Good morning. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the ITW's Q4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star followed by the number one. For those participating in the Q&A, you will have the opportunity to ask one question and, if needed, one follow-up question. Thank you. Erin Linnihan, Vice President of Investor Relations, you may begin your conference. Thank you, Tamika. Good morning and welcome to ITW's Q4 2024 Conference Call. I'm joined by our President and CEO, Chris O'Herlihy, and Senior Vice President and CFO, Michael Larsen. During today's call, we will discuss ITW's Q4 and full year 2024 financial results and provide guidance for full year 2025. Slide two is a reminder that this presentation contains forward-looking statements. Please refer to the company's 2023 Form 10-K and subsequent reports filed with the SEC for more detail about important risks that could cause actual results to differ materially from our expectations. This presentation uses certain non-GAAP measures, and a reconciliation of those measures to the most directly comparable GAAP measures is contained in the press release. Please turn to Slide three, and it's now my pleasure to turn the call over to our President and CEO, Chris O'Herlihy. Chris. Thank you, Erin, and good morning, everyone. As you saw in our press release this morning, in Q4, ITW delivered a solid finish to the year. We outperformed our underlying end markets with organic growth turning positive, excluding product line simplification, and we continued to execute well controlling the controllables, to expand operating margins and free cash flow to record levels. GAAP EPS improved 7% to $2.54. In end markets that we believe were down in the low to mid-single digits, Q4 organic revenue declined 0.5 point, which was 1 point better than the 1.4% decline in Q3. Excluding the impact of product line simplification, primarily due to strategic repositioning for growth in our Specialty Products segment, organic revenue growth was positive 0.4%. Overall demand was steady in Q4, with some improvement relative to demand levels going into the quarter, as revenue came in approximately two percentage points, or $70 million above what they would have been had demand held at the levels we were seeing exiting the Q3. In addition to outperforming our end markets, the ITW team did a solid job executing operationally, resulting in operating income of $1.03 billion and an increase of 4%, despite total revenues that were down more than 1%. Record operating margin of 26.2% was an increase of 140 basis points, with a 120 basis point contribution from enterprise initiatives. As a result of strong working capital management, primarily around inventory, free cash flow increased 10%, with a conversion to net income of 133%. Looking back on 2024, the ITW team delivered another year of solid operational and financial performance, achieving record financial results, including EPS, margins, and returns, as we consistently outperformed underlying end markets, particularly evident in segments such as Automotive OEM and Construction Products, and made continued progress on our next phase key strategic priorities. In 2025, we will build on this momentum and remain laser-focused on building above-market organic growth, fueled by customer-backed innovation into a defining ITW strength, on par with our world-class financial and operational capabilities, and deliver differentiated performance in whatever environment we face. We still have some work ahead of us as we position the company to deliver 3% plus CBI yield by 2030, but we are pleased with achieving 2% in 2024, more than double our historical pre-COVID levels. Furthermore, I'm particularly encouraged by the progress we're making on a key leading indicator of CBI yield, patent filings, which increased by 18% in 2024. Turning to our guidance, we are very well positioned to continue to execute at a very high level again in 2025 on both the top and bottom line. Per our usual revenue guidance approach, our organic growth projection of 1% to 3%, excluding PLS, reflects current levels of demand adjusted for seasonality. Although there are certainly some positive signals in our businesses, the current reality is that we are not yet seeing these reflected in orders. Having said that, we are very well positioned to capitalize on an improving demand environment if it should materialize. Our EPS guidance midpoint of $10.35 reflects the fact that we are faced with non-operational headwinds, including a foreign currency translation impact of $0.30. Our expected operating margin improvement of 100 basis points is powered by another solid contribution from enterprise initiatives independent of volume. In concluding my remarks this morning, I again want to extend my sincere gratitude to our global colleagues for their unwavering dedication to serving our customers and executing our strategy with excellence. Now I'll turn the call over to Michael to provide more detail on the quarter and full year performance, as well as our guidance for 2025. Michael. Thank you, Chris, and good morning, everyone. In Q4, the ITW team delivered a solid finish operationally and financially to a record year. Starting with the top line, organic growth was down 0.5%, which included a 0.9% revenue reduction from strategic product line simplification. Foreign currency translation reduced revenue by 1%, and two acquisitions earlier in the year added 0.2%. Total revenues was down 1.3%. Sequentially, revenue growth of plus 3.7% from Q3 to Q4 compared favorably to our historical sequential growth of plus 1.5%. On a geographic basis, organic revenue declined about 1.5% in North America, Europe was down 3%, and Asia-Pacific was up 5%, with China up 9%. On the bottom line, the ITW team continued to focus and execute well on the things within our control, as evidenced by an operating margin of 26.2%, an increase of 140 basis points year-over-year driven by enterprise initiatives, which contributed 120 basis points. Six of our seven segments expanded operating margin, driven primarily by strong execution on enterprise initiatives that contributed between 70 and 190 basis points to each segment. In summary, for Q4, we outperformed our underlying end markets with positive organic growth. ex-PLS achieved record margin performance with a strong contribution from enterprise initiatives and generated record free cash flow and record GAAP EPS of $2.54. Please turn to slide four. Operating cash flow was $1.1 billion, and free cash flow increased 10% to a quarterly record of $1 billion, with a conversion to net income of 133%. Strong working capital management, including inventory, was a meaningful driver of the strong cash performance in Q4, with further targeted inventory reductions this year as we project free cash flow conversion of greater than 100% for 2025. Now let's move to the segment results, starting with Automotive OEM, where organic revenue declined 2% in the Q4 against a tough comparison of plus 8% in Q4 2023. On a regional basis, North America was down 5%, while Europe was down 10% against a tough comparison of plus 11%. China grew 8% despite a comparison of plus 31%, as our China team continues to drive customer-backed innovation and gain market share, including in the rapidly growing EV market. For the full year, compared to industry build data, the segment outperformed relevant builds by our typical 200-300 basis points, and we expect similar outperformance in 2025 as we project that Automotive OEM will grow 0-2%, 1-3%, excluding PLS, with Auto builds in relevant markets that are projected to be down in the low single digits. On the bottom line, for the full year, Automotive OEM improved margins by 230 basis points to 19.6%, and the segment remains firmly on track to achieve its goal of low to mid-20s operating margin over the next couple of years. Turning to slide five, Food Equipment delivered organic growth of almost 3.5%, as equipment grew 3% and service grew 5%, as the growth investments made in the first half of 2024 to expand capacity and support long-term above-market growth in this very attractive service business are paying off. By region, North America grew 2%, with institutional end markets up in the high single digits and restaurants essentially flat. Our international business was strong, with growth of 5%, with Europe up 4%, and Asia-Pacific was up 11% due to strong equipment sales. Test & Measurement and Electronics organic revenue turned positive for the first time in five quarters, up 2%, with Test & Measurement essentially flat as electronics grew 6%, the highest growth rate since the Q4 of 2022, as semiconductor and electronics activity started to pick up. As we have talked about before, because of our focused growth investments, including customer-backed innovation through the cycle, we remain very well positioned to capitalize on a long list of attractive growth opportunities as the Semi and electronics recovery begins to take shape. Operating margins expanded by 170 basis points in the quarter to 27%. Moving on to slide six, organic growth in Welding improved as organic revenue was essentially flat after five subsequent quarters of year-over-year declines. Equipment was flat, and consumables were down 1%. While North America was down 2%, international grew 9% with strong growth in China as a result of some very targeted customer-backed innovation efforts. Throughout 2024, the Welding team continued to benefit from a strong pipeline of new products, which contributed more than 3% to growth. In our view, this is a great example of how our strategic CBI efforts and the adoption of our next phase CBI framework gives our divisions the ability to gain share and outgrow end markets on a consistent basis. Operating margin of 31.2% was a 160 basis point improvement over the prior year. Polymers & Fluids, organic revenue grew 1%, with polymers up 5% and fluids up 1%. Automotive Aftermarket, which tends to be more correlated to consumer discretionary spending, was down 1%, which is about two points ahead of end market growth, with relevant point-of-sale data indicating a market that was down 3%. On a geographic basis, North America declined 4%, and international grew 8%, with Europe again showing solid demand. Turning to slide seven, in our most interest rate-sensitive segment, Construction Products, organic growth was down 4% in a tough market as new housing starts were down about 7% globally in Q4. In North America, Construction Products was down 4%, approximately three points ahead of a market that was down about 7%, with residential renovation down 3% and commercial construction down 9%. Europe was down 3%, and Australia and New Zealand was down 8%. The 2025 outlook for the construction market globally remains uncertain, with new housing starts in the U.S. expected to be down in the low to mid-single digits. With that as backdrop, we expect Construction products to be about flat in 2025, as we're well positioned to outperform end markets with the launch of new products and market share gains. Operating margin of 28% improved 110 basis points, with another significant contribution from strong execution on enterprise initiatives. As expected, Specialty Products organic revenue was down 4%, with a planned 5% reduction in revenue from strategic PLS, as the team continued to take the necessary actions to strategically reposition the segment for consistent above-market growth. While the work is not complete, the progress so far has been encouraging, with 2024 organic growth of more than 3% and margin improvement of 380 basis points, which gives you a sense of the strategic and financial value we derived from PLS. Operating margin was a record 28.4% for the quarter. Moving to slide eight and full year 2024 results, as you've seen from ITW all year, our colleagues around the world continue to execute at a high level for our customers and for the enterprise. As a result of their efforts, ITW consistently outperformed end markets and delivered record results on key performance metrics such as earnings, operating margin, and after-tax return on capital. Throughout 2024, we remained focused on maximizing our growth and performance over the long term as we invested in projects that accelerate above-market organic growth and sustain productivity in our highly profitable core businesses. We raised our dividend for the 61st consecutive year by 7% as we returned more than $3.2 billion to shareholders in the form of dividends and share repurchases. Moving to slide nine for an update on one of our key strategic priorities. As we've talked about before, customer-backed innovation is the most impactful driver of our ability to consistently grow revenue above market. The CBI revenue of today fuels our ability to drive market penetration and share gains in the future, and over the past few years, we've expanded our CBI revenue yield from less than 1% pre-COVID to 2% in 2024. We're well positioned for further improvement in 2025 based on the recent launch of our next phase CBI framework. We can feel the energy and excitement from our divisional teams as they implement the framework in their divisions, and as Chris said, we're particularly pleased with the 18% increase in patent filings in 2024 because every one of those patents is tied to a known customer pain point and represents a high-quality growth opportunity for ITW. In 2025, we will continue to work on fully adopting our new CBI framework in each one of our divisions, consistent with the pace required to deliver CBI yield of 3% plus by 2030. Let's move to slide 10 and our guidance for full year 2025. As you can see, ITW is once again well positioned to execute at a high level and outperform our end markets in any scenario as we aim to improve margins by approximately 100 basis points with another strong contribution from enterprise initiatives. Per our usual process, our organic growth projection of 0% to 2% or 1% to 3%, excluding strategic PLS, of a percentage point is based on current levels of demand adjusted for typical seasonality. Foreign currency translation at current rates represents a 3% top-line headwind. In terms of profitability, operating margin is expected to improve by about 100 basis points to a range of 26.5% to 27.5%, which includes approximately 100 basis points contribution from projects related to enterprise initiatives that are independent of volume and range from 60 to 170 basis points in each segment. We are projecting GAAP EPS in the range of $10.15-$10.55, which includes a longer list than usual of non-operational headwinds, including $0.30 of unfavorable foreign currency translation impact and $0.15-$0.20 from increased restructuring expenses tied to ongoing 80/20 Front-to-Back projects and higher income tax expense with an expected tax rate in the range of 24% to 24.5%. Excluding the $0.30 of non-operational headwind from foreign currency, EPS would be $10.65 at the midpoint, an increase of 5% versus last year. In terms of cadence for the year, we expect a first-half/second-half EPS split of about 47% and 53% as compared to our usual 49% to 51%, which is due to increased restructuring expenses in the first half of the year. Combined with the typical sequential step-down in revenues from Q4 to Q1, we therefore expect Q1 EPS to contribute about 22% of the year's EPS, slightly below our typical 23% to 24%. As I mentioned, we expect strong free cash flows with conversion greater than net income, and per our disciplined capital allocation framework, surplus capital is allocated to an active share repurchase program as we plan to buy back $1.5 billion of our own shares in 2025. Our guidance does not account for any pricing adjustments made in response to the implementation of tariffs. ITW's produce-where-we-sell strategy largely mitigates potential tariff impact, and we're comfortable that once again we're in a position to read and react as necessary by adjusting price in response to higher costs as a result of tariffs. Based on our past experience, most recently in 2017, 2018, and our strong operational capabilities, we believe that the price-cost equation is manageable for ITW across a wide range of scenarios. Turning to our last slide, slide 11 for our 2025 organic growth projections by segment. As you can see, six of our seven segments are projecting positive organic growth based on current run rates adjusted for typical seasonality. Every segment is well positioned to outperform their end markets again in 2025, and consistent with our continuous improvement, never-satisfied mindset, every segment is also projecting margin improvement with another solid contribution from enterprise initiatives. In summary, our segments are heading into 2025 well positioned to execute again as they continue to outperform their underlying end markets and improve margins and profitability. With that, Erin, I'll turn it back to you. Thank you, Michael. Tamika, please open the line for questions. At this time, if you would like to ask a question, press star one on your telephone keypad. If you would like to withdraw your question, press star one. We'll pause for just a moment to compile the Q&A roster. Your first question is from the line of Steven Volkman with Jefferies. Great. Good morning, everybody. Thanks for taking the question. Good morning. A couple of things here, Michael. I think you gave a range of enterprise initiative benefits on the various segments, but I was too slow to write it down. But can you just maybe call out where the top and bottom kind of impact will be from enterprise initiatives on the segment level? Yeah. The largest impact, as you might expect, I think I said 190 basis points, would be in our Automotive OEM segment. We've talked about the margin improvement plan there going back to investor day in 2023, and so that's where the largest opportunity probably resides. And then at the lower end, you would expect segments that are already operating at margins in the kind of low 30s, maybe something like Welding, would be in that maybe 60 basis points plus range. So that's kind of, I think, the important point is that every one of our segments has opportunity for further improvement in margins driven by enterprise initiatives, which, as you know, are independent of volume, which is a great place to be going into a pretty uncertain 2025. Got it. Okay. Great. And then maybe just bigger picture, thanks for the slide on CBI. That's the one I think it's toughest for us to kind of explain. I'm wondering if there is a segment or maybe just even a couple of very specific projects that you could call out that kind of illustrate the power of CBI. Yeah. So Steve, I would say that CBI is well represented across all seven segments. Every division is working on this in a very intentional way, and we have a great pipeline of new products right across the company. But it's call out one where we've seen some very steady impact in 2024. Welding, obviously, we've called out on a few different calls here as having made great progress in what has been a very difficult market in Welding. We certainly mitigated that market condition by basically coming close to 3% innovation contribution from Welding in 2024, more to come in 2025. But nice increase across the portfolio. The increase you see going into 2025 is broad-based and will impact every segment, but I call out Welding specifically in 2024. Your next question comes from the line of Scott Davis with Melius Research. Hey. Good morning, guys. [crosstalk] Hey Good morning, Scott. I'm just kind of amazed that you can increase margins in a down-volume environment. I mean, it just doesn't happen very often in our world unless you're coming off a really big restructuring or something, which is not really the case for you guys. Help us understand. Let's just take auto as an example. When you look at your performance in auto, can you kind of parse it down to mixed benefit, new product benefit? You're getting better price and margin with new products. Are you more efficient with your labor or your fixed assets? I mean, if there's any way to kind of break down how this kind of special sauce is working, I think it would be helpful. Yeah. So Scott, I would say in auto specifically, and we kind of called this out somewhat at investor day in terms of the main drivers of margin improvement in auto were going to be volume recovery. Obviously, we're not getting a whole lot of that at the moment, but the other main components were enterprise initiatives and then higher margin on CBI. And that's really what's driving the margins in auto. Enterprise initiatives is just kind of how we think about those, and obviously, we've been delivering on those across the enterprise now for a while. But really, and they continue to be an important contributor to results. Really, these initiatives, which, as we called out, are independent of volume, are really an outcome of what we consider to be just this very, very strong continuous improvement mindset that's very much part of ITW's DNA and really drives divisional quality of practice in areas like 80/20 Front-to-Back and strategic sourcing. These are very much bottom-up initiatives driven by our talented people in our divisions at a very granular level. Most of these projects are less than $500,000 individually, but when you have 84 divisions, they add up to a real meaningful number here, so we have a lot of visibility, ownership, and accountability in our divisions around these initiatives. And as the track record is indicated here, with respect to enterprise initiatives over the last 11 years, our divisions have very much done what they said they would do. So we believe these are all sustainable. On the back of this ownership and accountability that's fundamental to our culture, the strong continuous improvement mindset that we would say is now hardwired into our divisions. And in the case of 80/20 Front-to-Back, as we've heard us say on many occasions, this is something that we'll never be done with. It's the gift that keeps on giving. So with that, we see this contribution continuing. Obviously, Michael's called it out again as 100 basis points in 2025, but ultimately, that's what makes it sustainable is this continuous improvement mindset that exists across all of our businesses, not just in auto. In auto, we also have, as we do elsewhere, the whole impact, higher margin impact of CBI, and the other aspect that's fundamental to enterprise initiatives is PLS, which we called out a number of times on this call as being fundamentally valuable to us, not just from a growth standpoint in terms of clarifying where to grow, simplifying our portfolio, and simplifying the allocation of resources, but also in terms of the margin pop that we get from enterprise initiatives around PLS, and a lot of those projects have a payback of a year or less. Okay. That's helpful. Guys, you didn't mention M&A in your prepared remarks, and I know this stuff can be a little lumpy, but I happen to have a view that you guys can be arguably a "best owner" for lots of different stuff because you've been successful in the past in running lots of different widget businesses, and that skill seems to be transferable, I would think, but maybe I'm overstating that. Just a little color on what's holding you back on M&A? Is it price? Is it the opportunity set? I would think you'd have a fair amount of confidence in your organization that you could integrate and win with a pretty wide set, I guess, is kind of my point. Yeah. I think as we've outlined, basically, we remain pretty disciplined in terms of M&A, in terms of our portfolio management strategy. We certainly have, we would say, a clear and well-defined view of what fits our strategy and our financial criteria. So it really is a question of us finding the right opportunities. We're focused on high-quality acquisitions that would extend our long-term growth potential, minimum 4% plus growth at high quality, and then being able to leverage the business model to improve margins. So I would say we review opportunities on an ongoing basis. We are very selective given all the organic growth potential we have in our core businesses, but we are pretty active in terms of reviewing opportunities. And to the extent that we find the right opportunities, then we would be appropriately aggressive in pursuing them. I would say, going back to the MTS example of an opportunity that really ticked all the boxes for us, and although in two years in here, this is turning out to be a home run for us. That was largely on the basis that it really met all the characteristics that we look at. Rest assured, we're pretty active. We just need to find the right opportunities. Your next question is from the line of Andrew Kaplowitz with Citigroup. Hey, guys. Close enough. How are you doing? Chris or Michael, I know you're forecasting your segments based on current run rates for 2025, and Chris mentioned that orders haven't picked up yet, but I was intrigued by your commentary that your sequential growth from Q3 to Q4 was 3.7%, greater than 1.5% historical. Did you see through the end of the year, better yet through January, any pickup in sales momentum that's worth calling out? You did call out semi-recovery is beginning within Test & Measurement. Do you forecast that to continue? Is there anything else you're seeing? Yeah. I think it's a little too early, probably, Andy, to call a recovery here for sure. We are seeing some positive signs. We called out semi-electronics. Going through the Q4, we saw a pretty solid December, but we usually do. And so I think we don't want to get too far ahead of ourselves here at this point. So we've modeled, as we always do, based on run rate, and certainly, if market conditions improve, if demand picks up in the second half. And I should say there are certainly some external indicators that would suggest that that is a possibility. We're really well positioned to take advantage of those growth opportunities. And if that turns out to be the case, our 1% to 3% organic ex-PLS would be on the conservative side. But we don't want to get too far ahead of ourselves. We're focused on the things that we can control. We just talked about the margin improvement from enterprise initiatives. And when the inevitable recovery happens, we're going to be in a great position to continue to outgrow the underlying markets. So that's kind of how we've positioned this. It's helpful, Michael. And could you give us more color into your ability to continue to outperform in China? I mean, it's been very impressive. Obviously, it's focused on China Automotive. So maybe just talk about that. I think you already said that you expect similar levels of outperformance in 2025 versus 2024 in China Automotive or in Automotive in general, but maybe talk about what you're doing there. And is it really CBI that's helping you or something else? Yeah. So Andy, the outperformance in China relative to Automotive has been going on for quite a while, and it really speaks to the quality of the team that we built in China, the investments we've made in China over many years. And you're right. CBI is a large part of this. Particularly, our growth in EV in China has been significant. You saw it again this year where we outperformed builds in China by about 800 basis points. We expect similar outperformance in China next year in Automotive, really on the back of the resource base, the investments that we've made, the really best-in-class innovation and business model application that we see in China that's put us in a position not just to outperform on revenues, but even from a margin standpoint, our margins in China are pretty much similar to what they are elsewhere in the world, so it's really a factor of the organizational capabilities we've built across the business model, innovation, and growth in China. Appreciate the color, guys. [crosstalk]Thanks, Andy. Your next question is from the line of Jeff Sprague with Vertical Research. Hey. Thank you. Good morning, everyone. Hey. I just wanted to think about the interrelationship of PLS and CBI. Right? Regardless of how good your margins are, right, there's always going to be a 20 in your construct. So should we think of CBI also just kind of constantly reloading the PLS opportunity set? And if that's the case, should we just kind of be thinking about a, I don't know, secular 1% headwind on PLS indefinitely as the CBI benefits kind of build on the other side of that equation? Yeah. So maybe just to refresh, I think, in terms of our philosophy and how we think about product identification and the value that accrues for us. So I would say, Jeff, PLS for us is very much an essential part of the ongoing strategic review and portfolio pruning that goes on really as a critical part of the implementation of 80/20 Front-to-Back in all of our divisions. And we got very much a tried and trusted methodology around this that's deeply embedded and very well understood. It certainly requires discipline, but there's a lot of benefit that our divisions get from proper PLS implementation, and even though there's a short-term kind of revenue impact here, this has always been positive for us in the long term from a growth standpoint in that PLS provides strategic clarity, which ultimately will help CBI for sure, but not just clarity, but also execution on our division's most critical customers and products and effective resource deployment around that, again, which all indirectly helps CBI, then from a margin improvement standpoint, of course, we get the cost savings from PLS, which ultimately are a meaningful component of the enterprise initiatives, and so I would say with PLS, there's no doubt that in the specific way that we execute PLS, it's very much an ongoing kind of value-creating activity for us in our divisions. And like I say, we have a lot of positive experience and expertise on this, and we saw this very much so on specialty this year, but on our overall business on an ongoing basis. But the clarity that comes out of PLS ultimately will be an enabler around CBI. And Jeff, if I may just add, PLS was a little higher in 2024 than kind of our normal maintenance run rate of about 0.5 point, which was entirely driven by the work that was done in Specialty Products. And I talked a little about the outcomes and the momentum going into 2025 in that segment. We're a little bit higher this year as well, 1 point, primarily in Automotive construction, and then more work to do in Specialty Products. I think it's too early to tell whether this is kind of a new, I think you called it a secular kind of where now the run rate is about a point. I think it's a little too early to say. Let's get through this year, and then we'll kind of see what it rolls up to next year. But I think the important thing is, as Chris said, this is an outcome of how we run these businesses. We're not trying to manage the PLS number because we know the strategic and financial value that we derive from doing PLS in our businesses. Great. Thanks for that perspective. And then maybe just a little tactical one on auto, right? In region, for region, but even in region, right? U.S., Canada, Mexico, could be a lot of scrambling going on in the supply chain, maybe a reprieve here this week. But are you seeing any unusual change in order patterns, people trying to get in front of maybe just the expiration of this 30-day cooling-off period? Just any other kind of tariff-related noise that you might be seeing would be interesting. Yeah. Jeff, to be honest, I would say it's too early to tell. I mean, obviously, it's been a pretty choppy week on the tariff front. But look, all I would say is that we're really well positioned here to read and react to whatever comes along, and we're confident that this will not really affect EPS for us this year. Right. And we have assets in all these geographies. We're uniquely positioned to take care of customers, and that's going to be our priority as we manage through this. Your next question is from the line of Jamie Cook with Truist Securities. Good morning. I guess just two questions. One, just back on auto again. Another question, just obviously, auto has been a great content story for you. If we shift back more to ICE versus EV, just wondering what the potential headwind could be for the auto business, given it's just been such a great growth driver and then my second question, Chris, to you. Obviously, under you, CBI seems to be, I don't want to say more important, but it's definitely getting more press or you're talking about it more, I would say, relative to your predecessors but just trying to think about the 30% plus margin target. We do get some criticism that that might be too high or maybe it gets pushed out as we're focused on CBI. So just anything you can say about your confidence level there, and is it just a function of volumes or anything you want to say on that target? Thank you. Yeah. So let me start with the CBI and margin impact first, Jamie, if I could. We would say that actually CBI is likely to be an enabler on margins because ordinarily, when we invent differentiated new products, margins tend to be higher. And with respect to the whole organic growth versus margin question, which I think you're posing, from our perspective, organic growth and margin go hand in hand. And I would even say that historically, our fastest-growing businesses have often been our highest-margin businesses. And I think we also demonstrated coming out of the pandemic where we had both healthy growth and margin expansion. While over that period, we were investing in a very focused way in resources like innovation and strategic marketing to position us to grow at 4% plus in the long term, so for us, I mean, it really comes down to, as we often talk about in ITW, the quality of organic growth, the fact that we can deliver organic growth at these high incrementals, which is really a natural outcome of applying our business model to this high-quality portfolio of businesses, so the math is pretty simple. Given our margin is 26% with growth at 35% plus incrementals, then we expand margin, and in fact, the path to 30%, as we have pointed out, is much more paved with operating leverage than structural cost reduction, and this is why, effectively, it's our primary road to 30% in 2030. Given the high levels of differentiation in our portfolio, we have very healthy gross margins. This provides more than enough investment firepower to appropriately invest in our businesses to help drive CBI a nd growth while still delivering very healthy incremental margins. And on the back of that, of course, continued expansion in operating margins. And then I think, Jamie, you asked about kind of the pace of the transition from ICE to EV. And I think for us, at this point, our content per vehicle, ICE versus EV, is about the same. Our margin profile is about the same. And so we are fairly agnostic to any mix in ICE versus EV at this point. Obviously, we've been, as we've talked about many times on this call, really well positioned, particularly in China where the growth has been and the content per vehicle growth has been really terrific. So at this point, we don't see this as a major issue for the company. Thank you. Sure. Your next question is from the line of Joe Ritchie with Goldman Sachs. Hey, guys. Good morning. [crosstalk]Morning. Hey. So just talking about PLS and customer-backed innovation, I guess on the PLS side, how much has that been contributing to the margin expansion? How much did it contribute in 2024 and the expectation for 2025? And then your commentary on CBI is very interesting. I'm just curious which segments are furthest maybe behind or in the earlier stages of implementing it. Yes. So the generic answer to your question in terms of the margin contribution from PLS in the overall context of enterprise initiatives, it varies from year to year, Joe, but I'd say directionally, it's in the 50/50 range, I would say. On CBI, like I said, we have broad-based kind of improvement on CBI across the portfolio. All seven segments are working on this and making improvements. If I was to call out ones that are probably further ahead, I referenced Welding already. Automotive, obviously, necessarily so given the level of disruption that we see in Automotive markets right now. Food equipment, obviously, a very fertile space for innovation on the back of energy and water savings. And then Test & Measurement electronics, another area where significant change in those end markets around increasing stringency in innovation standards, in quality control standards. Obviously, new materials being developed require new test methods. So that's another area where we've had a lot of early success, I would say. But rest assured, all seven segments, we'll see an improvement in innovation contribution as we go forward. That's helpful, Chris. If I could maybe just follow up with one more. I recognize you're planning to do the $1.5 billion in buyback this year. You take a look at your balance sheet right now. It's in a good position. If you wanted to lever up another turn, it would be pretty easy for you to do a more aggressive buyback. I'm just curious, under what scenario would you maybe consider doing maybe a little bit more and be a little bit more aggressive buying back your shares? Yeah, Joe. So the $1.5 billion that we've penciled in for this year is our best estimate of what the surplus capital is going to be for the company this year. So once we've fully funded our internal investments for growth and productivity, once we've paid the dividend, any acquisitions, and then what's left is allocated to share repurchases. And obviously, to the extent that the performance of the company exceeds kind of the guidance we gave you today, whether it's top line or margins, we still have opportunity on working capital, as I said in my remarks. And that $1.5 billion goes higher, then typically what we would do is allocate that excess surplus capital also to the share buyback program. So maybe one way to think about the $1.5 billion is it's at least $1.5 billion. And to the extent the company performs better than what we laid out for you today, the number could be higher than that. I think in terms of capital structure, if I may, without getting too technical here, I think we've made some really good adjustments over the last few years in response to a higher interest rate environment. I'll just point to our interest expense in the Q4 being down year-over-year. Our projection for 2025 is flat to maybe even down slightly, despite the fact that interest rates are significantly higher. I think if you just look at kind of what other peers are talking about, I think that would compare pretty favorably. So in terms of capital structure, we would say we're in a pretty optimal place at this point in time and do not foresee any major changes in terms of capital structure or capital allocation for that matter as we enter into 2025. Your next question is from the line of Tami Zakaria with J.P. Morgan. Hi. Good morning. Thank you so much. [crosstalk]Good morning. Good morning. So start. Hi. So circling back on the tariff topic, I appreciate that it's too early to tell, but can you remind us of your exposure to direct imports from countries like Mexico and also the EU and Canada? The reason I asked last time in 2018, you did provide some numbers around imports from China and how that would impact the P&L, which was very helpful. So anything you're able to or willing to share now? Yeah. I think with all the usual caveats, I'll give you kind of a way to think about this, Tamika. The combined imports from China, Canada, and Mexico account for less than 10% of our domestic spend here in the U.S.. So China, it's kind of in the mid-single-digit, 5%, 5, 6% range. Canada, 2%. Mexico, 2%. And then, obviously, Europe, slightly different equation there. But that's for those three. So you add that up and do kind of back-of-the-envelope. Let's just pick China for a moment, okay? So roughly $250 million of imports from China. A 10% increase is $25 million, which means we have to go get price of at least $25 million and probably a little bit more than that to recover the margin impact as well. So I think the, and this is a $16 billion company. So I think that's kind of why, combined with our produce where we sell strategy, our ability to read and react at the divisional level, we feel like as we sit here today, this is a manageable equation. We've got a game plan in place that will cover tariff-related material cost inflation with price actions based on some pretty positive experience doing the same thing coming out of 2017, 2018, and by the way, a very inflationary period coming out of COVID. Given the differentiated nature of our businesses, our ability to execute and take care of customers, we feel very good about our ability to offset those tariff-related cost increases. So pretty much in any scenario that we can think of as we sit here today, we feel like we're in a good spot. Got it. So a quick follow-up. Minus any tariff-related noise, what is the expectation for price cost for this year that's embedded in the guide? Yeah. I think, Tami, we're kind of back in kind of a normal price cost environment. Historically, we have offset cost increases with price on a dollar basis, and also it's been slightly favorable from a margin standpoint as well. So keep in mind that given the performance and the value of the products and services that we offer, we're in a good position here to get price to offset any potential cost increases. Your next question is from the line of Julian Mitchell Barclays. [crosstalk]Hey, Julian. Hi. Good morning. Hey. Good morning. Maybe just the first question around the top line sort of cadence. Understood, Michael, what you said about Q1, first half, share of earnings. Anything you'd call out on the sort of top line movement through the year and anything on sort of any segments we should bear in mind when looking at the Slide 11 weightings? Yeah. I think, Julian, typically, I'll refer to kind of the typical seasonality. And so what usually happens from Q4 to Q1 is revenues sequentially decline by kind of 3% to ish. It was a little bit more than that last year in 2024 and in 2023. If that happens, that's about a little over $100 million. That's organic growth that's down about one. And then foreign currency with rates, as we sit here today, adds another three points of pressure. So now you've got revenues kind of down in that three to five range. Margins typically start out at the lower end in Q1 and kind of progress from there as we go through the year. Just like top line, by the way, goes up Q1 to Q2. Q2 to Q3 is about flat. And then there's another pickup again from Q3 to Q4. And then we have these non-operational headwinds beyond currency, including somewhat higher restructuring in the first half of 2025, all related to 80/20 Front-to-Back projects that kind of these are projects less than a year payback that are feeding the enterprise savings, the margin improvement that we are putting up every quarter. That will be more weighted towards the first and the Q2. We have a little bit of headwind on the tax rate as well in the first half. You add all that up just relative to Q4 EPS, $2.54 revenues, probably $0.10 of EPS headwind going into Q1, and then maybe another $0.10 of headwind from the combination of higher restructuring expense and a higher tax rate. That's that 22% of the full year number that we gave you for the Q1. Hopefully that's helpful. That's great. Thank you, Michael. And maybe just wanted to focus perhaps on Specialty Products for a second. That was one segment that definitely caught the eye the first, called it, few quarters of last year. Seems to be normalizing somewhat on sales in the Q4. So how are we thinking about margins in specialty for the year ahead? There's a lot going on there with PLS and restructuring or reorganization there, it looks like. Maybe just kind of flesh out what the plan is in specialty and any more details on the year ahead there, please. Yeah. So as you pointed out, Julian, very solid year in specialty in 2024. Some strength in areas like aerospace and then strong demand in areas like food and beverage packaging equipment and so on. And as we call out all through the year, this has all been done at a time when we were doing some strategic portfolio repositioning for long-term growth. And that certainly was a significant impact in Q4, as you saw, about 500 basis points. There's some carryover on this in 2025, but we expect growth in specialty in 2025 despite the PLS. We also expect margin improvement in specialty in 2025. And the objective here is to make this segment a 4% grower in the long term. And based on 2024 performance, we're certainly well on our way to doing that. Great. Thank you. [crosstalk]Sure. Sure. Your next question is from the line of Nigel Coe with Wolfe Research. Oh, good morning. Thanks for the question. Just wanted to talk about the 90 basis points of margin expansion at the midpoint, ex-items. I know you don't provide margin guidance by segment, but if you could just make any comments in general sense on where you see the best opportunities for OMX and where perhaps those below the bar, and in particular, I just wanted to try and dig into the auto margins, just given first half relatively depressed and the exit rate close to 20%. So I'm just wondering what you're seeing in auto specifically. Yeah, so Nigel, you're right. We don't really give margin guidance by segment, but what I can tell you is that we expect, based on kind of the bottom-up projection that we received from our segments at plan time, we expect every one of our segments to improve margins in 2025, and that's based on what they told us, not what Chris and I would like to see. And so I think, obviously, the businesses that are the segments that are a little further along in terms of the journey towards 30%. So if you think about Welding, I think it can be a little bit more challenging. Without getting too detailed, just look at the growth at 35% to 40% incrementals. You get less of margin improvement in Welding than you do, for example, in Automotive. Now, in Automotive, you're right. We're not counting on a lot of lift here from in fact, we're counting on a market that's down in the low single digits. And the big driver here in 2025 is the enterprise initiatives. And so that's what's fueling the margin improvement in that, call it 100 basis points of margin improvement in Automotive in 2025. So we still, we've got a lot of things that are still within our control from a margin improvement standpoint. Independent of volume, that's a great place to be. We'd love to see some operating leverage. And if you just look at, as an example, if we try to call out Specialty Products, a little 3% growth and suddenly margins are up more than 300 basis points. And so the incrementals, when this growth starts to come through, at least in the near term, are going to be quite a bit higher than our kind of historical 35% to 40% incremental margins. And that's really from there, that's where the margin improvement really accelerates. So hopefully that's helpful, Nigel. It is, Michael. Yeah. Thanks. And I just want to double-click into that one key restructuring. $0.15, I think it's $55-$60 million of pre-tax investments. Just given that you don't disclose restructuring by segment, any help in terms of where you see the heaviest impacts across the portfolio? I'd rather not get into that level of detail, Nigel. We'll call it out when we report Q1. You'll be able to see kind of we've got that schedule in the back of the press release that lays out the restructuring. Suffice it to say that there's opportunity for further margin improvement in every one of these segments. And I'd rather not get into the specifics in terms of by segment for the first half. Now, just to be clear, the EPS headwind on a year-over-year basis that we called out from restructuring and the tax rate was $0.15-$0.20 per share. About half of that is tax and the other half is restructuring. 80% of that restructuring is planned for the first half of 2025. It'll be a little bit of a challenging start to the year in terms of the headline numbers. We'll help with calling out kind of those non-operational headwinds as we go through the year. Just from a modeling standpoint, we want to make sure everybody was kind of clear on how the year might unfold. Your next question is from the line of Joe O'Dea with Wells Fargo. Hi. Good morning. Good morning. Michael, your comment about your position to take advantage of an inevitable recovery is encouraging. Just curious, as you look at the end markets and you think about kind of volumes and cycles, what you're looking at, whether it's kind of region or whether it's end market and segment, but where you think you're going to see things get better earliest and any perspective from a volume standpoint in terms of how depressed some of these markets are? Yeah, Joe, I wish I could help you there. I mean, I think my crystal ball is not any better than yours. I think the reference to taking advantage of the recovery was specific to what we're seeing in Semi and electronics. I think if you look at some of so that's one cycle that certainly for two years has been pretty challenged. I think the same could be said for some of our CapEx-driven businesses, Test & Measurement, the Instron business, positive growth in Q4, but not the typical kind of five, six, seven organic that you would expect in that business over the long run. Welding, certainly encouraged that the business is now flat-ish in Q4 and down low single digits for the full year. That's a cycle. Typically, those cycles last six to eight quarters. And that's kind of where we're at right now. So the only thing I can just give these are just kind of anecdotal thoughts on where things go from here. But things change quickly. This is we're operating in a pretty fluid and pretty dynamic demand environment with things change pretty quickly here. We, as you know, are more short-cycle oriented. So, our focus is really on how do we make sure we position ourselves for long-term above-market organic growth in these businesses, continue to invest through these cycles, leveraging our financial position to do so. And then when these recoveries come, we're going to be in a great spot to compete and gain share and grow with new products. So that's really the focus that we're talking about. No, I appreciate that color. And then on tariffs and pricing and how you manage the uncertainty, the question is just how quickly you can implement pricing through the system. And I'm sure that's not a one-size-fits-all kind of answer, but living in an environment where you can have such headline whiplash, kind of how you approach that and how long it takes to get pricing in response to what you would anticipate tariffs could be. Yeah. So, Joe, you're correct. It's not really a one-size-fits-all answer because we have obviously 84 divisions and 84 different kind of circumstances and opportunity profiles around pricing. But what I can assure you is that given the decentralized nature of the company, given the fact that decisions are made very close to our customers, then our nimbleness means that we are quicker to read and react more than most. So there's not a huge lag with us for that reason. There's not a whole lot of approvals that are needed to implement pricing. It's done on the ground, in the division, close to the customer, relative to the circumstantial opportunity profile that the division sees. Your next question is from the line of Andrew Obin with Bank of America. Hi. Yes. Good morning. Good morning. Just to follow up on short-cycle industrial names. So just T&M&E and Welding. So just to confirm, we're not modeling any ramp of organic growth this year. And more structurally, once again, just to confirm, if PMI is sustainably over 50, how fast can these businesses grow? And should we think sort of high single digits as possible in a robust cyclical recovery? I think, Andrew, it's impossible to answer that question. I mean, I think we have models based on current levels of demand. We are not modeling a recovery in any of these end markets, including Welding and Test & Measurement. If that indeed happens, we will take full advantage of the growth opportunities. Historically, coming out of cycles like this, it's not uncommon to see quarterly growth rates in kind of the mid and maybe even high single digits. But every recovery, as you know, is different. And as we like to say, we're not economists here. So there's no incentive for us to try to forecast where things go, just given the short-cycle nature of our businesses. So I'm sorry I can't hel p you. No, no. This is a great answer. Thank you. And just on Food Equipment, solid growth in the Q4, right? 3% plus versus declining Q3. Got us for 1% to 3% organic growth. So why would things decelerate from the Q4? Are you seeing pressure anywhere? No, we're not seeing pressure. It's basically, again, based on sequential run rates over time, not just the Q4. We are very encouraged about food generally, I would say. We've seen this continued recovery in service. Still not quite back at pre-pandemic levels here. Just to refresh, we are the only major manufacturer with a captive service business, and it's a real differentiator for us. There continues to be a very fertile innovation environment in Food Equipment. As I said earlier around things like water and energy savings. We see continued end market strength in areas like institutions. And then geographically, I think China and Latin America are expected to be solid geographically. But that's kind of the view on Food Equipment. We expect a solid 2025 on the back of a solid 2024. So, Andrew, I'd say we share your optimism, and we'll pass that on to the team that runs the business, okay? And we'll see how they do this year. But one to three, further margin improvement. The service business is really performing at a good level now, given the investments that we talked about. And so we're really feeling good about how we're positioned going into 2025 in Food Equipment. Great. And thank you, everyone, for your time today. This concludes today's call. Thank you for joining. You may now disconnect your line.