Good morning. My name is Trevor, and I will be your conference operator today. At this time, I would like to welcome everyone to the ITW second quarter 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 the star followed by the number 1 key. For those participating in the question-and-answer, 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, Trevor. Good morning. Welcome to ITW's second quarter 2026 conference call. I'm joined by our President and Chief Executive Officer, Chris O'Herlihy, and Senior Vice President and Chief Financial Officer, Michael Larsen. During today's call, we will discuss ITW's second quarter 2026 financial results and provide an update on our outlook for full year 2026. Slide two is a reminder that this presentation contains forward-looking statements. Please refer to the company's 2025 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. A reconciliation of those measures to the most directly comparable GAAP measures is contained in the press release. Please turn to slide three. It's now my pleasure to turn the call over to our President and Chief Executive Officer, Chris O'Herlihy. Chris? Thank you, Erin. Good morning, everyone. As you saw in our press release this morning, the ITW team delivered strong operational and financial performance in the second quarter. Highlights include 4.5% organic growth, operating margin expansion to 26.7%, and a 10% increase in GAAP EPS to $2.84. Notably, operating income reached $1.15 billion, a 7.4% increase, marking the most profitable quarter in ITW's history. Our top-line momentum this quarter was propelled by significant acceleration in our CapEx-related businesses, led by organic growth of 14% in welding, 10% in Test & Measurement and Electronics, alongside 7% in polymers and fluids. In addition to capitalizing on favorable market conditions, we continue to make progress on our long-term organic growth agenda, most notably through Customer-Back Innovation, or CBI, which contributed 3% to revenue growth in the first half, compared to 2.4% for full year 2025. Delivering a 3% plus CBI contribution is the single biggest catalyst for achieving sustained, high-quality enterprise organic growth of 4% or higher. Our first half performance offers another proof point that disciplined execution on our enterprise strategy priorities is yielding strong results. We're firmly on track to achieve our 2030 performance goals. Operationally, the ITW team continued to execute at a high level, with enterprise initiatives contributing 120 basis points to our operating margin. We also expanded free cash flow by 41% and returned over $1.2 billion to shareholders through dividends and share repurchases. Looking ahead, we are raising both top and bottom-line full-year guidance, with all seven segments expected to deliver both positive organic growth and expand operating margins. Full-year organic growth guidance is raised by 1.5 percentage points to a new midpoint of 3.5%. GAAP EPS is raised by $0.15 to a new midpoint of $11.45, reflecting 9% year-over-year growth. This marks our second guidance increase of the year. As we've said before, ITW's unique business model, resilient portfolio, and do-what-we-say execution, demonstrated daily by our colleagues worldwide, ensure we are well-positioned to deliver robust financial performance in any environment and remain invested in our long-term strategy through any business cycle. As order activity continues to strengthen across several of our end markets, our production capacity, new product pipeline, and best-in-class customer-facing metrics position us to fully capitalize on these positive demand trends that we are now seeing. With that, I'll hand the call over to Michael to walk you through the segment details and updated full-year outlook. Michael? Thank you, Chris, and good morning, everyone. In Q2, total revenue grew 6.1%, driven by 4.5% organic growth, a 1.4% contribution from foreign currency translation, and 0.2% from an acquisition. As Chris said, organic growth performance was particularly strong in our CapEx and semiconductor-related segments, as well as polymers and fluids. Our Customer-Back Innovation efforts continue to gain momentum, and CBI was a key top-line catalyst, contributing 3% to growth in the first half. From a regional perspective, organic growth was up 6% in both North America and Asia Pacific, 3% in China, and flat in Europe. Moving to the bottom line, operating margin expanded by 40 basis points to 26.7%, with a solid 120 basis points contribution from enterprise initiatives. In the quarter, price increases more than offset higher raw material costs in dollar terms, though timing lags between inflation and price adjustments temporarily diluted margins by 40 basis points. As demonstrated in prior cycles, we fully expect to recover this margin impact over time, as evidenced by the implied incremental margin guidance for the full year of 40%. Free cash flow increased 41%, delivering a 77% conversion rate in line with typical seasonal trends. In Q2, we opportunistically pulled forward our planned Q3 share repurchases, buying back $750 million, or about 1%, of ITW's outstanding shares at an average price of $255 per share. Turning to slide four, our sequential trajectory from Q1- Q2 underscores accelerating strength across every key performance metric. Sequential revenue growth was +7%, versus our historical average of +2%. Operating margin expanded 130 basis points, and operating income grew 12%, making Q2 the most profitable quarter in company history. Moving to the segment highlights, starting with automotive OEM. Organic revenue was roughly flat, with North America up 1%, China up 1%, and Europe down 5%. We maintain our full-year expectation of outpacing global bills by 200-300 basis points, with bills projected to be down 2%. Operating margin improved by 30 basis points to 21.6%, with enterprise initiative gains partially offset by price-cost timing lags. Turning to slide five. Food equipment organic revenue was flat overall, as service strength of +5% helped offset a 2% decline in equipment, a notable sequential improvement from the 6% equipment decline in Q1. Regionally, North America was down 4%, despite some institutional demand improvement in areas such as healthcare, while international delivered strong growth of 6% in the quarter. Looking ahead, we expect that organic revenue growth will turn positive and that margins will improve in the second half. Test and measurement and electronics had an outstanding quarter, with 10% organic growth led by a 21% surge in electronics, which represents about 40% of the segment. The two main drivers of this strong growth that we're seeing are, one, our electronic assembly businesses, which serve the printed circuit board industry, and two, our semiconductor-related businesses, which serve the chip manufacturing industry. Our businesses in these two sectors are able to fully capitalize on the growth opportunities ahead of them and gain market share based on their expanded capacity, their highly differentiated product portfolios, and best-in-class customer-facing metrics. Operating margin expanded by 240 basis points to 25.2%, and we expect further improvement in the second half of the year. Lastly, it is worth noting that order growth continues to outpace revenue growth in this segment, which is also the case in our welding segment. Speaking of welding and moving on to slide six, welding delivered record top-line results driven by 14% organic growth as equipment surged 19%, driven by market tailwinds and strong new product adoption. North America, which represents about 85% of the welding segment, led the charge of 19%, with broad-based growth across both industrial and commercial markets as demand continued to strengthen in areas such as infrastructure, energy, aerospace, and defense. Operating margin remained best in class at 32.4%. As you may have heard, a storm impacted two of our welding facilities in Appleton, Wisconsin yesterday, with one manufacturing facility and one warehouse building sustaining damage. First, we're grateful that all our ITW colleagues are safe and accounted for. As for the business, our teams are in the process of executing contingency plans with a focus on minimizing disruption for our customers. In terms of our guidance, we do not expect any material impact on ITW. In polymers and fluids, organic growth reached 7%, driven by strength across the board, including 7% growth in automotive aftermarket as a result of traction on new products and continued market share gains. Polymers grew 7% and fluids rose 8%, supported by strong momentum in general industrial and biopharma markets. Operating margin expanded 160 basis points to a record 29.3%. Turning to slide seven. In construction products, organic growth was a positive 2%, marking the highest organic growth rate in four years. All regions grew, with North America up 2%, Europe up 1%, and Australia and New Zealand up 2%. Residential renovation in North America grew 1%, and commercial construction, which represents about 15% of the region, was up 13%. Specialty products revenue was up 3%, with organic revenue up 2%. North America grew 2% and international grew 1%, with strong growth in medical, aerospace, and consumer packaging offset by product line simplification in appliance components. With that, let's turn to our slide eight for an update on our guidance. Looking ahead, ITW is well positioned to deliver strong performance on both the top and bottom line in 2026. Starting with the top line, our organic growth projection is now 3%-4%, up from 1%-3%. The updated midpoint of 3.5% represents an increase of 1.5 percentage points versus prior guidance. Per our usual process, our guidance is based on current levels of demand, adjusted for typical seasonality and prevailing foreign exchange rates. On the bottom line, operating margin guidance is unchanged at 26.5%-27.5%, as enterprise initiatives are expected to contribute more than 100 basis points. We're raising our GAAP EPS guidance by $0.15 to a range of $11.35-$11.55, with a new midpoint of $11.45, representing 9% year-over-year growth. Today's guidance increase follows a $0.10 increase to guidance in Q1. The effective tax rate remains unchanged at 23%-24%. Free cash flow conversion is projected to exceed 100% of net income, with full-year share repurchases of approximately $1.5 billion. Lastly, with respect to potential tariff refunds, we do not expect any material recovery and haven't included anything in our updated guidance. We enter the second half of 2026 with strong operational momentum, highlighted by organic growth of 4.5% in the second quarter. As evidenced by today's raised guidance, which implies sustained organic growth of 4.5% in the second half, our best-in-class margins and returns, and our disciplined operational execution, ITW is well positioned to deliver strong financial performance in 2026 and beyond. With that, I'll turn the call over to Erin. Thank you, Michael. Trevor, please open the lines for questions. Hello, everyone. We will now begin the question- and- answer session. Please limit yourself to one question and one follow-up. At this time, I'd like to remind everyone that to ask a question, press star and then the number one on your telephone keypad. To withdraw your question, press star number one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. We will pause for just a moment to compile the question-and-answer roster. Your first question comes from the line of Andy Kaplowitz of Citi. Andy, your line is open. Hey, good morning, everyone. Nice quarter. Morning. Good morning, Andy. Question, Mike, obviously the growth in your CapEx-focused segments was quite impressive. Maybe you could talk about the durability of that growth. You mentioned orders continue to outpace revenue. While we don't think of ITW as a backlog business, does that mean you're building significant backlog in those segments? I know you're forecasting current run rates, but I would surmise you obviously have more confidence regarding your CapEx businesses in particular. Yeah. Andy, you're absolutely correct. We typically don't forecast the economy. Our forecast is largely based on run rates. Also what we're hearing from our customers, we don't carry a whole lot of backlog, but it has to be said that the order activity that we've seen in welding and test measurement electronics has been a good bit ahead of the revenue rates we've been demonstrating. Again, a bit more backlog there than normal. I would say we're very confident going into the back half of the year based on what we see in terms of the order rates, based on what we hear from our customers. I would also underscore the fact that the whole thing is also underpinned by some real nice progress on Customer-Back Innovation, which again strengthens our confidence that the growth is very sustainable here in the back half. Chris, to that point, maybe we can do a double-click on CBI. It has been a few years since your Investor Day. You mentioned 3% CBI in the first half. I think that is ahead of where you want to be even at this point. I think your long-term growth algorithm includes 2%-3% CBI. Again, can you keep up that kind of CBI? Is it time to think about maybe even more CBI moving forward? We always want more. What do you think about that? Yeah. 100%. Look, I would say, Andy, that we are really encouraged by the strong momentum that we are seeing in CBI right down into our divisions, the followership, the engagement, and the progress that we are making. We continue to see the strength in terms of our pipeline of new products that we are working on. This is one of the reasons that we are demonstrating these results. At 3% now, it is probably a little earlier than we thought, but no surprise given the way we and our teams have embraced this. The way we approach this is very similar to how we approached 80/20 front to back 10 years-12 years ago in terms of really investing and building capability over the last number of years in CBI. We have lots of great innovation practice throughout the company. As we have mentioned, we have codified this into a very effective and holistic innovation framework. We launched this in the back half of 2024. Since then, we have relentlessly implemented it at a very high quality of practice. Very similar to how we approached 80/20 front to back. In my mind, this innovation progress that we are seeing, A, is not a huge surprise, B, is very sustainable, and most of all, really encouraging in terms of what we see the projects we are working on extensively throughout the company in every segment. We will see CBI contribution increase in every segment this year and on into the future. Pretty encouraged about it. Appreciate all the color. Thank you. Our next question comes from the line of Tami Zakaria from JPMorgan. Tami, your line is open. Hey, good morning. Congrats on very nice results. My first question is on organic growth. I appreciate you don't give much color on intra-quarter trends. From a segment perspective, are you seeing any improvements quarter to date in some categories, or largely trends have remained stable versus the second quarter, based of the seven segments? I'd say, Tami, I would say the big thing about Q2 is the acceleration on the top line relative to Q1. 7% sequential growth compared to our historical 2%. It was really across the board. Every segment came in above their historical typical sequential growth rate, with the largest improvement in welding and test and measurement, as well as in polymers and fluids. As we went through Q2, April was off to a really good start, sustained that in May, and June was even better than that. We're off to a good start here to Q3, right in track with where we want to be, and consistent with the updated guidance that we're providing today, which implies that we can sustain the growth here in the back half of the year at 4.5% organic. I'd say that was kind of the big new news, the acceleration in demand that we also talked about on the last earnings call. It really continued throughout the second quarter and into the third quarter. Understood. That's very helpful. Then more of a longer term question. I think you're targeting 30% operating margin by 2030. Three of your seven segments are already at or above that. Of the remaining four, which ones do you expect to see more outsized margin growth in the next 12 months, 24 months? Or are we thinking about it the wrong way in the sense that the three segments that are already above 30 have room to go even higher? Well, Tami, I think in the spirit of continuous improvement, which is so embedded in our DNA here at ITW, we would expect, and the segments themselves would expect, that margins will continue to improve here as they move towards their full potential. Certainly as long as the incrementals are, margins are significantly above 30%, and we're guiding to 40% for the full year, those margins will continue to improve as the businesses grow. At the same time, obviously, we've talked about margin improvement in automotive OEM, approaching kind of the target we laid out in 2023 at Investor Day in kind of the low to mid-20s. Still a lot of runway in test and measurement. You saw nice improvement this quarter, 200 basis points+ improvement in test and measurement. That will continue. There's no reason why food equipment shouldn't be at 30%+ over time. Polymers and fluids, putting up a new record this quarter at 29%+. Oh, by the way, construction, with very little help on operating leverage, is putting up 30%+. I think really across the board, every segment will continue to improve. As Chris said, in the second half here of the year, in the near term, we expect every segment to improve their organic growth rate and every segment to improve margins. There's no reason to believe that that's going to stop anytime soon. As Chris also said, we are well on our way to our 30%+ enterprise targets by 2030, with the big driver, obviously still the enterprise initiatives, the organic growth, and the operating leverage that comes with it. The other big factor here is all these new products that are coming in that Chris talked about with the CBI contribution of 3% are coming in at higher margins. You put all of these things together and, at least from our vantage point, you see a very clear path to that 30%+ that we've committed to. Understood. Thank you. Our next question comes from Scott Davis from Melius Research. Scott, go ahead. Your line is open. Good morning, Chris and Michael and Erin. Good morning, Scott. Numbers look solid overall. The CBI number really caught my eye. I don't want to hit a dead horse, it feels like that's the key here in the quarter. Give us a sense of how you measure it and how you kind of think about the contra account, meaning any cannibalization that potentially occurs from iterative new products versus clean sheet paper stuff. Just help us understand how you guys kind of think about it, measure it, incentivize it. That'd just be helpful color, I think. Sure. Yeah. The CBI number is a truly incremental number, Scott. It's basically incremental revenues from new products introduced within the last three years. Cannibalization is taken out, it's all new. These are new actual revenues. Obviously, we audit these and so on and so forth. These are subject to a very high level of scrutiny within the company. In terms of how we incentivize, this is one of our four long-term metrics that we incentivize inside the company. We just introduced this as a metric actually last year when we launched a framework. Basically, everybody from the divisions on up are compensated on progress in this. It doesn't measure cannibalization. It nets that out and measures true new products year-over-year incremental revenues. It measures them for three years, at which point these roll off and you've got to have a new product coming along, otherwise the CBI number falls off. Yeah, that makes sense. I didn't realize it was part of the compensation. That's good. Good. Just switching gears a little bit, you're doing a lot of buybacks, which is great. Still have a very clean balance sheet. The M&A pipeline, have valuations come down at all? I know in some areas they have and some they haven't, but in stuff that you guys are looking at, have you seen much movement there that could potentially make things worthwhile? Yeah. I would say, Scott, we haven't seen a lot of movement in terms of coming down. As we said before, I think we would characterize our approach at M&A as active but disciplined, I would say. We're sticking to our disciplined portfolio management strategy here. Obviously, we believe, and we're now starting to realize this really compelling opportunity on organic growth. To the extent that we can find high-quality acquisitions that can extend our long-term growth potential, then we're certainly very interested. Obviously, the second aspect to that is that we've got to be able to leverage the business model to improve margins. We review opportunities on an ongoing basis. We're pretty selective given all the organic growth potential that we have in our core businesses. As I said, active but disciplined, and when we find those opportunities and when we do those opportunities, you will hopefully appreciate that we will have subjected them to this level of screening, and ensure that they will be good long-term businesses for ITW. Obviously, MTS is the last significant one that we did. Example of an opportunity that ticked all the boxes. Three, four years in now, this has turned out to be a great acquisition for us. We had one bolt-on acquisition in the semi manufacturing space late last year that had all the high-quality growth attributes that we look for. We'd be very open to doing more deals like that, but we're prepared to wait for them, particularly given the compelling organic growth opportunity that we have. Yeah, makes sense. I only ask because you guys are great operators, and so you can typically make other people's mediocre pretty darn good. That's all I got to say. We appreciate that. Thanks, Scott. We appreciate that. Thank you. I'll pass it on. Thank you. Our next question comes from Joe Ritchie from Goldman Sachs. Joe, your line is open. Good morning, guys. Morning. Morning. It seems like you guys are in a pretty good spot from a capacity standpoint. I think you called it out in test measurement and the electronics segment, increasing capacity recently. I guess, when I think about your growth rates still being behind your orders, I'm just wondering, maybe you can give a little bit more color on what you're doing to make sure that you're matching the demand environment, and are there particular areas across your portfolio where you feel like you need to invest today? Yeah. Joe, that's a natural outcome of how we do 80/20, is we use it to balance and match capacity. We never allow ourselves to get in a situation where we run out of capacity. We're very proactive at ensuring that we add capacity in advance of growth. Effectively, that's what we've been doing for the last number of years. If I cite semi and electronics specifically, obviously there's been a bit of a down cycle the last couple of years. Given our belief in the business, in our differentiation in that space, we continue to invest meaningfully over the last couple of years. Now that's really helping us, as the semi industry particularly starts and has been ramping for the last six months. We are really well positioned to capitalize on that growth. That's an approach we take in all of our businesses. It's a natural outcome of how we do 80/20 in terms of ensuring that we balance capacity, and that we invest proactively so that we don't get caught in a situation where we have growth, but we can't basically satisfy the growth because we don't have enough capacity. Got it. That's helpful, Chris. I guess the following question, I just wanted to touch on the welding margins for a second. Obviously, the growth rate there was incredibly good, better than we expected this quarter, and I guess better start to the year. Nice to see the progress there. From a margin standpoint, we've been at kind of like 32%, 33% now for several quarters. Are we hitting a natural ceiling on that business from a margin standpoint? We just would've expected maybe a little bit more torque on the growth that you're seeing. Yeah. I'd say, Joe, we definitely expect further margin improvement in the welding segment. I'll go back to, we had a little bit of near-term headwind from a raw material cost inflation standpoint and the lag between the price to offset those costs. Once we get through that, our incrementals will return to kind of our typical 40%+. As we grow, margins will improve from there. That's really the big driver here. When I look at the margin walk for the welding segment, the operating leverage is really good. The enterprise initiatives are really good. A little bit of pressure on price cost. Obviously when you're growing at 14% organic, you are going to be paying out slightly higher commissions to your partners that help you achieve those growth rates. That's really what we're talking about here. Like we said, in the second half of the year, margins, we would expect them to improve, as well as well into the future, into next year and beyond. Okay, great. Thank you, guys. Sure. Thank you. Our next question comes from the line of Jamie Cook with Truist Securities. Jamie, your line is open. Hi, good morning. Congrats on a nice quarter. I guess just two questions. One, Michael, just on the guide, just given the increase in organic growth, I'm surprised we didn't raise our margins. I know you're implying a 40% incremental margin typically. That's a high-quality incremental margin. I'm just wondering if there's upside to that 40% or what's limiting that and why we didn't increase our margins on the increased organic growth. My second question, sort of similar to the last one, but just on specialty. The organic growth was up. I think margins were down 110 basis points. Any color behind which product line was driving that? Thank you. Jamie. I think on the incremental margins, would've been 40% in Q2 if it wasn't for the headwind on the price cost timing lag that we just talked about. Margins, instead of being up 40 basis points year-over-year, would've been up 80 basis points. We do expect this lag will probably be with us a little bit into Q3. Certainly some progress on price cost. In Q4, there will be further improvement on price cost. The guidance and what I'm talking about is based on all the known price and material cost increases as we sit here today. Obviously, as we just saw in Q2, it can be a pretty volatile environment, and particularly what we saw in Q2, to be a little more specific, was some of the crude oil derivatives, like our resin purchases in automotive and in specialty coming through, and the associated price increases lagging a little bit. The good news is those resin and crude oil prices are trending downwards in Q3, and the price increases are coming through. That's exactly, to your question on specialty, what you're seeing in specialty. Yeah. I think reasonable growth and operating leverage, good progress on the enterprise initiatives, and then headwind. Actually, the segment with the highest headwind on price cost in the second quarter was specialty. It just takes a little bit longer to get those price increases through in specialty and in automotive to some extent. They are coming. The other thing that's happening is, like we said earlier, all these new products with the progress on CBI are coming through at higher margins. You'll continue to see specialty margins improve in the second half and into next year. I guess on the total for the full year guide, would it be reasonable to assume more the mid to high point of the margin ranges is probably more reasonable versus the low point? Are we still just with inflation, tariffs, whatever, it's still too uncertain to make that call? Well, yeah. I think, Jamie, if it wasn't for price cost, we would definitely be talking about the high end of the range. Just given what we're working through right now, we're providing the range, $26.5-$27.5. Incremental margins for the full year, about 40%. If it wasn't for price cost, that would be in the mid, maybe even in the high 40s. It's just a temporary price cost lag that we're working through. We worked through it before. If you go back to the first round of tariffs, the second round of tariffs. As you know, companies with highly differentiated products will not only be able to offset the costing cost of the $1 a piece, which is what we're doing right now, but will ultimately recover the margins down the road and maybe do a little bit better than that. Okay. I appreciate it. Thank you. Congrats. It's a pretty dynamic environment on the price cost front right now. Okay. I appreciate it. Thank you. Congrats. Yeah. Thank you. Our next question comes from the line of Stephen Volkmann from Jefferies. Steve, your line is open. Thank you. Good morning. Good morning. You almost touched on my question just there, Michael. I'm curious just to hear your thoughts about how we should be thinking directionally about the incrementals in 2027, assuming there's no more changes in all the things that have been changing. Well, we haven't done the annual plans yet for 2027. I won't really have an accurate view until we get closer to the end of the year and early next year. I think the long-term algorithm here, if you go back and look at our TSR model, has been incrementals in that 35% range. We've said previously that's now in the 40%-45% range in a normal environment. I would characterize the current price cost environment as a little unusual and kind of a temporary headwind. I think as we go into next year, I think when we roll things up, if we don't see 40% plus, I think we would be a little surprised. Steve, I would say fundamentally what drives our incremental in the long term is the quality of our portfolio and the quality of execution of our business model. The quality of our portfolio has continued to get better through the ongoing portfolio pruning we've done through PLS over the years. The quality of our business model continues to get better in terms of the quality of the 80/20 execution. You couple that with the increased progress on CBI, then all those things would augur for a very strong incremental in 2027. Great. Okay. That's helpful. Maybe just sort of philosophical, it feels like we're sort of inflecting on organic growth, which is great to see. Do you sort of do a little less on enterprise initiatives as you grow faster? You focus more on growth? Are those two things kind of not necessarily related? No, I think we're definitely focused on not having any regression operationally and sustain the momentum on the enterprise initiatives. As we rolled up our long-range plans this summer, we see a continued contribution from enterprise initiatives into the next three to four years. We would expect that to continue, and it's not mutually exclusive with organic growth. All those things kind of work together. All right. Much appreciated. Good luck. Sure. Our next question comes from the line of Steven Fisher with UBS. Steven, your line is open. Thanks. Good morning. Morning. You had a very big improvement in year-over-year growth in the polymers and fluids in Q2 versus Q1. Wondering if you could just help us with how much of that was comps versus underlying true demand, because the comps did get a bit easier, but you did mention some new products and share gains. I'm just curious how much more runway you have on those specific initiatives. Maybe that brings us back to some of the CBI discussion, curious for any help there. Yeah. In terms of polymers and fluids, obviously a very strong quarter, up 7%. Nice margin improvement as well of 160 basis points. The encouraging thing for us was that the strength was very broad-based. We saw strength across all three platforms, automotive aftermarket, polymers and fluids, with a very healthy contribution from CBI. CBI was almost 5% in that segment in the quarter. That was really what drove. I think what this highlights, because of the sustainability of the CBI efforts that we are making, this just all highlights for us the fact that this segment is really well-positioned to be a 4% grower for the enterprise on a sustained basis. That's very helpful. Wonder if you could just give us a little more color on the automotive trends between Europe and China. Clearly some differences there, and maybe there's some export dynamics or what have you. I'm just curious, what does greater penetration of China auto globally mean for you? I think just to start with China, I think what's driving, and has been driving the growth there for a long period of time, has been our penetration with local Chinese EV manufacturers. If you look at EV production in the quarter, we're still up in the mid to high teens globally, and EVs are now almost 20% of global production. That favorable dynamic will continue to benefit our Chinese business. Certainly, a little bit of a mixed bag here in North America. If you look at it by OEM, some of our customers had strong quarters, others had a little bit more challenging from production standpoint. North America was up 1%, builds about flat here in North America. Europe, a fair bit of PLS in our European business. Europe down 5%. We don't talk about it much because it's still fairly small, but there's a lot of strength in our India business, which hopefully we'll be able to talk about that the way we talk about our Chinese business at some point in the future. Overall, certainly from a production unit standpoint, we are not expecting a lot of growth. This year we said down 2%. We're not expecting a lot of growth either next year, but we are fully expecting that we'll continue to outgrow the underlying production numbers by 200 basis points- 300 basis points, which is what we've done historically, and which is how we're running the business and incentivizing the team is all about how do we grow our content with existing and potentially new customers. That's how we would position the automotive business. I will say this, we expect continued margin improvement. We've seen some nice progress over the last few years with more to come. I think, again, a little bit of near-term headwind on price cost, which we'll work through. All these new products, all this new content that we're talking about is coming in at meaningfully higher margins because they're solving real problems for our customers. That's what's really encouraging in the automotive segment. Sounds good. Congrats. Thanks. All right. Thank you. The next question comes from the line of Mircea Dobre from Baird. Mig, your line is open. Hello, Mig, are you there? It seems that Mig has disconnected from the call. In the meantime, we'll move on to Andrew Obin from Bank of America. We can circle back to Mig if he rejoins. Andrew, your line is open. Hello? Yeah, Andrew, we can hear you. Okay. Excellent. Sorry. Yeah. Just a question on inflation. Just would appear that there is quite a bit of it, and I think you've sort of said that the timing of inflation is what influenced incrementals this quarter. What are you seeing six months out, and what levers internally do you have if inflation continues to persist? Well, it's certainly true that we are seeing meaningful inflation this year. The Q2 impact was primarily from crude oil derivatives, so we're talking resin and chemicals. I'll also add logistics, transportation, freight costs. Electronic components continue to be fairly inflationary. The biggest lever we have is obviously the price lever that we talked a fair bit about, but it's also driving productivity across our businesses and our strategic sourcing efforts, which are part of that enterprise initiative number that we report on a quarterly basis. Those are kind of the big levers that we're working. I'd say inflation is, for ITW, very manageable. Everything we know about is included in our guidance. We have this unique ability, given how we're organized in this highly decentralized environment, our divisions are so good at reading and reacting to what they're seeing from an inflationary standpoint. We're highly confident that we'll be able to manage our way through this with some of the levers that I just described as kind of the more obvious ones. Maybe a question on welding was quite a bit better than what we modeled. Were you guys surprised internally by just how good North America was? If you could just sort of dissect, is it reshoring? Is it just the industries that you're doing well in are recapitalizing? What is it that driving America? Is it the cycle getting better? Just maybe dig into a little bit of that, what's driving the strength of welding, and if you were surprised by how good it was in the quarter. Thank you. We weren't surprised. We saw this happen. It really started building in Q1, even late Q4 last year, I would say. It wasn't a huge surprise to us. As Michael indicated, growth up 14%, order intake was higher than that. I would say the growth was pretty broad-based, not just in our industrial markets, like energy infrastructure, aerospace, construction fabrication related to some data center construction. What was particularly encouraging was also we saw growth in our commercial platform, so areas like small fabrication. It was a factor of the markets we are in are seeing some nice demand trends. I would continue to underscore the importance of innovation here. We've seen real nice progress on innovation and welding over the last number of years, and we saw a lot of that momentum come through here in Q2 and throughout the first half of the year. It's this combination of market and some great new products that we've launched in the last 12 months, and we continue to launch through the back of this year. Thank you. Our next question comes from the line of David Raso from Evercore. David, your line is open. Thank you for the time. Just want to make sure I understand, trying to think about the price cost impact when I think about the margin walk from 2026 to 2027. When you're exiting the year, what's sort of baked into the guidance for price cost impact, say, in the fourth quarter? I know there was about a 40 basis points drag this quarter. Maybe you can also help us for the full year, how you're thinking about price cost. Just again, that sort of exit rate idea, and then maybe the full year-over-year thought process for 2027. Sure, David. As we said, 40 basis points here in Q2, some improvement in Q3, call it maybe 30 basis points, and further improvement in Q4, approaching maybe the 20 basis points. For the full year, maybe that's what it all averages out to, so about 20 basis points of headwind. Kind of our historical normal price cost contribution, from a margin standpoint, is kind of plus 10 basis points-20 basis points. Again, that's based on historical. We'll see when we roll up the numbers as part of annual plan, maybe that's a good way to think about it. What you'll see is still a little bit of headwind here on margins and incrementals in Q3, closer to kind of a more normal margin and incremental performance in Q4, and certainly margin improvement sequentially from Q3 into Q4. Hopefully as we go into next year, exiting Q4, we'll be back to kind of a normal price cost dynamic. Certainly nothing material that will prevent us from improving margins even further in 2027 as we head towards our 30%+ target by 2030. It's fair to say with the organic growth acceleration, the baseline, how you're going to budget 2027, you're going to try to price for price cost still being that kind of 10 basis points-15 basis points improvement. Is that a fair generalization? Well, you make it sound like we have this very sophisticated pricing model at corporate. The reality is that there are thousands of pricing decisions made at ITW every day in our divisions, and none of them are waiting for direction from the team here in Glenview. What we have done historically, maybe that's the best way to answer your question, is we have seen a historical margin improvement from price cost in that 10 basis points- 20 basis points improvement, and that's probably what we'd expect as we roll out the plans for next year. If we see something very different, we'll certainly let you know when we provide guidance and explain, provide a little context in terms of why it would be different. I think that's a pretty good base case assumption as you think about modeling 2027. The big drivers from a margin improvement standpoint will continue to be the enterprise initiatives, the new products coming in at higher margins. So like I said earlier, we would be surprised if we don't have incremental margins in that 40%-45% range as we go into 2027. Again, what Chris said, a lot of that is because we've worked so hard on pruning the portfolio and making sure we're only in areas with high levels of sustainable differentiation, where these pricing and buying decisions are not made purely based on price. They're made based on the value that our products and solutions and services can provide. Well, that's what I appreciate. I was fishing for the idea this year, maybe we're controlling costs a little bit more, just given price cost. Next year, can I get a positive price cost or will you proactively increase your initiatives, your restructuring costs that might mute it? It sounds like we can approach 2027 in a pure traditional 10 basis points- 20 basis points as a baseline. Yeah. I think, David, that's a really good base case. Like I said, if it's very different in January when we give guidance, we'll let you know why that's the case. Thank you. I appreciate it. Sure. This concludes the question and answer session. Thank you for participating in today's conference call. All lines may disconnect at this time.