Hi, good morning, everybody. Thanks for your patience there while we got mic'd up. Hope everybody's enjoying lunch. For the folks at home, I guess you're probably enjoying the afternoon at this point, if you're on East Coast time. But thanks for joining us on day two of Laguna on stage. I have the team from Gates, Ivo Jurek, CEO, and Rich Kwas as well, from the IR team. Guys, thanks for joining us. Always a pleasure. Ivo, maybe just to start us out, I mean, we've heard from certainly a number of companies across end markets, you know, the past couple days. It seems like, you know, a lot more good than bad going out on there, despite, you know, some macro indicators that might give you a pause otherwise. You guys certainly have a lot of diversity, and have made a lot of, you know, kind of good pivotal investments yourselves. What are you seeing out there? Anything that, you know, that's sort of catching your attention, and maybe we can jump into some more deep dive questions? Yeah, I think this is great, and thank you for hosting the conference. A great conference as always. Look, you know, we came out of Q2 feeling actually reasonably good. Q2 was a little bit better than what we anticipated. You know, we had some nice growth regionally. U.S. was down slightly, but probably the best performance in the company's history in North America, and so it was down very low single digits. And, you know, when we provided guidance for Q3, we felt that it's kind of more of the same. Business is doing reasonably well. Yes, lead times are shrinking a little bit, around, you know, around, the entire portfolio, but, the end market, the, the consumer demand remains, reasonably buoyant. So you do see some choppiness, particularly in the industrial applications, but it's more, driven by people getting used to that they can buy products on the much shorter lead time than necessarily the end market, rolling over. So we feel reasonably, reasonably good about where we sit from a demand perspective. You know, on the call, on a Q2 call, we says, "Look, China is not as great as what we anticipated." I mean, we've printed 28% core growth in Q2, which on a, you know, on a print, look really good, but the underlying comp was really easy versus prior year, and it was not as good as what we have originally anticipated. We feel that, you know, there are incremental headwinds in China, kind of, you know, for the remainder of the year. While, you know, we are very bullish about what's happening in China with our automotive businesses, we think that the industrial businesses are gonna take some more time to recover post-COVID. So, you know, net-net, not bad, you know, being cognizant of the fact that there's choppiness out there, but overall, the book-to-bill ratio stayed very, very supportive of what we anticipated that we're gonna see in the H2. I think that, you know, sort of supply chain accordion effect is probably worth digging into a little bit more, 'cause a lot of companies have experienced that differently. I think there was probably a point in time, you know, when we were talking about this a year ago, where in some cases, you guys were the golden screw that folks were waiting for, in some of your markets. If you had to characterize, you know, sort of this compression cycle around shrinking lead times versus inventory destock versus underlying demand, sounds like underlying demand isn't really the toggle that is, you know, particularly disruptive, but do you see it more as customers just trying to get their orders aligned, or is there actually too much inventory sitting out there somewhere? Look, I mean, I think that it's really f or us, it's somewhat difficult to characterize because when I take a look at the inventory metrics, I would still assert that inventory is reasonably well aligned to the underlying demand that our customers are seeing. But that being said, everybody's focused on the overall working capital efficiency. So as you start to normalize your overall underlying performance, I think that people are looking and taking advantage of the fact that, "Hey, look, I don't have to over-order well in advance, knowing that maybe I will not get everything that I want to. So now I can order, because the situation is normalizing, I can order what I need, and I know that I can get it within much shorter period of time, so, it is in time with my underlying market demand." So, so I think that, you know, I characterize it more as a choppiness. Mm-hmm R ather than, you know, the classic destocking, because we really haven't seen the end market rolling over. Right. Not being said that it won't, but it's not happening today. Yep. And so I think that if you also consider the fact that, you know, we are nowhere really near peak industrial demand, you know, I don't think that, you know, it is overly scary out there. I think that we will see some incremental destocking, you know, more choppy type performance, but I just don't think that you're gonna see this massive destock that you classically have seen in the past. Right. Makes a bit you mentioned China there a little bit at the onset. I think, you know, matching some of the slowness other folks have seen with similar business models. How long does it take, you think, to sort of wash out either, you know, some excess on the inventory side? I know a lot of what goes on there is kinda tied to what they wanna do on stimulus, so maybe a little hard to forecast, but for the stuff that is maybe a little bit more, I'll call it, you know, microeconomic. How How do you see that progressing? Look, for us in China, it's kind of a story of two sides. Our automotive business is doing actually quite well in China, both on the OE side and then on the replacement side of our franchise is doing actually quite well. And we also have a little bit of a secular tailwind in auto replacement side of the business in China, because it is the largest car park in the world. Mm-hmm. That's finally getting to what we call our sweet spot. It's about six years of age, and our sweet spot is 7-11. So it is approaching very quickly, what we would, you know, expect to be a very accretive growth driver well into the future. So that's good, and we are seeing the benefits of that. I would say that the industrial set of applications and markets are a little more dislocated, and I think that there is a fundamental end market demand issue. Mm-hmm. You know, whether or not it is, commercial construction, so you see excavators, you know, heavy duty truck that is, struggling there. You know, you see kind of an overall industrial activity with the slowness in kind of electronics and, slowness in kind of the consumer side of the business demand drivers. So, you know, that may take some time, and that may need, that may require some stimulus from the government side. But, you know, we're still long-term, constructive on China. Our business is China for China. It's about 10% of our revenue, and, you know, we still anticipate it, even with all of the headwinds, as you are thinking about H2 of the year, we still believe that we will deliver positive core growth, maybe low single digits, positive, core growth in China. So, you know, it's not, it's not that bad. It's not as good as what we anticipated, but, you know, we are still having growth drivers. Right. Because of the diversity of our portfolio. I wanna follow up on that car park comment, sort of hitting the sweet spot or hitting your stride on that replacement cycle. Certainly something you referenced in the past as well. I kind of want to visit some other regions on that same thought. Mm-hmm. Once we talk about China. But, you know, I think one maybe key difference for China is that at least in that initial kind of surge in auto production, I don't know if anyone would have said that the useful life of those cars is gonna be, you know, quite equivalent to what you see in the U.S. Like, I think my dad drives a pickup that's 20 years old, and still works fine. Thank you. Yeah, I think, I think China, by comparison, you know, probably don't have a lot of those rolling around, but, yeah, I'm sure he's a Gates customer, whether he knows it or not. What do you think, sort of that, that age of fleet or maybe useful life dynamic plays into some of those normal maintenance cycles? Is that, is that, you know, kind of temper it a little bit or even accelerate it because these things wear out faster for them? What's your thought? You know, in China specifically, it's behaving the way that most of our markets are behaving. The cars are aging. You know, I think there was lots of skepticism about, you know, the Chinese, they're not gonna hold onto their cars as long. You know, you have a first owner, and then you have a second owner, and you have a third owner, just like you have in the U.S. or in Western Europe. And so, you know, the car market is developing very, very similarly as what we have seen in the Western world. So that's a really good dynamic. What we are watching today for, you know, there are really three dynamics that are driving consumption in the automotive replacement side of our business, and that is, age car population, which is the most important. Second of all, is kind of a consumer confidence, right? It's do I have a job? Do I feel good about my economy? And three, how many miles we are driving. And so while the Car Park is aging nicely, presently, I would say that you see somewhat of a negative consequence from maybe less positive consumer, confidence. That results maybe in a little fewer miles being driven. Got it. That's a temporary state. You know, as the economy starts to recover, people feel better, they drive more, and the car park is gonna get into the seven years of age. We feel like that's gonna be a really positive driver for us, you know, into the next, you know, 5+-year cycle. Yep, makes sense. How would you sort of size up the car park and age in the U.S. by comparison? Again, I know it's something that we've talked about in the past. I guess maybe over time, I've lost track of where we're on the. Mm-hmm. On the age of the car park Yeah. And where that is for you guys. So the great news about U.S. is that it is the oldest car park ever. It's over 11.5 years of age, so that's a really good opportunity, and I think that's one of the reasons why you see such a strong dynamics with that, with that part of our business. And it's doing really well. It continues to grow, and, you know, we believe that we are very, very well positioned to continue to take advantage of that. And, you know, it's not dissimilar in Europe, if we are on the subject, right? I mean, car park is aging in Europe as well. And, you know, we see very I mean, we have been printing some very, very strong quarters, despite the loss of business in Russia. Mm-hmm T hat we have all experienced in the industrial Western world complex. So, we feel really good about the automotive replacement side of the business, and I think that, you know, you and I had this conversation, I think, in 2019, where, you know, we kind of got a little bit of a dislocation from the China trade war. Yep D uring the Trump era, set of actions, where we have seen a little bit of a sharper destocking in the H1 of 2018. You know, I think now folks who are looking at it say, "Hey, look, we thought this business more stable." The business is very stable. It's a really good business to have, and it's got very strong market dynamics globally, and we believe that it will provide a very good stability for us well into the future. That makes sense. I know that, you know, over the last several years, you've sort of been more selective, I'll call it, on the OE side. At the same time, there have been an awful lot of changes on the OE side, including, what's happened, you know, in EVs and all the new platforms and startups and nearshoring, and I could kind of ramble on that all day. How would you assess, like, how happy are you with where you've gained content relative to just how new some of these platforms are, and kind of building that base in, you know, what should be a pretty healthy market is on transition? Are you finding that, you know, sort of easy to do because they're new customers, or more difficult because maybe they're more price-sensitive? I don't wanna, you know, kind of lead the witness too much, but how would you assess how that's gone? Look, first of all, I will start with, we are uber excited over what the energy transition in transportation propulsion has to offer, whether or not it is in the passenger cars. It is in the last mile transportation, which, you know, I don't think that we spend enough time about talking. Because I think that there's some really big opportunities to fundamentally change how, you know, packages are being delivered by, you know, Amazon or UPS or FedEx or what have you, with, you know, many stops, very short hops. I think that there's a real opportunity there to electrify that transport, that segment of transportation, and it's a very large consumer of mid light-duty vehicles and then heavy-duty transportation. And we play a role in all three of these subsegments. We're very judicious, and we see, you know, very good content opportunity for us. But again, as we said at, you know, a number of my meetings, we're gonna be very judicious. We wanna make sure that we can generate the right returns for our shareholders in participating in the OEM applications. I don't think that we have seen or we have a real clarity who the winners and the losers are going to be yet, whether or not it is in the past cars or on the mid-light-duty vehicles. And so we are well positioned across the traditionals, and also some of the non-traditional participants that are emerging across all three of these segments. So we feel really good about that, but the story or the book is not gonna be written for the next 10-15 years. Right. Right? And then, if you recall, you know, the most important segment, again, for our business in the automotive is replacement business, 7-11-year-old vehicles. So, what we are doing is we are focusing on building out our content and building our product line coverage on the electrified propulsion vehicles that are available today. But to put it into perspective, there is about one billion cars, ICE-based cars, that are in that sweet spot, the 7-11 years old, globally for us, that we service on a daily basis. Your dad's 20-year-old pickup truck is one of them. Yep. There is about 675,000 electrified vehicles that are 7-11 years old. So, you know, I wanna be pragmatic. We are positioning ourselves to be the leader for the next 50 years, 100 years, and we are going to do the work. We're gonna make the investments to make sure we have the product line coverage. So when these customers need to repair these cars, we are there, and we are working with a number of our channel partners to get ready for them, in particular, to support the transition into secondary repair. We will be ready when they are ready. When we ultimately do have a higher percentage that is electrified, obviously, you know, the configuration is different, and I know that the content story is similar, maybe even a little higher, I think, potentially on EVs versus ICE. But is anything sort of unusual or proprietary, where you really need to get spec'd in upfront to be part of the longer term? Or is it comparable to ICE, where there's a lot more fungibility and, you know, you may OE with somebody, but you'd replace with Gates? Yeah. So first, let me start with, it is a core part of our business. So, you know, we are not a fringe player on the outside that is trying to participate in some new scale that business. We're investing money in development of technologies. We've talked about development of electric water pump technology, new technology, as an example, that's doing quite well. We've talked about the development of the portfolio associated with battery cooling, inverter cooling, motor cooling. That's doing quite well. So those are products that we manufacture today, and, you know, we feel that our position is strong, and we have a good cost base to be able to participate. Now, on the content side, when you think about that, the content on BEV versus ICE, for us, is almost 2.5 times the content. So when on ICE, you're thinking about maybe $125-$150 of content for Gates, on BEVs, we're kind of talking about, you know, $300+ of content, and it's all predominantly driven by the size of the battery cooling that you need, the coverage that you need to have and the secondary pumps that are required to pump that coolant in. And as this technology continues to develop, you know, you got to continue to evolve your technologies because now the customers, you know, they don't just want to cool the batteries. You know, your problem of driving in the winter is as bad as it is, driving in the summer. So now you need to heat the batteries in winter so you can protect the range. So, you know, so the technology is scaling up, it's getting more complex, and that just drives our ASPs up. So it's all very good for us, but we will need that build-up of that car park, and we will need the ramp-up of the technology, consumers adopting the technology, and then having the technology to age. So we are getting ready today, but we believe that, you know, middle of next decade, it should be where we start seeing some real, tangible, scaled-up benefits for our company. That makes sense. Very exciting, though. Yeah, it sounds that way. Going back to sort of this, you know, kind of near-term, you know, supply chain, you know, phenomenon that we've all lived through and are, you know, now working past, as customers have normalized some of their activity, has there been any pushback on price? I can't imagine there's been a lot of deflation or disinflation in, in your categories, and certainly labor is not. But are you finding that prices have been sticky, even as those folks are, you know, reprioritizing, "We need as much as we can, as fast as possible? Yeah. Look, you know, we have never, a nd I have faced some criticism, to be quite frank with you, where, you know, there are folks that are saying, "Hey, look, you know, if your, your products are so critical, why don't you just ask for any price?" You know, our view is that we wanna do, we wanna retain our customers. Yeah, you don't make a lot of friends that way. No, you don't make lots of friends that way. We wanna be fair and equitable. Our philosophy has been that we want to ensure that we don't penalize our shareholders, but we don't want to penalize our customers either. It is in our interest to continue to stimulate demand, and so our philosophy has been, "Hey, look, you know, we will cover inflation to the tune of being neutral to our EBITDA margins," and we have delivered that over the last two years, and we will continue to deliver that throughout 2023. So rather than just go out and just price ad nauseam, you know, we price fairly. And we need to focus on internal efficiency. So driving productivity, driving 80/20, driving incremental restructuring, are all opportunities that we have that we can drive gross profit improvements, that ultimately results in EBITDA margin improvements. That's frankly how we feel that we will be able to get to that kind of midterm target of 24%+ EBITDA. So we, you know, we are not decommitting from any of our midterm targets. We feel actually pretty positive about having an opportunity to get there now, as you start getting more stability in the supply chain, as transportation has normalized, as labor has normalized. Yeah, you're gonna have inflation. We will continue to price for inflation, and we will continue to now focus on driving internal productivity, so we can drive margin expansion through fundamental operational execution, rather than just leaning on price that you pass on to your customers. That makes sense. Anything on the productivity side that has been, I'll call it, deferred, just as a function of being preoccupied elsewhere? Obviously, there have been a lot of spinning plates the last two years. Where are you kind of refocusing on the productivity side? Well, when I was sitting here with you, Josh, last year, we were talking a little bit about, you know, the inefficiencies that were settling into our business associated with the lack of availability of raw materials, so, you know, incredible amount of disruptions. You know, that's kind of abated, and we are now having an opportunity to just fundamentally look at, "Hey, look, how do I produce demand for my customers on five-day basis instead of six-day basis, right, so I don't have to use the premium overtime?" And so I think that you're almost starting at stage one, where, again, you have tremendous amount of productivity activities that are available to you. So we are reenergizing our operations teams. I think our operational teams understand that, you know, the disruptions that we have all faced from COVID era are abated, and that we all now can focus on the fundamental, gross profit improvement through operational execution. We are always focused to be the best operators of our assets that are out there, and we believe that those opportunities are reasonably tangible, reasonably short term, and, you know, they are filtering through the improved gross profits that we are reporting on, you know, last couple of quarters, right? So I think that it's recovering, it's repairing, and I think that that journey is gonna continue over the short term here. Understood. Following up on something that you and I were talking about briefly before we stepped up here, mega projects are sort of the, you know, the second most popular buzzword in industrial, I guess, after AI, thus far this year. Obviously, you guys have a lot of diversity in the model and, you know, not necessarily like a big CapEx-exposed name, but are you seeing that, that pull in the business, you know, either, from customer orders or even just customers saying, "Here's something that we're thinking about and, you know, want to be ready for over the next, you know, six to 12 months? Yeah. So look, I think that what's most underappreciated about Gates Corporation is that, frankly, Gates is everywhere. We've talked about it during the IPO period of time. When you think about large-scale projects or mega projects, we actually touch every one of them. We are starting to see, you know, some of those effects, whether or not it is in heavy-duty truck in excavators, combine harvesters, you know, in build-out of roads and the infrastructure that will actually house the big battery plants and so on and so forth. Now, think about the fact that, you know, when you are putting equipment in those battery plants, that they are building batteries for BEVs, that equipment is gonna use Gates belts. That equipment is gonna use Gates hydraulics to activate the actuation that makes those batteries. And then you are getting into a process like a, you know, razor, razor blade, right? You are in there, and you're going to be generating the replacement cycle for those products. So we are not, you know, we're not directly citing that, "Hey, look, you know, I'm putting a transformer on a, you know, on a pole, and I can link it to rebuild of an infrastructure grid. Yep. But we touch the transformer. We touch it from enabling the mining company to mine for copper. Yep. And we transport, we help to transport that raw copper into a smelter. We have equipment in the smelters, and we have equipment that ultimately help the power company to build a transformer. We have equipment that We have components on the equipment that will lift the utility worker to hang the transformer on a pole. So frankly, we are everywhere, and we are touched by, you know, this large cycle of investment that's coming here in North America, but also it's coming in Western Europe, and that's really good for us, for, you know, a midterm, cycle of, of revenue generation. Sounds like we got plenty to look forward to. I see we're coming up on time. I really appreciate you guys taking the time. Always a pleasure. Thanks for coming. Thank you very much. Thanks, Josh. Appreciate it.