy transition, reindustrialization, and digitalization. Moving to page 19, we show our fiscal year organic growth and operating margin guidance. Overall, our 2024 organic growth is now expected to be between 8%-9%, which is an increase of 50 basis points at the midpoint. We're raising our organic growth guidance in Electrical Americas by 150 basis points to 11.5%-13.5%, from 10%-12%, and in Aerospace by 100 basis points to 10%-12%, from 9%-11%. We're lowering and tightening the range of our eMobility organic growth guidance to 17%-23%, given the well-reported softening in some of these end markets. And we're reiterating the growth guidance for the remaining segments. For segment margins, we're increasing the company's margin guidance range by 50 basis points at the midpoint to 23.5%. This is driven by the improved outlook in Electrical Americas, where we're seeing strong demand and strong operational execution. In this segment, we're increasing our margin outlook by 90 basis points to a midpoint of 28.9%. We're also reiterating our guidance for the remaining segments, and, you know, we're well positioned to continue to deliver strong financial performance for the balance of the year. On the next page, we have additional guidance for metrics for 2024 and Q3. For 2024, our adjusted EPS is expected to be between $10.65 and $10.75 a share. The $10.70 midpoint represents 17% growth in adjusted EPS over the prior year, a $0.55 increase over the initial 2020 guidance, and a $0.30 increase over the prior guidance. We tighten the range for free cash flow and now expect $4.2 billion-$4.4 billion for operating cash flow and $3.4 billion-$3.6 billion for free cash flow, an increase of $100 million at the midpoint on both measures. For Q3, we expect organic growth to be between 8% and 9%, segment margins to be between 23.5% and 23.9%, and adjusted EPS in a range of $2.73-$2.83 a share. So let me just close with a summary on page 21. Once again, the trends driving growth in our markets continue to play out as we expected. Even better, in our Electrical Americas business, driven by data center markets and the reindustrialization trend that we're seeing across multiple markets in North America. We also delivered a strong quarter of financial results and continue to see outstanding execution on our key initiatives across the company. As a result, we raised our guidance for organic growth by 50 basis points, our segment margins by 50 basis points, and our adjusted EPS by $0.30 at the midpoint. In the quarter, we were especially pleased to see the strength in our negotiations, our orders, and our growth and backlog, all of which are at record levels, validating our medium and long-term growth outlook. So we leave the quarter with a high level of confidence when we say, Eaton will deliver higher growth, higher margins, and consistent earnings growth for years to come. And with that, I'll open things up for any questions you may have. Hey, thanks, Craig. For the Q&A today, please limit your opportunity to one question and one follow-up. Thanks in advance for your cooperation. With that, I will turn it over to the operator to give you guys the instructions. Thank you. Ladies and gentlemen, if you wish to ask a question, please press one then zero on your touch tone phone. You will hear an acknowledgment tone that you've been placed in the 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, please press one then zero at this time. The first question will come from the line of Joe Ritchie from Goldman Sachs. Please go ahead. Thank you. Good morning, everyone. Morning, Joe. Hey, Craig, I want to start with, I guess maybe just a longer-term question on, I'm sure you witnessed what happened with, the PJM auction this past week and how they saw record-high prices. I'm just trying to get an understanding for ultimately what that means for your utility business going forward and when you can maybe start to see an inflection. I know that business has been growing well, but maybe see a further inflection given how tight capacity is. Yeah, I mean, as we've talked about, Joe, and appreciate the question, that, you know, the utility market is just one of many markets for us that we're absolutely thrilled about the growth prospects on. I mean, as we talked about, you know, these big trends of, you know, beginning with energy transition, the electrification of the economy, climate change, and the need to build grid resiliency. You know, all of these factors converging at the same time are just creating, you know, a pretty unique set of conditions in terms of those opportunities into utility markets. And, as we talked about before on this call, one of the longest lead time products that probably exists in the electrical industry is getting an electrical transformer. So I'd say that business for us is, it is a big part of the company. It's, you know, some 15%, as we said, of our total market exposure. We talked about our long-term growth rates being in the kind of the low teens for that business. And so we are already seeing, you know, quite attractive growth in the utility market, you know, including in this current quarter, and we expect it to go on for some time to come. Yeah, that's, that's, that's helpful, Craig. And I know I like that you guys highlighted the investments that you're making to increase capacity. I guess if I take that 2+ million in additional square footage, like, what does that represent as a percentage of your total, you know, capacity today? And then as you think about how much leeway that gives you or flexibility that gives you in the coming years, does that make you good through, you know, 2027, 2028? Like, how much flexibility does this give you? You know, I appreciate the question. In terms of a percentage, [Ed], I don't have that number offhand. So we can certainly get that number for you. But I think the way to think about it is that, you know, in every one of those businesses where we are capacity constrained, we're making investments in capacity to deal with, let's call it today, our midterm outlook. Obviously, depending upon which piece of the business you're talking about, the response time to put on new capacity varies widely. We can do it relatively quickly in our electrical assemblies businesses. In a business like transformers, for example, that go into, you know, lots of different markets, not just the utility market, the lead times there tend to be longer given the type of manufacturing. And so I would just tell you that today, we're investing to win here. We're making the investments that our customers expect and need us to make, and in many cases, we're getting long-term commitments from customers to ensure that we're not putting in too much capacity. But I can just say it's something that we've done for a long time. We know how to do it well, and we're going to be ready to support our customers as they continue to grow. Appreciate its color. Thank you. Thank you. Thank you. The next question is from Jeff Sprague from Vertical Research Partners. Please go ahead. Hey, thank you. Good morning, everyone. Hey, good morning. Craig, really solid results and outlook. As you may or may not be aware, because you're not watching everybody else's prints like we are, but sort of the takeaway from the week has been, you know, companies kind of missing and lowering or making the numbers, but cutting organic growth on- ... you know, weaker project-related outlooks. And, I'm not surprised you're outperforming, given kind of the secular exposures you have. But, where you have exposure to smaller projects or machine OEM and things like that, are you seeing pockets of weakness underneath the surface? Again, obviously being masked by data centers and other things, but, just kind of the general lay of the land and the industrial landscape out there. Hey, Jeff, appreciate that question. One of the things, if you recall, that we've reported on during the last earnings call, because one of the things we wanted to convey was that we're spending a lot of time focusing on mega projects because it is a fundamental change from the historical patterns in the industry and the sheer number and size of them, and it is changing the dynamics of the business in terms of our order flows. But the small projects as well, those projects that are under $1 billion, what we reported during the last earnings call is that we're seeing a very similar pattern of growth in projects under $1 billion. In fact, I don't recall the number offhand, but it was 16%. What? 16%. 16%? Roughly, yep. Up 16%. Yeah. So we are really seeing a broad-based increase in, you know, our project-related business, whether it's the mega projects that we spend a lot of time talking about or the stuff that tends to be more of the smaller, flow projects that we've always seen inside the business. And so, no, I would say today, you know, we have not seen any letup at all in the level of activity. And as we talked about in the mega project slide, Q2 was one of the biggest quarters ever. Those projects continue to come in at a significant rate. Our negotiations, you know, overall in our Electrical business continue to be at record high levels. And so, you know, we're obviously mindful and watchful, but we've not seen a slowdown. And by the way, I'll assure you, by the way, we do watch all the other prints as well. We are obviously, you know, staying attuned to what's going on more broadly in the marketplace, and, our business continues to do well. Wow, interesting stuff. And then, maybe, maybe just a little bit more color on, you know, on the global side of Electrical. Olivier hit some of it, you know, in his prepared remarks, but, you know, some of these secular forces ought to come to bear, you know, in Europe and elsewhere eventually. Is it just resi weakness and kind of general, you know, kind of macro-related pressures that hold it back? Obviously, I'm not expecting it to grow like Americas, but it just seems like there should be prospect for growth there to pick up, maybe, perhaps as we move into next year. Yeah, I think, I mean, your, your statement is largely accurate, that the, the megatrends that we talk about of energy transition, electrification, you know, digitalization, all of those trends are, are just as relevant in Europe as they are in, in, in the North America market. You know, I would—I will say, though, if you think about, you know, some of the big differences in what's driving, perhaps, this outperformance in the U.S., is really a lot of reindustrialization, a lot of, you know, investments in manufacturing and LNG and, and other sectors, data center, where you have manufacturing that has historically taken place in other regions of the world. Now, those investments are being made in the U.S. Obviously, these investments are also being helped and supported by a number of these stimulus programs as well. And so over time, we would clearly expect Europe to see more significant impact. Although within those same verticals, data centers, for example, utilities, we are seeing good growth in our global businesses, not at the same extent as the U.S., but it's being overwhelmed by the macro in the market, for sure, in terms of just the overall, you know, economy that we see in Europe, and you don't see the same reindustrialization trend taking place there. Great. Thank you, Paul- On balance, you know, you know, markets overall doing well, and we're pleased. Great. Thank you. Thank you. The next question is from Andrew Obin from Bank of America. Please go ahead. Oh, yes, good morning. Morning, Andrew. Just want to touch on, maybe just digging a little bit more into AI data centers. Can you just talk about sort of the pace of electrical orders and your win rate on, specifically on the AI data center side? Thank you. Andrew, I appreciate the question, as obviously this is perhaps the hottest topic in the world right now in terms of what's going on with AI and how that's driving, you know, increased investments in data centers. As I think this group is well aware, you know, these AI-centric or training data centers consume a lot more power and a lot more electricity than your conventional data center, so the basic cloud-based data centers. You know, the first thing I would say is that when you think about the growth that we're seeing today in our data center business, and you think about the growth projections over time, very little of this today is a result of specific investments in AI. It's coming. We're quoting a lot of projects. I think if you take a look at what the industry, some of the industry leaders talked about last year, that, you know, 5%-10% of their capital spending is in AI-related, you know, data centers. So I would say most of the growth related to this expansion that we expect to come is still out in front of us with respect to AI data centers. It, it, it's coming, and I'd, I'd say in terms of its contribution to our orders is very much aligned with that. Most of the orders that we're getting, you know, 90%+ of the orders that we're getting, are really tied to your conventional data centers as more and more companies like our own move, you know, applications to the cloud from on-premise. If you think about this, this massive increase in data that we're all generating, consuming, and storing, that's really what's driving the growth in data centers today. And AI, I would tell you, is still largely a future. And in fact, when you look at the total backlog today of data center projects, close to $140 billion, and if you look at that in the context of historical build rates, that's eight years of production, and we haven't yet hit the inflection point yet for AI. So we think what happens ultimately is that this market expansion and this build-out cycle just gets extended for quite a number of additional years. Oh, great to hear. Thank you for a comprehensive answer. Another question, just to follow up on capital allocation, just buybacks. You bought back, I, I think, $740 million in the first half. So how should we be thinking about the cadence of buybacks for the balance of the year? Andrew, we see today, based upon what we see in the market, a strong upside in the value of our stock, so we will continue to buy back shares. We have said that we would buy back about $2 billion for the year. That's what the midpoint of our guide implies. But based upon where we see the stock price today, we believe we will be more at the high end of our guidance range, and we would balance this buyback between Q3 and Q4, but we will remain obviously opportunistic, Andrew. Thanks so much. I'll go back in the queue. Thank you. Thank you. The next question is from Steve Tusa from JP Morgan. Please go ahead. Hi, good morning. Morning, Steve. Congrats on another strong print here. Good execution. Just on the backlog, can that continue to grow in Electrical, you know, through the rest of this year? You know, I, I think it's, it's a great question, and, you know, if you'd asked me that question at the beginning of the year, I would've imagined that we would start to see a leveling out in the backlog and perhaps even eating some backlog this year. But, you know, and given how strong markets have remained, you know, the backlog, as we talked about, up 27%, year-over-year, growing still quarter-over-quarter. You know, from where I sit today, Steve, and based upon the, you know, the activities and the negotiations we're seeing, you know, my guess is we'll probably continue to build backlog. You know, the industry as well is, it's reached a level where, you know, there are some constraints today that are, quite frankly, you know, limiting our ability to produce at the rate at which, you know, we're receiving orders. And at some point, those will certainly converge. But I would say, tough to tell for sure, given this, you know, especially the advent of these big mega projects and what they do to your backlog. And, you know, the other dynamic that we've talked about before that's taken place in the industry is that we are having some of these, you know, big, you know, hyperscale data center customers giving us multiyear orders. So it wouldn't surprise me at all that the backlog continued to grow. Great. So, like, sequentially for the next couple quarters, effectively, you can grow backlog for three and four Q? You know, I think the truth is I don't have... I don't know. I can't really give you a definitive answer. Yeah. I mean, you know, the negotiations are up, what, 18% or so in our Electrical business, and so we continue to grow our negotiations, and we're growing our negotiations at a faster rate than we're growing our sales. That math would suggest that it's certainly possible that, you know, we're gonna continue to build backlog. But we'll just have to wait and see, you know, how it all plays out. Okay. And then just one more on the Electrical margins. I think last quarter, you guys talked about some investments hitting the margins, but you know, here we are again with another you know pretty nice upside print on that front. You know, you raised the guidance for the year. It does show a bit of a step down in incremental. Still very strong in the second half, no doubt about it. What's driving the step down in incrementals? Again, I'm not saying it's negative or anything like that. I'm just saying it's I wanna kind of understand as things mature in the back half, what's the bit of the step down in incrementals? No, no, appreciate that question, and without a doubt, a very strong first half of incrementals in our Electrical businesses. And I'd say that lots of contributions from our team's execution, and quite frankly, we've had, on a relative basis, more higher contribution of price in the first half than we had we'll have in the second half of the year. And, you know, very much consistent with what we mentioned last quarter, we are ramping our spending. We have capacity coming online that brings obviously depreciation, and obviously the work that we need to ramp up new capacity. And we continue to make growth investments in the business, and those tend to be more heavily backed and loaded. Clearly, you know, those margin numbers, you know, that we provide to you is our best view. Our teams have continued to surprise us as well with their execution. If you think about the electrical margins, you know, the range that we provided, I think the range is a good range, and we're hopeful that they can be at the higher end of the range, but at this point, that's our best view. Yep. Great. All right, thank you. Thanks for the detail. Thank you. The next question comes from the line of David Raso from Evercore ISI. Please go ahead. Yeah, hi, thank you. Electrical Americas on price cost, can you give us some update on where we stand on that right now? Particularly, if you can give us any sense of volume versus price in the Electrical Americas growth, which, you know, 13% this quarter, 17% last quarter. And then also, given some of the long lead times, how should we think about, as we sit here today, pricing power into 2025? Thank you. Hey, appreciate the question, and I would say that, you know, certainly, you know, as we come through this inflationary period over the last couple of years, we were a little bit upside down for a period of time on price versus cost. Today, I'd say that equation is back balanced, which means not only that are we recovering the inflation, but the incrementals that we need to maintain our margins. And so fairly balanced today between what we'd expect to see from the business in terms of the relationship between price and cost. On volume versus pricing, as I mentioned a moment ago, obviously, we, you know, our pricing in the second half of the year will be less on a year-over-year basis than we saw in the first half, and that's simply a function of timing of when prices went in last year, so it's kind of in the base already. And so I, I would say today, you know, volume versus price, specifically in terms of separating those two pieces, as we've said before, we don't provide that number, and we don't provide that number, you know, for, we think, a, a lot of the right reasons in terms of the variability, depending upon who the customer is, and inflation varies by customer, and our ability and need to recover varies by customer. So we don't wanna create an unintended problem for ourselves by separating the two, when that number could be different for one customer versus the other. To your point on, you know, this balance between, you know, pricing power today, within the business, I'd say we continue to be in an advantageous position with respect to our overall demand versus capacity. And so I would expect, you know, as we go forward, you know, that we continue to be in an advantageous position. What we've said historically, and continue to believe, that we have tremendous opportunities to expand our margins by running the company better. And as we think about the margin expansion that, that's in front of us, and there is plenty of opportunities to expand margins every place, it will largely come from our abilities to run the company better. Quick follow-up. Electrical Global, the rest of the year, the revenue growth organically has to accelerate to up 5, after the first half was, you know, 2.2 and change. Is that simply the function of the easier comps in the second half, or is there anything you're seeing that would suggest that could accelerate? No, and it's largely a function of comps. You know, the European market, you know, the Electrical Europe market, if there's been a market that's been a little bit of a disappointment this year relative to our expectations coming into the year, it would have been the Electrical business, specifically in Europe, that's embedded in our Electrical Global segment. Asia is doing great, you know, high single-digit growth. We're doing fine in our GEIS business, but we have had some a little bit weaker results in markets, specifically, and you see all the data coming out of Europe, so we're not at all unique in that regard. But we think pretty much, it's really a function of comps, more than it is. We expect a second-half turnaround in the European electrical market. Thank you. Thank you. The next question is from the line of Deane Dray from RBC. Please go ahead. Thank you. Good morning, everyone. Morning, Deane. Deane. Hey, wanted to stay in Electrical Global, if we could, and could you put the spotlight on your data center business outside of the U.S.? Talk about win rates and market share, because, and, you know, how much of that is in that segment today? And I would have thought that would be lifting the growth rates a little bit more, but just some color there would be helpful. Yeah, and appreciate the question, Deane. You know, I will tell you that today, very much consistent with the balance of the Eaton franchise, we don't today have as much, let's say, electrical content in a data center in Europe as we would have in North America. That's just largely a function of the share position that we have in North America, in not just UPSes, but in electrical switchgear, in products like transformers. So in the North America market or in the Americas market, we have the ability to sell a complete suite of solutions end-to-end into data centers. In the European market, we don't have the same strength. We have the same strength, for example, in UPS, but we wouldn't have the same, let's say, position of strength in the electrical switchgear. The other thing I want to add is that when you look at the data center market in Europe as a percent of the total market, it represents a much smaller share of the total business. And so those are really the factors that I'd say are really, you know, holding back the relative, you know, results of our global business versus the Americas. One, just the breadth of the portfolio. Secondly, the size of the relative market. As you know, historically, Europe has been much more focused on manufacturing and, you know, machine or MOEMs and automation in many ways in the data center space. That's really helpful color, and thanks for that distinction. And just sticking with data center, if you think about your backlog today on your quote activity, how far out are the deliveries? Are you? I would imagine it's over two years now, especially in transformers, but any kind of color there, please. Yeah, you know, I'd say that, you know, when you think about it, you know, I, I guess it depends upon your perspective on, you know, I think I told you, the industry in data centers is looking at perhaps as much of as an eight-year backlog, unless, fundamentally, we find a way, collectively, across the industry, to step up what we do in building out data centers at a much faster rate. It's one of the reasons, for example, we talked about this deal that we did in Europe, you know, to do these EPODs, which is a standardized modular design, something that enables you to stand up a data center in a much shorter period of time than we have historically. So I think the question becomes, as I think about Eaton, in terms of our constraints, the bigger constraints will not be what comes from Eaton. It will be largely what comes from the industry and the industry's ability to find the land, to find the power, to build out the data centers at a faster rate than they have historically. So we're gonna be fine in terms of what we do. We're not gonna be the bottleneck for the industry, but the industry will have challenges to keep up with this growth rate. Thank you. Thank you. Appreciate it. Thank you. The next question is from Julian Mitchell from Barclays. Please go ahead. Hi, good morning. Good morning. Maybe good morning. Maybe just a question around the Electrical sort of products side of things. I think that, you know, when we look at that business, for example, in the Americas, it's been fairly sluggish the last kind of nine months versus very, very high growth in systems. And there was maybe some destocking that had weighed on that, that's now passed. And then to a degree, a similar phenomenon in the Electrical Global side with weaker products and pretty good systems growth. So just wondered sort of how you're thinking about that product piece from here. I think the systems revenue growth, we could sort of rightly or wrongly, take for granted for a few quarters because of the very large backlogs. But products, I suppose you have this mix of easier comps in the back half, but also maybe the short-term macro numbers per the ISM this morning and so forth are worse. So maybe help us understand kind of how you see that product side of things, revenue-wise, in EA and EG playing out. Yeah. Hey, appreciate the question, Julian, and I know it's oftentimes challenging to really give an insight into what's going on in these individual markets. And as I think most of you are aware, we really don't look at our business anymore by products versus systems. We really look at it largely around the various end markets that we sell into. And to your point, Julian, there are certain end markets that we sell into that tend to be more product-centric versus system-centric, but we really do look at it by end market. If you think about an end market of resi, you know, the residential market, which today, you know, would account for maybe, you know, 12%-13% of our total business, that market has clearly been slow. We think we've seen some evidence of bottoming in general, but that business today, comps get much easier going forward, and we think, you know, perhaps with some, you know, cuts in the federal rate, federal funds rate, that we'll see that business start to take off. But once again, it's a smaller part of the company. The same thing could be said for what's happening today in what we call MOEM, you know, the machine builders. We do sell components into that market, and that market has been weak, especially in Europe, which tends to be more manufacturing-centric. Once again, has that market bottomed? We think so. The comps do get easier, so we'll just have to wait and see. But most of our businesses, if you think about it in the context of the end markets that we sell into, be that data center, utility, industrial, commercial, institutional, which is the way we think about the business, we, we're not, we're not seeing any sluggishness. And obviously, whatever sluggishness we're seeing in these smaller pieces of the portfolio are being more than offset and overwhelmed by the megatrends and what's going on in the biggest part of our business. So, so hopefully that's helpful to you in terms of, you know, as we think about it, it's really, if you want a proxy for products and the way you think about it, it's what's happening in resi and what's happening in, let's call it, MOEM, machinery OEMs, would be probably the, the best two proxies for products inside of Eaton. Yes, it has been slow. Maybe we're reaching a bottom. Comps do get easier going forward. Thanks very much, Craig. And then just a more sort of short-term question, looking at maybe margins for a second. So I think the guidance seems to imply it's sort of midpoints and so on, and aware there's some rounding, no doubt. But it seems to imply the operating margins are sort of flattish sequentially in Q3, I think, and then sort of flat year-on-year. And then in Q4, it looks like they're sort of flattish again, sequentially. So just trying to understand that, 'cause I suppose normally the operating margin goes up sequentially in Q3, down sequentially in Q4. And then as we're thinking year-on-year, you know, understand your investments are stepping up a bit, that's crimping the firm-wide operating leverage in Q3. But it's sort of interesting that the margins are guided to be flat despite the 8%-9% growth. Yeah, you know, what I would tell you, you know, and as we talked about this one a little bit already, Julian, is that we are investing. We are bringing on additional manufacturing capacity, and that brings on, obviously, startup expenses. It brings on depreciation. We are investing in commercial front-end resources to essentially, you know, deal with the growth that we're seeing. And so, yeah, I mean, margins, you know, on balance in the back half of the year, you know, flat. We'll see where we end up, but that's essentially our current view. And, you know, if our team continues to execute as well as they have, there could be some upside there, but it's our current view from where we sit today. Thanks very much. Thank you. The next question is from Nicole DeBlase from Deutsche Bank. Please go ahead. Yeah, thanks. Good morning, guys.. Morning. Morning. So another really strong set of results. I guess maybe the one blip was Aerospace margin down year-on-year. I guess I'm a bit surprised that you maintained the full year of guidance. It embeds a pretty big step-up in second half. So can you just talk about what happened with Aero margins in the second quarter, and then what drives the implied step-up in the back half? Yeah, I appreciate the question, Nicole, and I would just say that, you know, in Aerospace, you know, margins can be lumpy. And that's largely because there's such a big difference between, you know, margins and aftermarket and margins on OEs and which OE platform do you ship and how much in a given quarter. So I would just say, I would just think about it as noise. We're confident in the second half outlook. It's based upon, you know, essentially, you know, orders that we have in-house and have pretty clear visibility. So we're confident in the outlook, and I would just look through the noise in the quarter and attribute it largely to, yes, we had some operating inefficiencies in the quarter. They will go away, but mostly it's a function of mix that we ship in a given quarter that really drives the margin outlook. Got it. That makes sense, Craig. And then I guess, on the NordicEPOD investment, is there an opportunity to bring that modular solution to the U.S., or do you view that as more as a European-centric opportunity? Thank you. Yeah, you know, we'll have to see how the North American market evolves. I mean, modular solutions, we see it in Europe for sure. We see it in Asia, you know, two regions of the world where we're tending to see more of this modular approach to data center build-out. The U.S., especially the hyperscale customers, tend to be more specific and customized in their build. So we'll have to wait and see how that plays out, but as of today, it does tend to be more what's taking place outside of the U.S. versus what's in the U.S.. Thank you. I'll pass it on. Thank you. The next question is from Scott Davis, from Melius Research. Please go ahead. Hey, good morning / afternoon. I think it just turned afternoon, but anyways, good morning and congrats on the results. Thanks, Scott. Appreciate it. Last couple years. Craig, a couple kind of small things. I mean, you quote the 40% win rate. If I don't recall what that was historically, but if you went back, like, 5 years or something, would it be in that ballpark? Is this meaningfully higher than that, than maybe where you guys were historically? Yeah, I would say that the win rate, and once again, you know, we're relatively early, right, in mega projects overall, with some 15% of them having started. And so it's a good start at 40%. That would be, you know, higher than our underlying market share in North America. And so clearly, we're encouraged by, you know, by the start that we're seeing. But I would say in general, the bigger and the more complex the project in general, the more likelihood that Eaton is gonna win, and our market share in general tends to be higher in larger, more sophisticated projects. Yeah, that makes a lot of sense. Then, Craig, not that anybody's chasing you out the door, you've done an amazing job, but any update on the CEO succession? No, I'll just say thank you, first of all, for the acknowledgment. It's been a pleasure, and it will continue to be a pleasure. You know, as everybody on the call is probably aware, we have a mandatory retirement age of 65. I'll turn 65 in May of next year, and I'll leave at the end of May. In the meantime, I'm continuing to enjoy the job and having a lot of fun and, you know, can't think of a better time, by the way, to be, you know, in my chair and be a part of these industries that we're associated with. But the board is very busy working on that particular question, and we certainly will announce things as soon as the board is ready to share their feedback and their decision on who's gonna be the next leader. Well, they'll have big shoes to follow in. So, best of luck. I'll pass it on. Thank you. Thank you. Thank you. The next question is from Nigel Coe, from Wolfe Research. Please go ahead. Thanks. Good afternoon, everyone. And Craig, what an amazing career you've had. So, I know you're not leaving. This is not the last call, but, I just wanna acknowledge you've done a fantastic job here. So on the investment spending, the $1 billion, 2 million sq ft of additional capacity, can you just remind us where we are in that ramp up? You know, when does that capacity come online? And I know it's come on in sequences, but, can you just give us a sense there? And this investment spend, sort of sequentially in Electrical Americas, is that mainly depreciation, or are there some other cash expenses to think about as well? Yeah, so the first question around when, and I'd say, you know, really, I would tell you that it really starts beginning in the second half of this year, where some of the investments that we announced in the early part of, you know, that $750 million North America spend, it really starts to come online this year. Some of the other investments that tend to be a little longer term, maybe towards the end or so of next year, or even some into 2026. But I'd say it really does begin, beginning in the second half of the year, where we're adding capacity. It allows us to obviously address the overall market demand and some of the backlog that we see. I'm not sure I understood the second part of the question, though. Maybe, Nigel, you can, you can remind me. Yeah, yeah. So, you know, the spending, the kind of investment headwinds in Electrical Americas that you're referencing, is that mainly depreciation on this new capacity, or are there other investments that we should think about as well? Yeah, no, there certainly it's depreciation, and then it's also the ramp-up cost, right? When you ramp up a new manufacturing facility or a new line, you know, there's obviously inefficiencies that you have to absorb until these lines come up and reach, you know, their targeted capacity levels. And so there's manufacturing inefficiencies, there's depreciation, and then there's investments that we're making in our commercial front end to really, you know, address some of this growth that we're seeing, both now and into the future. Okay. My follow-up question is, I guess related in some ways, but, you know, the announcement by Cleveland-Cliffs, can't believe I'm actually mentioning Cleveland-Cliffs on this call, but, you know, they have announced a transformer manufacturing investment of, you know, $150 million, three-phase transformers, which I thought was kind of random. But, I'd be interested to kind of get your view here on, in terms of, you know, kind of a new entrant in this market. You know, kind of how much capacity are we seeing coming online in transformers? And how long do you think this market's gonna be undersupplied for? I mean, are we still undersupplied for the next couple of years? Any thoughts there would be great. Yeah, I mean, we, we've obviously saw the announcement as well from Cleveland-Cliffs. I mean, they have not historically been a supplier to transformers into the market. They, at one point, had rumored to be partnering with another transformer manufacturer in that investment. I can just tell you, you know, just based upon the size of the investment and what we know about transformer manufacturing, we're not worried about Cleveland-Cliffs and what amounts to a very modest, very modest investment in transformer manufacturing. So that, so we're not, we, we've seen it, but we're not worried about it and don't think it's gonna have any impact at all on our growth rate and very little of any impact on the industry, given the size of the investment. You know, and how long? I'd say that, you know, we talk about these trends, and as you can imagine, transformers go everywhere. I mean, they go into data centers, they go into industrial buildings, they go into, you know, utility applications. And so transformer demand that we're seeing today is comprehensive across every one of our end markets. And I would imagine what they're doing is focusing perhaps on maybe one of these verticals. I'm not sure. But but I don't see transformer demand and capacity coming into alignment for a number of years. I think that market's gonna be good for a long time, and we'll have to wait and see how it all plays out. But our markets, as we've articulated, are expected to continue to see very attractive growth for a long time from now. Yeah. Okay. Thanks, Craig. Thank you. Our next question is from Joe O’Dea from Wells Fargo. Please go ahead. Hi, thanks for taking my question. Actually, on that topic, Craig, could you just provide a little bit more detail on the $750 million of spend on capacity in the Americas? Any perspective on, you know, some of the categories that are gonna see some of the biggest capacity addition? And so what will be the step up in your transformer capacity, anything on switchgear capacity? Just to better sort of understand, you know, where there's some of the more sizable investments. Yeah, no, I think the right way to think about that, you know, is that we're making the investments in those product lines, and there's obviously a chart in the outbound commentary around the various businesses that are gonna be impacted. But every place that we have capacity constraints today, or where we see capacity strength, constraints over the next few years, we're making investments, and we're making those investments in line with our and our customers' medium and long-term outlook for what the demand will be, and including, as I mentioned, in many cases, you know, getting customer commitments for the capacity that we're bringing online. And so, lots of different products, lots of different businesses, it's difficult to really perhaps answer the question as precisely as you've asked it, other than to say, you know, we're making the needed investments. As I said in the last earnings call, we don't intend to be a bottleneck for the industry in terms of our capacity to support the growth outlook. And we're comfortable with what we're spending and where we're spending it. And then I just wanna ask on backlog. If you go back last quarter, the backlog expected to ship in the next 12 months was up, like, $2 billion or 20% sequentially. And so just curious, in terms of meeting that demand, how much of that is dependent on capacity that would be coming on in the back half of the year? And then any specifics, you know, the order activity and the end markets that that was directed into with that $2 billion increase in the next 12 months backlog? Yeah, you know, it – that's another a difficult question to really piece that together in terms of how much of the specific backlog is tied to the capacity expansion. The backlog is obviously quite large, and the backlog cuts across every one of our businesses, some of which are getting additional capacity, some of which are not. So difficult to really answer that question, you know, maybe in a satisfactory way to really address that, other than to say, once again, where we have capacity constraints, where lead times have stretched beyond what we think are reasonable, and we're making those investments to get out in front of it so that, you know, we can, you know, deliver, reduce our lead times to customers and can continue to grow. But difficult to really answer that question in the context of these investments, other than to say that if you think about it in, you know, and these are the incremental investments. On a relative basis, most of the backlog, most of the backlog is not tied to these capacity investments, right? We talk about, you know, adding 2 million sq ft of capacity, impacting 25 of our sites. You know, we have, you know, north of 100 sites. So I would just say that, you know, most of the investments or most of the backlog, you know, is obviously gonna be satisfied by our facilities, where we don't necessarily need to add capacity, but we have some real tight spots in some of the businesses, and that's what we're addressing. Got it. I appreciate it. Okay. Thank you. Thank you, and the final question in queue is from Phil Buller from Berenberg. Please go ahead. Oh, hi, thanks for squeezing me in. Sure. You used to talk, Craig, about investment or portfolio strategy of, I think it was growing the head and shrinking the tail. I think that that was the phrase you used to use, but essentially throwing all the weight of investment dollars behind the most attractive end markets and dialing back or exiting the least attractive parts. And obviously, that's worked really well. I think it's clear today what the best bits are, but is there much happening now on the tail? Is there a tail, or are there any less strategic parts of the business where we might expect potential disposals? Thanks. No, I appreciate the question, and the short answer is: absolutely, there's a tail, and there's a tail everywhere. You know, we posted close to 30% margins in our Electrical Americas business this quarter. The Electrical Americas business has a tail. And so I would tell you that the way we really think about this is that every one of our business leaders has to be a portfolio manager. They have to be looking at products, applications, customers, markets, where we don't make the returns or don't have the right growth prospects, and to be actively addressing that. And the inverse is also true, by the way. There's a head, too. There's places where we ought to be doubling down and, and making incremental investments and, and really playing in the wind because we have the right technology, the right to win, great margins, great growth industries. And so I think the short answer is, absolutely, we continue to do portfolio management every place, and there's opportunities every place across the company to be more focused in the places that we decide to play and where we think we can win. Thanks. And just to follow up, I guess, an extension of that question. Broadly speaking, what's your current assessment of the attractiveness of commercial Aerospace? I get that backlogs are high, traffic is secular and so on. But airlines are profit warning daily at the moment, it seems. Airbus and Boeing have a lot of their own challenges to ramp up. I know it's an attractive long-term industry, but what's your evolving view on the sort of three-year view on commercial Aerospace and its relative attractiveness versus the wider portfolio? Hey, I certainly appreciate the question, right? Given today, you know, some of the challenges that, you know, some of the OEMs are having, you know, why you'd ask the question in terms of how we feel about it. But I can tell you, we think the Aerospace, commercial aerospace industry is an outstanding industry in the short, medium, and long term. And why? It has all of the characteristics of businesses we like. It's a business that pays for technology. It's a business where you can differentiate. It's a business that has a very large aftermarket. It's a business that has a wide moat, where if you're on a platform, you're on a platform for life. It is a long-term growth industry, and it's an industry where we make very attractive returns. And so despite the fact that maybe one of the, a customer or two is going through a, a little bit of a short-term issue, the growth outlook for commercial Aerospace continues to be one of the best growth outlooks that we have in the company, in the company. Aftermarket continues to be very attractive, and so no, we, we like the space, and we like the fundamentals, and we think it's a, it's a, it's a very attractive asset. That's great. Thank you. All right. Thank you. Okay, great. Hey, thanks, guys. We're reached to the end of our call, and I appreciate everybody's question. As always, the IR team is ready to any follow-up questions. Thanks for joining us. Have a great day. Thank you, and that does conclude our conference for today. Thank you for your participation in using AT&T Teleconference. You may now disconnect.