Hello and welcome to today's Ingersoll Rand Sustainability conference call. My name is Elliot, and I'll be coordinating your call today. I would now like to hand over to Matthew Fort, Vice President of Investor Relations. The floor is yours. Please go ahead. Thank you and welcome to Ingersoll Rand's 2022 Annual Sustainability and ESG update. I'm Matthew Fort, Vice President of Investor Relations, and joining me today is Vicente Reynal, Chairman and CEO, along with our team, as outlined on slide three. Vicente, Mary, and Mike will be presenting on today's call, and the entire team will be available for Q&A. Today's presentation is available on the investor relations section of our website. In addition, a replay of this conference call will be made available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide two for more details. At the end of our meeting, I will moderate today's Q&A session, asking a series of questions we received leading up to today's call. At this time, I'll turn the call over to Vicente. Thanks, Matthew, and good morning to everyone. You'll hear today an outline of the significant tailwinds we have on sustainability and how we are aligning the business with those opportunities to enable outperformance. Turning to slide four, w e view this in two compelling paths. First, growing sustainably where we have the complete product portfolio to deliver energy and water efficiency for our customers' wants. Second, operating sustainably where we have a path to run our operations in a highly environmentally friendly manner. Turning to slide five, f or those of you who may be unfamiliar with our company, I would like to spend a minute updating you on who we are. Ingersoll Rand is roughly a global $6 billion revenue company with mid-20s EBITDA margin w ith over 16,000 employees spanning across more than 65 key manufacturing sites globally. Our portfolio is comprised of mission-critical technologies with premium and long-lasting respective brands where the cost of our technologies is small relative to the process where they participate but cost of failure is very high. This allows us to have high recurring revenue of approximately 40% in aftermarket and services, as well as the ability to command premium price. Moving quickly to slide six. I'm very excited to provide a brief overview of how sustainability is at the forefront of how we think and act as a company. Mike and Mary will discuss how we approach sustainability through the lens of both growth and operations. Moving to slide seven. Everything we do is guided by our company purpose of making life better. Our five strategic imperatives are how we stay grounded on our areas of focus. Just less than three years ago, we added a new strategic imperative around operate sustainably. Today, based on the tremendous progress we have made, we are evolving that strategic initiative and we'll call it lead sustainably. Leading sustainably is at the core of our strategy and has become a driving motivation for our highly engaged employees. Sustainability, for us, is when we're able to live every day and put forward actions to make life better for our employees, customers, the planet, and shareholders. The two main focus areas of leading sustainably are growing sustainably and operating sustainably. In growing sustainably, we will deep dive today into how our products offer an intrinsic sustainable benefit to our customers and how we are continuing to focus our business on high-growth, sustainable end markets. For operating sustainably, we will review in detail the progress and actions towards our aggressive 2030 targets we have set within our own operations. On slide eight, during our Investor Day in November of last year, we introduced our economic growth engine and I'm very pleased to say that we are executing very much in line with this model as our financial performance this year has shown. Here we show how sustainability is directly embedded within that growth engine. During the call today, you will be able to learn more about how we have accelerated and aligned our commitment to sustainability. For example, within our technology, we're proud that currently more than 70% of our patents are related to improving energy efficiency, and that percentage continues to increase as all of our new products are developed with energy efficiency in mind. Turning to slide nine, i t is our commitment to sustainability that has enabled us to be recognized as one of the leading companies in our space and we anticipate that we will continue to see an acceleration of that recognition. Through the utilization of IRX, the efforts of the team have resulted in another upgrade from MSCI to A A, which puts us in the upper quartile of our peer group. This recent upgrade was done before the release of our 2021 Sustainability Report. We will be watching carefully and we will expect to see continued positive momentum in our ratings from the other sustainability rating agencies. On slide 10, we believe that we are the leader in the area of social with our innovative employee ownership model. Since the time of the Gardner Denver IPO in 2017, we have granted over $260 million in equity to our employees including an ongoing program to make new employees shareholders. This is not a thank you gift but instead it means to have 16,000 employees all aligned on the critical priorities of the company with skin in the game to drive improvements. We supplement this program with a distinct focus on employee engagement and internal programs via the inclusion groups listed at the bottom of the slide to drive our shared purpose. What this results in is a model that we believe is a competitive advantage with a unique combination of engagement and ownership that drives high performance and results. Moving to slide 11, one of our core efforts is to ensure we have the proper governance structure in place to manage the strategy and execution of our sustainability efforts. Where there is a creation of a board committee specifically for sustainability or our execution engine that we call IRX helps employees around the globe operationalize ESG. These actions drive our continued progress as well as the recognition by industries and agencies around the globe. On slide 12, as you will hear during today's presentation, and as you see in the news on a daily basis, there continues to be a growing global focus on sustainability and making the world greener. This is at the core of how we operate as our products are central in addressing customer needs in the areas of renewable energy, energy efficiency, and decarbonization particularly as the cost of energy has risen dramatically in many parts of the world. We know that our focus and attention to helping make life better for our customers and the planet will also ensure that we make life better for employees and shareholders. With that, let me transition here to Mike Medaska to take us through how we are growing sustainably. Thank you, Vicente. Let's begin with an overview on page 14. Our Grow Sustainably strategy consists of two paths. Part A is intrinsically sustainable products and services. To us, intrinsically sustainable encompasses three elements. First, efficiency, using less electricity to do the same amount of work. Second, circularity, using scarce resources such as water, metals, and plastics more thoughtfully or avoiding their use altogether. Third, safety, which means keeping the operators, technicians, and consumers of our products safe. We feel we are uniquely positioned to succeed in delivering these elements. We hold over 1,450 active patents for energy efficiency, safety, and other sustainability elements, and have a team of more than 2,000 mechanical, electrical, and software designers and engineers continuously developing next generation technologies. Part B is our focus on high-growth, sustainable markets. We define high-growth, sustainable markets as the set of verticals that we expect to grow above GDP levels because they are supported by sustainability, megatrends, a nd tailwinds including decarbonization, water conservation, and rising standards of living. In today's call, we will highlight four such markets, but we have many others. We create value for customers in these markets with a product portfolio and application-specific knowledge built on decades of accumulated engineering and commercial experience. Our ability to scout and acquire new companies operating within these market ecosystems is very real. Let's look at each of these two growth paths in more detail beginning with intrinsically sustainable products and services on slide 16. Let's start with efficiency. We believe that improving energy efficiency of compressed air systems is a massive customer need and a significant growth opportunity for us. The first point is that compressors are everywhere. Air is often referred to as the fourth utility and is expected to be available 24/7. The global market is very large and we estimate the installed base of compressors to be in the range of 5 million units. Second, most compressors are electric motor-driven and consume a significant amount of electricity in some cases up to 30% of a manufacturing site's total. Third, air systems are typically not optimized. Our customers are focused on making the world's best cars or consumer products or pharmaceuticals, not figuring out air systems. Imagine asking a typical manufacturer to produce their own water or electricity or gas but that's exactly what most users are asked to do with compressed air. Since mechanical systems and materials degrade over time, things like leaks can emerge, and production requirements can change. With a shortage of skilled manufacturing labor, there's simply no time or staff available to intervene. All of that taken together equals an amazing opportunity for IR as an industry leader to bring our deep expertise to bear to help customers. We believe that we have the products, services, people, and capabilities to deliver improved energy efficiency. In the lower right, we illustrate the potential impact if the efficiency of all compressed air systems in the U.S. could be improved by a very conservative 15%. It would save 15 billion kWh of electricity, avoid 9 million MT of CO2 emissions, and save customers more than $1 billion in operating costs. This is very rough math, and for many customers and industries who use more compressed air, the opportunity is much bigger. Given higher energy costs and less clean electricity grids in other regions, we estimate that the global opportunity is in excess of 5x the number shown here. Let's turn to page 17 to understand our right to win. Looking first at the product level, we have a broad portfolio of products that reduce energy consumption. To bring this to life, I'll share four examples. The Gardner Denver Ultima oil-free compressor includes innovative design features that enable it to be 13% more energy efficient than comparable oil-free compressors. The energy recovery unit below it is a brilliant device that captures up to 94% of the waste heat generated during air compression and uses it to warm water that can be used in other processes or for space heating. On the right are two examples from PST. The Dosatron water-powered dosing pump uses the pressure found in the supply water to rotate the dosing mechanism inside the pump, eliminating entirely the need for electricity. The new EVO pump from our ARO business is a first-of-its-kind positive displacement pump that reduces energy consumption by 20% compared to air-operated alternatives. On page 18, we'll look at the opportunity through the expanded lens of system efficiency. An air compressor is an important device, but if you zoom out, you'll see that it's just one element of a compressed air system that consists of supply side components such as dryers, filters, valves, controls, piping, and storage tanks, as well as demand side components, which are the users of the air and include things like automated processing and packaging equipment, pneumatic cylinders, power tools, and more. More often than not, it's the other supply side and demand side elements that degrade, and result in dramatic losses of efficiency. We take a comprehensive approach to helping customers improve their compressed air system efficiency, and we call Air System Assessments. Our skilled auditors and sales engineers follow a three-step process, score, assess, and implement. The outcome is typically a recommendation for remediation that includes a combination of upgraded equipment or components, adjusting supply side or demand side operating parameters or executing service. In the U.S. alone, in 2021, we conducted more than 4,000 assessments that yielded over $100 million in orders, very often with incredible payback for the customers. Interestingly, we see that order values are nearly two times larger when we conduct an assessment versus when we simply sell the customer a compressor, which we take as evidence that we're delivering real value. We're excited about the significant potential here and we'll continue to scale this capability. Let me share a real-world example to help bring this to life. A global leader in consumer products was dissatisfied with the high annual cost of its compressed air, electricity, and maintenance costs at one of its facilities where they were running four competitive rotary screw compressors. We were invited in and following an air assessment helped them design a much more efficient system that used a new compressor to provide a stable base load and eliminate the over cycling of the smaller rotary machines. The customer purchased a new IR centrifugal compressor and packaged care service agreement and realized an annual savings of over $250,000 on their investment with a payback of less than a year at current energy costs. They reduced their CO2 emissions by 383 MT in the process. On page 19, I'll share two ways we deliver circularity for customers. The first is with water. Our impact on water occurs in multiple ways, but perhaps the most compelling are those products we offer that don't require the use of water, but which can be substituted for those that do. The RunEco turbo blower technology from our Runtech business is a perfect example. In very simple terms, it's a blower that is used by paper products manufacturers to dry the wet pulp and paper. It replaces an alternative technology that requires a fresh water supply for sealing. The population of RunEco units currently installed around the world is saving 7.5 billion gal o f water a year. We estimate that full adoption of the technology across the entire pulp and paper industry would yield a savings of over 50 billion gal of water per year, equivalent to the annual water consumption of nearly 450,000 U.S. households. Another way we deliver circularity is through our remanufacturing services. Remanufacturing is circular in that it eliminates the need to produce a new product by extending the useful life of an existing asset by machining worn surfaces, replacing damaged components, and executing inspection and test procedures to return units to working condition. Our air compressor business excels here. With multiple sites and teams around the world, we're able to remanufacture both rotary and centrifugal compressors. Another example is the Nash Unit Exchange Program, which has grown rapidly since its launch several years ago. Customers enjoy the 50% savings and love the idea that each remanufactured liquid ring vacuum pump saves over 3,000 lbs of new cast iron and 850 kWh of electricity. Turning to page 20, j ust as we want every one of our employees around the world to return home safely each night, we want the same for the operators and technicians who use our equipment. Shown here are the many ways our products deliver safety and I'll highlight a few. Lawrence Factor, the company we welcomed to the IR portfolio in 2021, provides air quality monitoring and purification systems to keep breathing air safe for rescue personnel. Our YZ odorization systems ensure that natural gas, which is naturally colorless and odorless, is detectable by humans. Finally, IIoT-ready products and connected services, which allow the health and status of our equipment to be monitored remotely versus requiring in-person inspection. An additional point to make here is that we take our role as an industry leader very seriously. We have leadership roles and are active members of many trade organizations, including CAGI and the Hydraulic Institute, where I had the privilege of serving on the board several years ago. On page 21, we'll turn to part B and dive deeper into four examples of high-growth sustainable markets, food, life science, water, and clean energy. For each one, I'll share a list of products that we offer and some customer success stories to illustrate how we create tangible value. Moving to page 22, a secure food supply is vital to making life better for people around the world and foundational to economic growth and prosperity. As you can see in the middle panel, we participate across the full food value chain, in agriculture and livestock, processing, packaging, and delivery. Our product's used every day to produce and process fruits, vegetables, proteins, grains, bread, dairy products, chocolate, and much more, as well as the packaging that enables them to be safely stored, transported, and delivered for consumption. On the left, you'll see a MAXIMUS controller for precision greenhouse management and an oil-free centrifugal compressor used by many food customers to supply a high volume of clean, dry air for their equipment. In almost all cases, our equipment is mission critical because the cost and disruption of downtime is significant. A great success story in this market is Spowdi, a Swedish green tech innovation company focused on regenerative precision agriculture. Its flagship product is an inexpensive solar-powered water supply system to irrigate crops in remote or developing regions without electrical infrastructure. Following several years of collaboration with our Thomas business within PST, the Spowdi system on the market today includes a Thomas brushless DC piston pump, the critical component that creates the flow of water. We've already shipped 1,000s of units and are excited about the impact that this system will have by enabling regenerative agriculture in emerging markets. We're excited about the food market and the continued growth potential it offers for our solutions. Turning to the next page. Life science is a market where making life better is literally part of its name. We operate in three sub-segments: pharmaceuticals, patient care and medical devices, and research, discovery, and laboratory analysis. The products listed in the center cover a broad range of flow and other technologies, including compressors, blowers, vacuums, and liquid handling pumps and systems. Shown at left are a few examples. A Zinsser Analytic unit used to analyze liquids in research and diagnostic centers, an Elmo Rietschle rotary vane vacuum pump found in hospital central vacuum systems, and a QX Series precision electric fastening tool. One of the many customer success stories to share here is our partnership with Shinva, a leading global producer of antibiotic intermediates, pharmaceutical raw materials, and finished products. They rely on IR to provide reliable sources of clean, dry, compressed air. A recent project with high efficiency oil-free air compressors and a heat recovery solution was able to save Shinva more than $1 million per year in energy costs. A second and perhaps more unexpected example comes from the power tool business, where we recently won a $200,000 order to supply 20 precision fastening systems to the manufacturer of a next generation surgical robot. Let's turn to page 24. Water is a special vertical for IR as we have a long history in industrial and municipal water and wastewater markets. In March of 2021, we launched an IDM to bring together the water experts from ITS and PST to share knowledge, references, and ideas for growth. A few outputs from that team are shown at left, a market-facing water brochure and a new IR water website. You'll see a very broad product line in the middle of the page. Core products include blowers and mixers for wastewater aeration, an example of which is the Robuschi Robox turbo blower, chemical metering pumps for disinfection and treatment, and the SEEPEX progressive cavity pumps for sludge transfer, also shown in the lower left. The success story I'll share here is that of Anglian Water, the largest water utility in the U.K. by geographic area. Dissatisfied with the performance of their existing competitive pumps, Anglian turns the application experts at SEEPEX who designed an improved system that allowed them to process 50% more sludge and biogas per day while eliminating equipment downtime. The project paid back in under a year. This type of impact is what makes us so excited about bringing the full IR portfolio together to help customers across the water market. Finally, turning to page 25. Clean energy is, without question, one of the most exciting markets for us simply because of the pace of change and the potential for massive environmental impact. Also because of the sheer volume of applications for systems and components that move air, liquid, and solid materials in these markets. In the center of the page, we've itemized seven categories that we serve today, biogas, hydrogen, wind, solar, decarbonization, electric vehicles, and nuclear. We've got a very strong technology portfolio for clean energy. The Robox blower unit shown at left is a core element of an air lubrication system, an amazing system that creates microbubbles along an ocean-going vessel's hull reducing general friction or resistance by as much as 80% and reducing fuel consumption and CO2 emissions up to 16%. The LeROI renewable natural gas compressor is used to compress and transfer biogas released from landfill sites and livestock ponds, which is then used to generate electricity or for industrial or consumer use. Operators love the idea of monetizing this otherwise wasted asset as they comply with new emissions regulations. The Haskel hydrogen refueling station is one we've highlighted before, and we continue to be very excited about the potential for hydrogen vehicles and the hydrogen economy overall. Let me share two stories in clean energy. The first is Aqualung, a clean technology innovator based in Oslo, Norway. Aqualung developed a novel system for industrial carbon capture using their patented membrane, but needed a way to drive air into the system, and pull it through the membranes that extract the carbon molecules. Our team of experts worked with Aqualung to develop and test a prototype system that includes four separate IR products, a side channel blower, two vacuum pumps, and one gas compressor. We're excited about the partnership and the impact that we and Aqualung together will have on the environment. Second example is Canadian Solar, one of the world's largest solar photovoltaic cell manufacturers. To them, a clean, reliable compressed air supply is vital for the operation of their cell fabrication machinery. Since 2020, they've acquired more than 70 IR oil-free compressors for installation at 11 manufacturing sites. We're proud to call them a partner as they produce and deliver solar cells to renewable energy sites around the world. With that, let's transition to the Operate Sustainably chapter. It's my pleasure to introduce Mary Betsch, Ingersoll Rand's Vice President of Sustainability. Thanks, Mike. The value of our business is rooted in our purpose of making life better, and that includes making life better where we operate. We lead by example in our operations with measurable and continuous improvement as inspiration to our employees, our customers, and our communities. Our deep commitment to operating sustainably delivers real value for our stakeholders and our planet, including bottom line performance, risk mitigation, a sense of purpose and inspiration for our employees, alignment with our investors, supplier of choice for our customers, and a positive impact in our community. We're building a better future for everyone and setting the right pathway for a continued strong business. Sustainability is the driving force behind what we do, and this slide shows why we do it. Now I want to talk to you about the real progress we've made and how quickly we have done it. On slide 28, I'm extremely proud to share with you our sustainability progress over the past two years. We're excited and optimistic about the future as we diligently work using the IRX process to achieve our goals and help our customers, suppliers, and employees build a greener economy by minimizing our own impact. As you can see here, we've already made great strides on all fronts especially when looking at intensity. Each of our publicly facing absolute goals is on track in light of our increased production, including water, as we have an accelerated pathway over the next two years to three years to reduce water use. Our 2030 goals involve reductions that require both investment, and deep process understanding, and it's our intent to meet them. In terms of our 2050 net zero and renewable energy goals, we are steadily making progress as we procure more green electricity, implement energy efficiency, and install solar around the world. Turning to slide 29, IRX is how we operationalize sustainability. Here's where we have all business units participating weekly in a company-wide IDM where metrics, projects, and learnings are shared. Each of our businesses are managing their environmental progress and developing a pipeline of projects in order to achieve them. Then quarterly, the business unit leaders review their environmental and safety metrics with Vicente and the executive leadership team. Recently, we launched what we call Green Excellence Teams as the framework for our 75 plants worldwide to achieve water and energy goals and reduce waste. As an example, our Monroe, Louisiana plant's energy focus helped them realize a 30% reduction in energy year-to-date, with improvements in minimizing compressed air leaks, changing manifolds, and management of the HVAC system. A new chiller recently installed there came with the added benefit of using a lower GWP refrigerant. On slide 30, our stewardship of the environment is core to our sustainability strategy. Ingersoll Rand is committed to reducing its carbon footprint and doing more to use less of the world's natural resources. We're committed to using energy economically and efficiently, and we've already made significant changes to our operations, and invested in a range of solutions that have resulted in a decrease in the amount of total energy derived from fossil fuels. Our strategy takes a portfolio approach. It prioritizes new projects, efficiencies, and greening the grid as opposed to simply purchasing environmental attributes. The current total portfolio of possible solutions would exceed Ingersoll Rand's 2030 goal. Our Scope 1 solutions include refrigerant emissions reduction through a lower GWP refrigerant, site-specific energy efficiencies, hybrid service vehicles, and building electrification particularly in Europe. We've made a large investment in travel optimization software to reduce our technician highway time that equates to approximately 237 MT of CO2 annually. Scope 2 solutions include on-site solar at 10 facilities and 16 facilities currently purchasing retail renewable energy. This equates to a reduction of over 7,000 MT of CO2 per year. Additionally, we are preparing for a large-scale VPPA contract for 100% of the U.S. electrical load, and this is also going to include a biodiversity element to improve the local ecosystem. We are constantly innovating to control our impact and drive greater efficiency. These are exciting times for Ingersoll Rand as we have set the foundation of our future and accelerate our decarbonization transition to net zero and 100% renewable energy in all of our operations. Moving to slide 31. As we develop a clear understanding of our full climate impact, our net zero transition plan hinges on our knowledge of our Scope 3 emissions. Despite how difficult Scope 3 emissions are to measure, we have successfully measured three of the 15 categories, use of sold products, travel, and employee commute. It's important to note here that we currently believe these three categories account for more than 80% of our Scope 3, with use of sold products being the most significant by far. We're well on our way to completing our Scope 3 baseline. We are continuing our pursuit this year and next by attempting to measure our supply chain and transportation and distribution. Our PST Shanghai, China, site is working with their logistics supplier to reduce Scope 3 emissions by switching the 15 diesel trucks to hydrogen and electric, which will reduce approximately 134 MT of greenhouse gases annually. On slide 32, from an operational standpoint, water is consumed primarily in our painting operations, parts washers, and testing of our products. However, the cooling of our aluminum die cast operations in Sheboygan, Wisconsin accounts for 51% of our total global water consumption. A program is underway to identify opportunities to reduce water intensity for the casting operations. These equipment efficiency improvements can then be cascaded across all the die cast and trim press machines. At the same time, the team there is investigating the feasibility of installing a closed loop water system that will reduce the remaining water demand by as much as 90%. Additionally, our Sedalia, Missouri manufacturing plant intends to complete the installation of a closed loop system this year that will reduce their water demand by 2 million gal annually. Next, on slide 33, you will see that 59 of our 168 in-scope sites have already reached Ingersoll Rand's zero waste disposal standard. Ingersoll Rand is committed to circularity and reducing and recycling as much as possible. All of our sites have annual waste reduction goals where they're coming together to solve incoming and outgoing waste strategies and share their best practices. Here's just two examples of innovative thinking to minimize waste. Burbank was able to replace hazardous spray foam packaging with recycled and recyclable packaging. In Naroda, our engineering team came together to design out waste in packaging and processes to eliminate wood, plastic, and cardboard in our aftermarket parts, as well as work with suppliers to deliver parts in returnable packaging. Turning to slide 34. Nothing is more important than the safety of our people. Our people are our most valuable asset and there's no compromising here. We're passionate about protecting our 16,000+ employees. Our employee ownership culture is a meaningful way for all employees to feel a sense of belonging and contribute to our safety efforts and to fulfill our purpose to make life better. We believe our injury rates are significantly lower than the industry average because we maintain a safety culture where all employees are accountable and responsible to reduce workplace injuries. Our annual 100 days of safety campaign is all about reducing risk and this year we surpassed our goal with employees identifying and minimizing over 870 risks at work and home and realizing an 8% reduction in recordable injuries during the campaign. We are collectively making life better for our employees. With that, I will turn it back over to Vicente. Thank you, Mary. As we wrap up today's call, Ingersoll Rand continues its leadership role in sustainability as both a growth enabler and within our own operations and products. We continue to make significant progress, and we're guided by our purpose and values, and we will ensure execution through the use of our own IRX tools. We're making positive impacts across environmental, social, and governance areas that are most material to Ingersoll Rand and our stakeholders. We take our role as a sustainability-minded industry leader very seriously and our employees embrace IRX to strengthen that leadership position. I believe our future looks very bright, and I look forward to the positive impact that our global employees will continue to deliver. With that, I'll turn the call back to Matthew to moderate us through Q&A. Thanks, Vicente. We received several great questions in advance of today's meeting, and I'll try to get through as many as possible. For the first question, Vicente, how much does sustainability impact growth opportunities? And specifically, how does energy efficiency play into the sales team's value proposition to clients? How often, et cetera? Yes, great question. I would say that sustainability is highly embedded into everything we do and it's providing a tremendous tailwind for growth to us. As you saw in the presentation today, when we think about our economic growth engine that we presented during the Investor Day and then presented here again today, you could see the touch points of sustainability across every facet of that economic growth engine. Whether it is on the organic growth with demand generation and how we're doing a lot of campaigns around energy efficiency to our customers so they can do the audits and we can actually provide great products with saving energy, or even on the inorganic side, where, you know, a lot of the acquisitions that we're making have already a sustainability focus on the technologies that we buy. It's highly embedded into everything that we do, organic, inorganic, and the investments that we have. In terms of our commercial team, they're super focused on this. I mean, clearly, you know, even with calculators that show the return on investment based on energy savings that we can achieve, as well as CO2 emissions that get translated during those conversations with the customer. I would say that it is very holistically embedded through everything that we do today. Thanks, Vicente. Let's stick with the growth theme and this one's for you as well. What are your expectations for a read-through from the IRA and how soon would you see a benefit from those funds? I'd say in terms of seeing the benefits of the funds, to be determined in our opinion. What I can tell you is that clearly, we have a lot of areas of potential opportunity here for incremental growth to us, and maybe a couple to highlight is biofuels. I mean, we spoke a lot previously about how biogas, biomethane, a lot around these renewable natural gas investments that are happening already, and now we think could get accelerated with the IRA funds coming through in terms of whether, you know, investments for capital expenditures or even tax credits should accelerate the utilization of the renewable natural gas, as well as, you know, sustainable aviation fuel. I mean, we're seeing that there's actually a lot of very good focus on sustainable aviation fuel that could generate some really good opportunities for us on several of our technologies, compressors, vacuums, and blowers, as well as some of the pumps that we have even in our precision and science technology segment. Talking about the precision science technology segment, another area that we see is hydrogen. There's a proposal for creating a hydrogen network on the IRA or at least some investments, and we think that that could be the accelerator to get hydrogen more prominent here in the U.S. All right. Great. Mary, next one for you. What are VPPAs and how do they differ from buying carbon credits? Matthew, VPPAs are a really smart way to green the grid. A VPPA is a real clean energy project. It could be either wind or solar and that's what we're doing to fund and help green the grid. In exchange, we earn renewable energy credits and with our carbon accounting, we can account for our electrical load. With a VPPA, we're doing our part, whereas buying carbon credits, that's just simply paying to offset brown electricity with no real investment in greening the grid. For our VPPA, we plan to have that constructed in the United States by around the year 2025, as you saw on our roadmap. Thanks. And Mike, the next one here is for you. 70% of manufacturing facilities use compressed air. How many are not up to what you would consider to be standards for modern equipment and technology or optimized for size and power? Yeah. Thanks, Matthew. Great question. First thing to clarify, 70% of manufacturing facilities use compressed air. We know that number is much larger when you consider other technologies, including blowers, vacuums, and non-manufacturing industrial applications like air separation, which is a massive user of compressed air. Further, you know, the reach of Air Systems is even larger when you think about industrial markets like water and wastewater treatment. One data point we shared during our Q1 earnings call is, this year, that you know, we estimated roughly two-thirds of our installed base is eligible for upgrade based on deficiency. We think that number probably holds for competitive assets as well. I would say, when you take a system-level view, that the opportunity is even larger than that, given the potential for all the supply side and demand side remediation activities and optimization that's potential. Thanks, Mike. The next one, Vicente, I think is for you. It centers around M&A. To what extent does the sustainability push affect the screening for M&A targets? How have recent M&A deals furthered IR sustainability efforts? I'll say, for sure, highly critical, and important, and it is really one of the topical conversations that we have with our team in terms of understanding how the M&A can help on the sustainability. Let me give you a couple examples. Even back, roughly 2018, I think it was, when we acquired Runtech. This is now even during the Gardner Denver days, and you saw from the presentation today with Mike how Runtech has been an exciting technology acquisition for the pulp and paper industry to really help with sustainability and now saving roughly 7.5 billion gal of water per year with the potential of, you know, up to 50 billion gal of water per year savings if our technology gets incorporated across all pulp and paper facilities around the world. We're seeing a lot of good demand on that. It's not only the water, but also the energy efficiency that Runtech generates, roughly 50% energy efficiency savings. Even also, most recently, Holtec. Holtec is an on-site nitrogen generation technology that can get attached to the compressor to eliminate having customers to haul in with a truck nitrogen in big tanks. So again, that really saves a lot in terms of CO2 emissions from driving and potential leakages that can happen whether it will be nitrogen or oxygen or any other technology that we can actually generate on-site with the use of our compressors. So it continues to be very central to everything around our screening efforts because we want to make sure that all of our technologies are helping make life better for the planet. It is very core to our M&A transactions. Great. Thanks. Mary, the next one is for you. It falls more within our operate sustainably theme. How can we or how do we, as Ingersoll Rand, influence our suppliers to reduce their Scope 1 and 2 emissions, our Scope 3 emissions? Exactly. Their Scope 1 and 2 is our Scope 3 emissions, and this is our next piece of really important work we're going to do around Scope 3 to begin working on measuring our suppliers and transportation and distribution. We recently invested in some software technology to be able to track our supply chain Scope 3 emissions. We'll be doing that in the year 2023, and we also hired one person to manage that system for us. We intend to enroll 95% of our critical tier one suppliers in this preferred supplier program and request our suppliers to have a sustainability plan. This is going to include expectations on their reduction of carbon. We'll be working with our suppliers and helping them with their sustainability plans. Thanks, Mary. Mike, over to you more on the growth side of things. What is the TAM or unit opportunity for compression upgrades related to decarb and energy efficiency, and how is this decision made? Yeah, another great question. At our Investor Day last November, we shared that our total addressable market for the enterprise was around $44 billion, and that would be growing to approximately $70 billion by 2025. We know that 60% expansion will be driven, you know, by the three global mega trends that we love to talk about, digitization, sustainability, and quality of life. The clean energy subsegments that I detailed early in our presentation, hydrogen, electric vehicles, decarbonization technology, wind, solar, we expect that to be a significant and meaningful part of that 60% expansion. When you look, for example, at the $11 billion total addressable market for compressors, we know that that will expand on the back of system efficiency and system optimization programs. We're excited about the TAM expansion. Yeah. Thanks, Mike. Vicente, next one for you. Scope 3 emissions are clearly the most difficult to measure and the most difficult to influence. Where do you see your responsibility or Ingersoll Rand's responsibility for the products, emissions ending? It is indeed the most difficult thing to do, which is Scope 3 measurements that companies need to do themselves. I would say the exciting piece here, as Mary mentioned, we're already measuring roughly 80% of it. We have a great baseline in terms of things that we now can do to continue to improve that Scope 3 emission. You have seen today's presentation is just highly embedded through everything that we do around ensuring that our products are helping achieve, you know, our customer's journey. Which basically will mean that in many cases, we also need to get improvement in our Scope 3 with a lot of the technology and advancements that we're making. You see that whether some of the topical conversations here that Mike Medaska presented around our intellectual property that, you know, is really highly concentrated on sustainability with a very high percentage of patents, not only the current ones we have, but now even accelerating even more so, the new ones that we're launching, is all centered around how do we save energy, water consumption, and I think that's the exciting piece of it. I mean, everything that we're doing is really helping the sustainability effort across. Clearly we'll help our Scope 3. Thanks, Vicente. The next one, Mike, I think is right up your alley, more kind of longer term strategy. How proprietary is the technology to reduce consumption and operating costs of your products? If the whole market is going to move to these higher efficiency products, will you see more competitions in these areas? Will it be necessary to increase spending on innovation to stay ahead of the crowd? Yeah, excellent question. We obviously believe that innovation is a key part of our competitive advantage. The number that we cited, you know, over 70% and approximately 1,450 active patents within the portfolio are related to sustainability including system efficiency components, safety, and circularity. The fact that, you know, that we've got that base of patents, I think, is a clear indication that proprietary technology is a key to our advantage. I would say that we're, you know, we're very pleased with the scope of our new product development program, which is about 2% of our revenue, as well as our ITV program, which contributes meaningfully to innovation, which is also approximately 2% of our revenue. Taken in aggregate, spending approximately 4% of our revenue each year on product innovation to provide that sustainable competitive advantage, I would say we're comfortable with that level. The key is to continue to prioritize the time and energy and investments of the 2,000 technology resources around the world that we have that are innovating every day to make sure that we continue to focus on sustainability, which is obviously part of our roadmap and part of our plan. The final point I make is, I would say, that you know, the customers are moving and the customers are pushing us in a direction, and the need for higher efficiency, more sustainable products, more circular solutions, safer products. We're very pleased with the position that we've got as a market leader and expect that we'll continue with that advantage. Perfect. Great. Mary, can you talk a little bit about Ingersoll Rand's emission targets in terms of GHG Scope 1 and 2, and how that compares to the broader and best in class industry peers? Certainly. Around two years ago, when we were thinking about establishing our goals, we looked to our best-in-class industry peers, as well as thought leaders such as CDP, for the guidance to begin to develop our goals. Once we did, we think our goals are aggressive. They're in line with industry peers and these thought leaders, but yet they're achievable. As you saw in the presentation, we're making excellent progress on both of our 2030 and our 2050 goals. Thanks, Mary. All right, Vik, how do you measure ROI from our sustainability initiatives? Are there different hurdle rates being applied to sustainability investments? Yeah. Thanks, Matthew. Good question. I'll take the first half of that, and I'll actually let Andy kind of maybe provide some specific examples. I think the easy short answer is, we really don't differentiate between sustainability investments and what I would say the balance of investments within the organization. You know, every year we do what you would expect our normal investment plans, whether they be for OpEx investments, CapEx investments, and sustainability is just part of that exercise. We partner very closely with Mary and her team and the global organization to understand what those investments are. Frankly, we hold them to the same hurdles that we hold any other investment within the organization. It's really just becoming part of the natural course of how we think about deploying capital within the organization. I'll let Andy maybe even give a tangible example or two. Yeah. You know, Vik. As Mary Betsch talked about, we have our Green X teams at all of our major facilities. Those teams are focused on looking at these very types of investments and they're finding some great opportunities. A really good example of this is our recent installation of solar panels at our Vignate, Italy plant. That project not only hit our ROIC targets, it actually had a payback of less than a year. It's a really great example. All right. Thanks. You know, we get this question a lot, but I think it's definitely still prudent to ask here. With the skyrocketing energy costs in Europe impacting both your costs and your customers' CapEx, what is the outlook and how do we try to reduce those costs? Sure. I mean, I think this is one that in our case for us, with the manufacturing footprint that we have actually in Europe, think about it too as well, that we do a lot of light assembly. We're not a high consumer of natural gas, therefore, you know, our energy costs are just for locally. I mean, they have definitely increased, but not in a dramatic way as we have seen in other places. Also, as Andy mentioned, I mean, we have been very proactive in investing in other energy sources such as solar with our in our Italian footprint, and then also in some of our German factories too as well. Again, we continue to invest in areas that can reduce the cost with different energy sources. At the same time, you know, what we see here from our customer base is that our customers are asking for a lot of our products and technologies that are helping them achieve lower energy consumption. We have said it before many times that, and here again repeat that again, you know, compressors are typically, you know, consume 30% of the energy in a typical manufacturing location. Even if you think about a blower, a blower consumes more than 50% of the energy consumed in a wastewater treatment facility. These are kind of good high consumptions of energy. Again, our technologies every year are helping our customers as they upgrade with the newer technology, save in a compressor could be 15%-20%, but even in a blower, when you change the technology in a wastewater treatment facility, you can cut that energy consumption by more than half. There's a lot of benefits in looking at technology that over the past few years as maybe globalization was happening more aggressively, we have you know these technologies that have been underinvested in our customer base for the past, you know, decade. I think it's a great opportunity here not only to just upgrade new technology, but as we think now that accelerated higher cost is really accelerating that conversation because the return on that investment is very, very low and t he payback is quick. Thanks, Vicente Reynal. Kind of one final question. We've got time for one more here, and it's kind of an add-on to that. What are the biggest revenue opportunities in sustainability, and how are we targeting them? I mean, in today's world, I'd say, you know, difficult to pick one or two specific. I mean, it's just multiple areas and multiple levers of growth for us as it relates to sustainability. As we highlighted throughout the presentation today, it is on the organic piece but also the inorganic piece. Again, we see good opportunities on both sides as we continue to invest. If you think about some of the organic opportunities, clearly anything related to energy efficiency now is a very high topical conversation, not only in Europe, but also in Asia and in many parts of the U.S. too as well. In addition to that, when you think about the energy transition and the decarbonization, whether it could be CO2 sequestration or even hydrogen production, a lot of these are really interrelated and intertwined in terms of the sustainability that many companies and customers are really putting a big effort into it. I would say that, you know, what we do is we spend a lot of time with our customers to really understand how do we help them mitigate, and how do we help them achieve the goals that they have. All of us, and many of you on the phone too as well, are reading the sustainability reports from our customers, and you can clearly see that they talk about compressors and air treatments as a big area of opportunity for them to help achieve their Scope 1 and Scope 2 targets. Again, we're at the center of this really great tailwind that we're seeing, and we expect that we'll continue to see around the sustainability topic. Thanks, Vicente. With that, any final closing remarks? As we close, I want to say, you know, thank you again to everyone for the interest in Ingersoll Rand. You can see that leading sustainably is at the center of our strategic imperatives, and we just don't put it on paper, we live it every day. It's really tied to our company core purpose, which is making lives better for the employee, the customer, the shareholders, but also the planet. It's really topical for us. We want to be seen as a leader in sustainability, not only from, you know, improving our internal operations, but also helping all of our customers achieve their sustainability targets. Thanks, everyone, and hope to see you soon. Thank you. Today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.