Good morning, welcome to the Johnson Controls third quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star, then one your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the call over to Jim Lucas, Vice President, Investor Relations. Please go ahead. Good morning, thank you for joining our conference call to discuss Johnson Controls third quarter fiscal 2023 results. The press release and all related tables issued earlier this morning, as well as the conference call slide presentation, can be found on the Investor Relations portion of our website at johnsoncontrols.com. Joining me on the call today are Johnson Controls Chairman and Chief Executive Officer, George Oliver, and Chief Financial Officer, Olivier Leonetti. Before we begin, let me remind you that during our presentation today, we will make forward-looking statements. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond the control of Johnson Controls. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to carefully review the risk factors and cautionary statements in our most recent Form 10-Q, Form 10-K, and today's release. We will also reference certain non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are contained in the schedules attached to our press release and in the appendix to this presentation, both of which can be found on the Investor Relations section of Johnson Controls' website. I will now turn the call over to George. Thanks, Jim. Good morning, everyone. Thank you for joining us on the call today. Let's begin with slide three. Johnson Controls delivered another strong quarter that met the high end of our guidance. We delivered 9% organic sales growth, adjusted segment EBITDA margin expansion of 130 basis points, and 21% adjusted EPS growth. Our longer cycle Building Solutions business continued to show strength globally. Service momentum accelerated, driven by our enhanced solutions and increased adoption of our digital offerings. Orders grew 8% overall, with service orders leading the way with 12% growth. Our backlog ended the quarter up 8% to $12 billion across both install and service. We remain confident in the resiliency of our backlog and order momentum as our performance during the quarter solidifies our investment in building a world-class service organization. We continue to see a strong pipeline of opportunities, and the outlook for orders in our longer cycle businesses remains robust. In our shorter cycle Global Products business, our applied and rooftop businesses delivered another quarter of very strong double-digit growth, and demand remained strong. We also continued to see strength in our commercial ducted and fire detection businesses. Consistent with trends in the industry, our ducted North America residential business remains soft. Overall, we are encouraged by the continued strength and good visibility across our Building Solutions segments. As we look ahead for the remainder of the year with one quarter to go, we are narrowing our full-year adjusted EPS guide to approximately $3.55, which represents the midpoint of the previous range. At Johnson Controls, we continue to expand on the solid foundation that we have built with strong order momentum and a record backlog, driving consistent top-line growth. We have made good progress enhancing profitability across our portfolio throughout the fiscal year, and we have significant actions underway that we believe will result in further margin expansion. Now, turning to slide four. We have spent the past few years investing more strategically in our service business, and we are seeing strong returns from those investments. During the third quarter, service orders and sales both grew 12%. Our service business has transformed from a traditional break-and-fix business to helping customers proactively and more efficiently optimize management of all assets in the building. Digital is becoming an important enabler to driving more service opportunities and growth. We also accelerated sales of our higher-margin parts business, which once again grew at a strong double-digit pace in the quarter. Decarbonization is an area of focus across the entire Johnson Controls portfolio. This includes our sustainable infrastructure, or SI business, as well as many products and solutions in our portfolio, such as heat pumps, energy-efficient refrigerants, and digital solutions. In fact, nearly 55% of revenue comes from sustainable products and solutions. We continue to see strong demand in our SI business, with orders growing 20% in the quarter. Heat pump sales were up mid-single digits globally, with very strong double-digit growth in our applied and industrial refrigeration businesses. During the quarter, we acquired M&M Carnot, a leading provider of natural refrigerant solutions with ultra-low Global Warming Potential, or GWP. M&M designs equipment and controls that use carbon dioxide, which has a GWP of 1. By contrast, traditional refrigerants can have GWPs in thousands, magnifying rather than solving global warming. We have spent the past few years defining our multi-phase digital strategy to transform environments to more effectively use data to drive outcomes for our customers. We continue to gain momentum. In the quarter, we grew our connected revenue at a high single-digit rate. We surpassed 16,000 connected chillers. We are now expanding OpenBlue into connecting controls and security to better optimize customer assets and improve outcomes in buildings, further differentiating our offering. Historically, buildings required standalone systems to manage each asset within the building. Today, connected buildings are creating a single digital dashboard optimized for energy. Still require multiple systems to manage the assets. We are making great progress in creating the digital thread throughout the building life cycle, connecting controls is the next step in the evolution of this journey. Moving on to slide five. We recently announced the acquisition of FM:Systems, which is an important next step in adding critical capabilities to OpenBlue. FM:Systems is a leader in the growing integrated workplace management system, or IWMS, sector. IWMS furthers our OpenBlue capabilities, allowing Johnson Controls to offer a one-stop solution that helps customers accelerate their digital transformation journey, improve building efficiency, and reduce operational costs. FM:Systems advances OpenBlue's capabilities and brings a significant amount of data, including service, space utilization, and real estate portfolio management. The addition of FM:Systems's capabilities into OpenBlue enhances Johnson Controls' relationship with customers by providing a full suite of integrated outcome-based solutions. Turning to slide six. Extreme temperatures are increasingly straining buildings, putting at risk the ability to deliver comfortable and healthy indoor environments. Our OpenBlue digital solutions help optimize indoor air quality, comfort, and energy consumption while monitoring outdoor air conditions, ensuring our customers can meet their operating objectives, even in the most extreme conditions. When paired with our OpenBlue digital services, we are uniquely positioned to help our customers deliver healthy indoor environments while optimizing costs, reducing emissions, and ensuring HVAC equipment is operating at peak performance, ready for any condition. We spoke earlier to the progress we are making expanding margins, and we are not done. Supply chains are improving, which have normalized lead times, allowing us to create better operating leverage in our manufacturing facilities. We continue to make progress in improving our SG&A structure and have additional actions underway to further optimize our performance. On capital allocation, we have established a track record of being prudent and disciplined. In fiscal 2023, we have returned $1.3 billion to shareholders via share repurchases and dividends, in addition to investing in several strategic acquisitions. Climate change is a defining theme of this century. With nearly 40% of emissions coming from buildings, we have the technology and the people to turn buildings from one of the greatest challenges into one of the biggest and best solutions. I will now turn the call over to Olivier to go through the financial details of the quarter. Olivier? Thanks, George, and good morning, everyone. Let me start with the summary on slide seven. Total sales grew 8%, while organic sales increased 9%, with strong double-digit growth in our service business. FX was a 2% headwind in the quarter. Adjusted segment EBITDA increased 17%, with margins expanding 130 basis points to 16.4%. Price/cost was positive, and we delivered strong productivity savings. Turning to our EPS bridge on slide eight, adjusted EPS of $1.03 was at the high end of our guidance and increased 21% year-over-year. Operations contributed $0.23 of the growth in the quarter, benefiting from positive price/cost and our ongoing SG&A and COGS actions. Below the line, we saw headwinds from net financing costs, FX, and non-controlling interest. Overall, we were pleased with the strong adjusted EPS performance in the third quarter. Let's now discuss our segment results in more detail on slides nine through 12. Beginning on slide nine, organic sales in our shorter cycle Global Products business increased 6% in the quarter, with 8% of price offsetting a slight volume decline. Global Products continues to see strength in the applied business, where our rooftop business in North America has nearly doubled this year. Fire and Security grew low single digits with continued momentum within our fire detection products. Industrial Refrigeration had another strong quarter, growing over 20%, driven by North America. Our Global Products third-party backlog increased 8% from the prior year to $2.5 billion. Adjusted segment EBITDA margins declined 10 basis points against a tough comparison to 22.1%, as continued weakness in the residential North America market offset positive price, cost, and productivity savings. Moving to slide 11 to discuss our Building Solutions performance. Orders increased 8% organically as demand remained strong, and we continue to convert our healthy pipeline. For the 3rd consecutive quarter, service orders grew low double digits, with 12% growth in the quarter as our focus strategy on transforming services into a more predictable, consistent business is paying dividends. We saw install orders increase 6% against a tougher comparison, led by double-digit orders in North America in the prior year. Total sales grew 10%, with organic sales increasing 11%. We saw strong double-digit growth in both service and install, growing 12% and 10% respectively. Adjusted segment EBITDA increased 35%, with margins expanding 240 basis points, as we continue to execute higher margin backlog and recognize savings from our productivity initiatives. Building Solutions backlog remains at record levels, growing 8% to $12 billion. Both service and install backlog increased 8% year-over-year. Let's discuss the Building Solutions performance by region on slide 12. Orders in North America increased 5%, with continued strength across our HVAC and control platforms, up high single digits year-over-year. Overall, there was robust demand in our office, data center, government, manufacturing, and education sectors. Service continues to perform well, increasing 8% year-over-year, driven by our shorter-term transactional business. Sales in North America were up 10% organically, with broad-based growth across the portfolio. Our install business grew 11%, with over 20% growth in new construction. Our service business maintained its strong momentum with 9% growth. Sales across our HVAC and controls platform grew low teens year-over-year, while fire and security increased high single digits. Segment margins expanded an impressive 270 basis points year-over-year to 14.4%, driven by ongoing productivity benefits and the continued execution of higher margin backlog. This resulted in a strong price/cost performance. Total backlog ended the quarter at $8 billion, up 11% year-over-year. In EMEALA, orders were up 10%, driven by healthy growth in service, up 19% year-over-year. Industrial refrigeration and HVAC and controls had solid results in the quarter, with each growing over 25%, driven by the decarbonization efforts in the United Kingdom and Northern Europe. By region, we saw double-digit growth in the Middle East, Africa, and Latin America. We saw strong demand in both our government and industrial sectors. Sales in EMEALA grew 9% organically, led by mid-teens growth in service as our short-cycle transactional business continues to have good momentum. Applied Commercial HVAC grew high single digits, driven by healthy performance in Latin America. Fire and Security grew high single digits within the quarter. Segment EBITDA margins declined 10 basis points to 8.6%, increased 190 basis points sequentially, driven by further improvement of higher margin backlog conversion. Backlog was up 6% year-over-year to $2.3 billion. In Asia Pacific, orders grew 14%, driven by double-digit growth in both service and install. By region, China grew 14% year-over-year, with continued strength in data centers and manufacturing sectors. Northeast Asia had growth of high teens, driven by controls. Sales in Asia Pacific increased 16%, with 19% growth in service and 14% growth in install. Overall, commercial HVAC and controls grew approximately 20%, driven by the installed business within China, while fire and security declined low single digits. China continued its momentum from Q2, reporting 25% growth in the quarter, which included double-digit growth in both service and install. Segment EBITDA margins expanded 110 basis points to 13.9%, driven by ongoing productivity savings and the execution of higher margin backlog, resulting in positive price/cost. Backlog of $1.7 billion increased 2% year-over-year. Turning to our balance sheet and cash flow on slide 13. We ended the third quarter with $1.1 billion in available cash, and net debt declined 2.1 times, which remains within our longer term target of 2x-2.5x. Inventory turns improved sequentially, and free cash flow remains a major focus, with inventory being a key driver to further improvement in the fourth quarter. Now let's discuss our fourth quarter and fiscal year 2023 guidance on slide 14. We are introducing fourth quarter sales guidance of approximately 4%. We expect Building Solutions momentum to continue, while Global Products faces a tough year-over-year comparison, driven by inventory reduction in residential HVAC and certain fire and security indirect channels, as lead time have materially improved. For the fourth quarter, we expect segment EBITDA margin to expand approximately 60 basis points and adjusted EPS to approximate $1.10, which represents 11% year-over-year growth. For the full year, we are narrowing our adjusted EPS guidance to approximate $3.55, which represents the midpoint of the prior range. This represents 18% year-over-year growth. We expect organic sales to grow high single digits and segment EBITDA margins to expand approximately 110 basis points. We expect free cash flow conversion to be roughly 70% as we make good progress on inventory reduction, while not at the level we were expecting, given some inventory reduction occurring in our indirect channels. We see good momentum continuing to build for fiscal 2024. Our longer cycle Building Solutions segments continue to experience strong orders. Backlog remains at record levels. Global Products is benefiting from strength in the larger commercial HVAC space, while residential HVAC comps should ease entering the new fiscal year. We have made good progress on expanding margins this year. We are not done. With that, operator, please open up the lines for questions. We will now begin the question and answer session. To ask a question, you may press star then one your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In respect of time, we ask you limit yourself to one question and one follow-up question. At this time, we will pause momentarily to assemble our roster. The first question will come from Nigel Coe with Wolfe Research. Go ahead. Oh, thanks. Good morning, everyone. Thanks for the question. Maybe we could just unpack a little bit more, you know, the fourth quarter sales growth, especially within Global Products. It sounds like you're still seeing, I don't know, high single-digit growth in the solutions businesses, and it looks like products down mid-single-digits or so. Is that correct? Maybe just talk about some of the headwinds. I mean, I think resi HVAC, we understand, but maybe just talk about the fire and security products, the headwinds, maybe, you know, unpack between geographies and end markets. Yeah. Good morning, Nigel. Let me start by saying our overall commercial business, both products and services, remains incredibly strong, and what I would say is across the board, hitting on all cylinders. We do continue to see strong bookings in, in our applied and in our rooftop, commercial rooftop businesses, you know, across the board. When you look at our Building Solutions, you know, we made great progress during the, the course of the year, improving the margins, and, and the service momentum now is, is expected to continue. When I look at the, the, our Building Solutions business, we've got a very strong backlog, and more important is within that backlog, the, the mix of services that are coming through with the momentum that we've been building and, and now adding FM:Systems systems is gonna be a big, a big add to that. Now, referencing the orders in Q4, in revenue in Q4, when you look at our residential and fire and security businesses, we have been experiencing some short-term pressure in our shorter cycle book to build business, and it's in those two areas. The inventories in the channel are resetting as we've been able to improve lead times, so therefore, there are some short-term adjustments in the book to build our revenues. But what I would say is, with those adjustments, we're continuing to execute with the deployment of our new products, and we're seeing good traction there. As we project going forward, we still see that coming back and being very strong as we set up for 2024. On the resi, I think it's in line with what you're seeing across the industry and on fire and security is mainly in our products business, which ultimately is a book-to-bill business, and therefore, we're seeing that adjustment. Okay. That, that's clear. We'll, we'll follow up offline. George, you mentioned 2024. Obviously we turn the calendar into FY 2024 very soon. Maybe just talk about how you're thinking about the setup for 2024, you know, I don't know, based on the backlog conversion or customer conversations. How should we think about, you know, the, the top line environment for the FY 2024? Yeah, Nigel, what I'd say is that, you know, we're still building the 2024 plan, but I'd touch upon some key items here that I think really set us up well for 2024. When you look at the commercial markets, as I talked a little bit earlier, that we see that are incredibly healthy and are playing to our strengths, especially with the secular trends that are underway within the commercial space. That, you know, we see with our orders up 8%, with our backlog up in our Building Solutions business at $12 billion, and even in our Global Products business, despite some of the inventory adjustments, we are up about 8% in our Global Products business also. When you look at that, that momentum's gonna continue. If you add the stimulus spending that we don't believe has, has really been materialized yet, is in the background, and I believe with these secular trends and the combination of what we're doing in HVAC with our digital platform and now services, are gonna benefit really nicely from the investments that ultimately are gonna be needed to drive sustainability. If you look at our backlog, you know, we look at this very closely. It's very resilient, and very strong with the idea that we believe that even through the next quarter, we've got an incredible pipeline that we're converting. We're working to develop the backlog so that when we plan and ultimately enter next year, we're gonna have a nice backlog to, to work from. The last is, is really the acceleration of the transformation of our Building Solutions business to services. You know, that proposition is playing out. I would call it our flywheel, which has been accelerating, which is about creating installed base, getting that in base connected with higher attach rates, with higher revenue per customer. That leads to lower attrition. All of that spins out additional business, like with our spare parts and upgrades and the like. You know, I, I feel that the current trends that we see and how we're being set up, we're gonna set up for, you know, a nice 2024. But again, you know, we can't predict the environment, but the trends that are underway do play to our strengths. An additional comment on the margin, Nigel. First of all, in gross margin, we see a expansion gross margin. George mentioned it. Services is growing faster than installed now. We are using installed as a vehicle to drive service, so we should see gross margin expansion, and also we're working on further SG&A leverage as we standardize and leverage also functional excellence across the organization. Top line and margin, we believe we are well positioned for 2024. Okay, that's good detail. Thanks, guys. Thank you, Nigel. Next question will come from Steve Tusa with J.P. Morgan. You may now go ahead. Hi, good morning. Morning, Steve. Can you just walk through a little bit the, the fourth quarter and this, you know, sales deceleration, as well as maybe some color on what you would expect for the margins by segment? The growth seems to be slowing pretty significantly here. Just wanted to see if that's concentrated in any particular business. Maybe just some segment color for the fourth quarter? If you look at the top line today, in the Building Solutions business, the, the top line is very strong. The order momentum is expected to continue in the fourth quarter. We have good visibility today based upon where we are today in the quarter. You have, in the top line, some inventory adjustments happening in the channel that is impacting our shorter cycle business, resi and fire security. George mentioned that that would be an impact on Global Products, but we see that as being temporary. If you look at the margin, we believe that the field business, our Building Solutions business margin, will keep improving. In the Global Products business, we see the margin being slightly flat. What is happening in the Global Products business, you have that in Q3, it's happening in Q4. It's some absorption as we are ramping applied volumes to drive market share and lead time. We have had some absorption impact, and also we have normalizing inventory. Inventory and finished goods went down by about 20 days in in about two quarters. That is impacting also absorption. That's the story in terms of margins, Steve, and revenue. Yeah, I guess for Global Products, what, what, what do you expect for revenue? Maybe either organic year-over-year or sequentially, however you think about it, 'cause I think that, that's kinda where the hole is on revenue here, it seems like. The revenue in Global Products will be growing low single digits to flat, and the margin would be expanding to flat for Global Products because of the two phenomenons I've mentioned, Steve. Yeah. Okay, sorry, one last quick one. How much price did you get in the field business in the quarter? We, we don't talk about price anymore for the Building Solutions business, because we sell a solution. It's difficult to differentiate price from, from volume anymore, and we have discussed about this. You know, overall, pricing and value proposition is resonating with our customers. I guess, how do you calculate... if you don't calculate price, how do you calculate price/cost then in your slides on slide 12 for the solutions business? It's mainly going to impact our global business, and, and to an extent, also the field. Steve, just to comment on that, as we've discussed, we've been building, you know, models, robust models from a cost to value proposition standpoint, and it's calculated on, based on the inflation that, that we've built into our long cycle businesses, and then how that plays out to then the value proposition that we, we bring to our customers with the differentiated install, and then ultimately, which then leads to our, our service growth. That's what's in the overall equation there as far as price. Great. Thank you. Thank you, Steve. Our next question will come from Joe Ritchie with Goldman Sachs. You may now go ahead. Thanks. Good morning, everyone. Morning, Joe. Morning, Joe. Maybe just, just going back to the destocking comments in Global Products. I'm sure you guys have had, you know, conversations with your channel partners. You know, there might be a little bit of uncertainty, but you did mention, Olivier, I guess, that you expect this to be temporary. What kind of sense do you get in terms of the timing of destocking and how elevated their inventories are today? I'm just trying to, trying to get a sense for-... you know, how quickly we should get back to normal demand patterns in that business? Well, let me, let me take that, Joe. On the resi side, I think in line with what everyone's seeing in the industry, you know, we've seen a significant adjustment, and we've taken that on in the first half and now through third quarter, a pretty significant adjustment. We believe we're now in line with the industry relative to our volumes and alike. When you look at, we do believe there's some additional destocking in Q4, but I think through that, we'll set up here in the first quarter. First, second quarter of next year, I think we'll be pretty normalized. The other, on the, on the fire and security, when you look at, at those businesses, it is mainly a product of when we saw a significant ramp, when lead times were extended, we, we developed significant backlog, and we've been working down that backlog. The good news I see now is on the input side, as we're now moving forward, we're starting to see a pickup now of some of that, that backlog. Our ability to be able to then take on the orders, create the backlog, and then be positioned from a supply chain to respond, we're in a much better position. We'll see some of that play out here in the, in the fourth quarter as it relates to fire and security. We do believe it's short term, and we do believe it's, it's totally aligned with the, the lead times, the lead time adjustments that have been made. I would tell you that when we look at some of the core products and new products that we're bringing into, into that, that segment, we're seeing some nice pickup on market share with some of the new products. Okay, great. That's good to hear, George. I guess maybe my, my second question, just going back to 2024 and just thinking about, you know, the service growth that you've seen over the last three quarters. Obviously, that is gonna be mix accretive to the business. How do you kind of think about the margin impact that's in the backlog right now, and, and that we should see come through in 2024 in the Building Solutions business? Well, as it relates to the overall growth, I mean, I, I think this is the first time that we've seen where now our service growth on a sustained basis is outpacing our install. When you go back to the strategy of the company with our Building Solutions business, was to make sure we use install very strategically in how we build our install base with our assets, with our equipment, and then with the digital assets, enable us to be able to extract, you know, over the life cycle, the services. Now with the digital content that we have, we're not only enhancing what historically we've done, but it's now given us the opportunity to add additional services with the customers that we're serving. We feel very good about continuing to sustain that growth rate with services. That'll be a natural mix, you know, with the revenues that turn within our, within our Building Solutions business globally. We're seeing it, the traction is in every one of the regions. I mean, this is not isolated into one vertical or one region. It's pretty much across the board. With that, that combined to what Olivier said around margins, we continue to drive strong productivity, both in COGS as well as SG&A. That, combined with the mix of services, is gonna continue to accrete margins within our Building Solutions business. Okay, great. Thank you. Thanks, Joe. Our next question will come from Noah Kaye, with Oppenheimer. You may now go ahead. Good morning. Thanks for taking the questions. First, it looks like, guide is now for higher amortization of intangibles. That's driving about a $0.05 EPS headwind versus the prior guide. Can you, A, confirm that math, and then, B, talk about the timing expectation for accretion on, on some of the acquisitions you've made? I assume those acquisitions are what's driving the higher amortization for the year. No, you're right. I'm confirming the, the number. What we do probably at some stage, we need to, to think about how we treat amortization of intangible, Noah. Relative to our peers today, we're, we're not guiding EPS in the same way. We'll, we look at this, and we expect the accretion to start at the start of next fiscal year. All right, that's helpful. Then, you know, just to better understand the free cash flow conversion dynamics, it sounds like you do expect some inventory reduction, you know, here in 4Q. But, you know, as we think about, you know, what needs to happen for you to kind of get back to, you know, close to that 100% free cash flow conversion as we set for 2024, what are you going to be focused on? Inventory, Noah, you mentioned it. We had a good progress in inventory reduction in Q3. We have good momentum. As indicated, we have reduced our finished goods level inventories in days, by about 20 days. That's where the focus is. As lead time is improving, we have seen some inventory adjustments in the channel, and that is impacting, on the short term, our ability to dispose of the inventory at the speed we had anticipated. We believe it's a short-term phenomenon, and we believe that we are absolutely going to return to our 100% free cash flow conversion next fiscal. Appreciate that. Thank you. Our next question will come from Jeff Sprague, with Vertical Research. You may now go ahead. Hey, thank you. Good morning, everyone. Good morning, Jeff. I just want to come back to service margins and kind of George, and you addressed this to some degree in a prior question, but, you know, certainly the key KPI, in my view, in this quarter was, you know, this significant lift in North America margins in the quarter, and you delivered on that. Is service mix playing a really significant role in that performance in the quarter? Or are we actually just seeing more kind of COGS and SG&A programs and other things you're trying to do on productivity? Maybe you could just give us a little bit more color on how you would expect that North American margin to progress into the fourth quarter. Yeah, let me reflect here, Jeff. If you go back to North America and what played out last year, you might recall that a lot of the backlog that was built up during 2021, prior to the significant ramp-up of inflation, and the backlog that turned, is really what caused the margin pressure last year. That, and then the work that we've done since then with the our cost models and value proposition and pricing as a result on a go-forward basis, we've been building very strong margin and backlog across the board, not just North America, but across our Building Solutions business, you know, over the last 18 months. A significant piece of that is the margin we've been putting in backlog after that ramp up of pricing and the accumulation of the inflationary costs that we took into consideration into our models. That being said, North America, you know, is starting to turn relative to service as a percent of revenue, and you're gonna start to see that accretion on a go-forward basis contributing. You also, on a margin rate, we have been, with the value proposition that we've had with service, we've been able to, throughout the inflationary cycle, we've been able to maintain very attractive margins. It has been, through that cycle, very strong. Now, with the mix going forward, it's gonna be, continue to be accelerating the accretion and the benefit that we're gonna get in the margin rate on a go-forward basis. I would add, Jeff, and they go together, we are now driving in-store to drive services. It wasn't the case before. You will see margin expansion also, also because we are very selective on in-store. To your point on the SG&A, much more is to come in term of SG&A leverage as we standardize our operations further, and we're in the middle of this, and leverage functional excellence. We have said that, and our level of conviction is actually increasing. We believe we can deliver over the, you know, next gen forward, 30% incremental for the company because of those two phenomena, margin and SG&A. Right. Sounds like you're noodling on maybe moving to an ex-amortization EPS construct. I wonder if you'd opine a little further on that. Just the amortization that we see, how much of that is directly kind of deal-related amortization versus maybe amortization of software or other things that are running through the system? It's quasi exclusively relating to deals, and, if you look at our peers today, we are the only one to have not adjusted for deal amortization in our EPS. We are looking at that, as a potential for next year, Jeff, but it's all deal related. The Tyco Johnson Controls merger will be the lion's share of this amortization. Great, thank you. Our next question will come from Julian Mitchell with Barclays. You may now go ahead. Thanks very much. Maybe, just wanted to start off with, how you're thinking about, that sort of slide seven and the profit drivers from price, cost, and productivity benefits. You're running very strong on productivity benefits in 2023. Maybe just remind us, what's the incremental saving into 2024, that's, that's left under the cost out program? Then how quickly should we expect that big price cost tailwind to narrow towards parity next year? Thank you. On productivity, we are far from being done. Our program that we announced about two years ago, is going to end. We're well on track. We'll deliver about $340 million for FY 2023 through SG&A and COGS, Much more is to come in term of productivity, both impacting sales and G&A. Again, standardization and driving functional excellence are going to be the drivers for this. Price cost, George mentioned it. We are very bullish about the value proposition of our offering, either through solution and including services, but also through the product portfolio, where we have a strong in commercial sustainability offering. All of that should drive margin expansion through G&A scaling, gross margin, and price cost. Julian, relative to just pure price, when we're planning for 2024, we, we see continued pricing now, certainly at a reduced level, but given the continued inflation and how we're, we're booking that inflation into our backlog, we still see pricing playing out as we, as we plan for 2024. That's helpful. Thank you. Then, just my second question on the, the top line. Looking at slide 12, you have the 4% install orders growth in North America and EMEALA in the third quarter. Just wondered, you know, given the sort of the, the macro data out there, Dodge starts, square footage, and so on, and interest rates, do you think those install order numbers decelerate from that 4% in the two regions, or they can sort of hold the line when you look out? Yeah. When you look at our go-to-market, and we, we look at this very closely on a, you know, weekly, monthly basis. When you look at our pipeline, our pipeline is continuing to grow. As we look at whether it be domain by domain, or as we look at our Building Solutions now addressing these secular trends, we're building a very strong pipeline. On a run rate basis, as we project Q4, we still see very strong order growth in Q4. It is, it is hard to dissect exactly, you know, from a vertical standpoint, 'cause we see pretty, pretty broad strength across, whether it be industrial data centers, we, we, we talk about government. There's a lot of strength that we see here, and we're making sure that from a go-to-market standpoint, we're gonna be positioned to be able to capitalize where the growth will occur. Then the value propositions that we have as it relates to these secular trends, it really does tie to be able, to be able to create the most amount of value, and then in our solutions business, really build an attractive service business from that. So as, as I set up for 2024, you know, it's gonna be critical here as we pace through the fourth quarter with the order rates to really set up a backlog, because our, our Building Solutions business, at least from an install standpoint, is pretty predictable over the next 12 months. That backlog continues to build, and our pipeline and conversion right now in Q4 suggests that that's gonna continue at a very strong rate. Perfect. Thanks very much. Thank you, Julian. Next question will come from Nicole DeBlase with Deutsche Bank. You may now go ahead. Yeah, thanks. Good morning, guys. Morning, Nicole. Hey, Nicole. Maybe just starting with the price/cost dynamics in EMEALA, specifically. I know that segment is lagging a bit with respect to execution of higher price backlog. Is the expectation that price/cost turns positive, you know, could that happen in the fourth quarter, or is that more of a 2024 event? Nicole, if you look at EMEALA, there is nothing fundamentally different with this business which will prevent us to reach a strong level of segment EBITDA margin. What you have happening in EMEALA this quarter, and that's about 150 basis points of EBITDA in margin, is two things: one, pension cost and also FX in our business in Argentina. We have a strong business in Argentina, in our subscriber business. If you were to remove those, the margin in EMEALA would have increased by about 140 basis points in the quarter. You will have some of those impacts again in Q4 impacting EMEALA, but again, nothing structural in EMEALA. Nicole, when we look at all the work we've done on the price/cost over the last a couple of years, especially in this inflationary environment, when you look at the margins in backlog in our EMEALA business are very strong going forward, and so it's a matter of just the timing of the conversion. Got it. That's clear. Thanks, guys. Then, just thinking about the overhang that you're seeing with Global Products margin, or, sorry, Global Products margins and very tough prior year comps, I guess, how do you think about fiscal 2024 from that perspective? Like, do you see the potential to start expanding margins in this business again? The answer is absolutely yes. If you go back to the quarter, we had, because we have ramping the manufacturing of Applied, we wanted to be very competitive in lead time. We have a very competitive set of products. So as we are ramping manufacturing of lead time, we had an impact in conversion cost. Again, as we have normalized for inventory, we have produced less, that is impacting conversion cost as well. The combined impact of those two elements is a bit more than 1 point in the quarter, Nicole. And we believe that we will have some of that happening in Q4, but we see absolutely margin expansion happening in our Global Products business. Thank you. I'll pass it on. Thank you, Nicole. Our next question will come from Chris Snyder with UBS. You may now go ahead. Thank you. I, I wanted to follow up on the destock headwinds on the indirect side for resi, fire and safety. Can you just maybe quantify, you know, what that headwind means for fiscal Q4 organic growth in the guide? Like, you know, where, where would that 4% be if it wasn't for these headwinds? Thank you. I would say that on the year, this impact is about 1-1.5, and then you could do the math for, for also, Q4. It's, it's in the ballpark of 1-1.5 of full impact on the, on the year. Thank you. I appreciate that. It sounds like from some of the prior commentary, that you guys would expect this headwind to alleviate in the early part of fiscal 2024. You know, obviously, that's a tailwind to the 4% organic guide for the fiscal fourth quarter. Are there any sort of negative offsets there? You know, are there... You know, is anything, you know, kind of getting worse from here as we try to build, you know, the organic bridge into next year? Thank you. When you look at those businesses and the applied fire and security products we put through our Building Solutions business, we're starting to see that, you know, that's very strong and picking up, and it's critical to our Building Solutions business as far as how we create value and ultimately create service. That is coming back nicely. On the indirect channel, where we see the pressure, the same has happened there relative to, you know, the timing of orders based on the reduced lead times. Our assessment, based on, you know, with the intimacy that we have with our distributors and the and the pulse that we have across the globe, that that's gonna come back. That we're starting to see, you know, sequential improvement and, and then getting, you know, baseline here that for 2024, you know, with assuming, assuming the economic conditions are, are somewhat stable, we, we, we have been outperforming with our products and our new product launches and the like. We're confident that we're gonna that's gonna come back, and we're gonna be positioned to be able to, to pick that growth up as it adjusts. Thank you. Our next question will come from Gautam Khanna with TD Cowen. You may now go ahead. Thanks. Good morning, guys. Morning, Gautam. Wondering if you could comment on supply chain and your own lead times, manufacturing lead times, and whether you anticipate that will have any impact on orders, just as lead times shrink. Is there a risk of kind of less urgency to place orders that could show up in any given quarter? If so, when would you expect that to be a potential factor, if at all? Well, Gautam, we, we've seen that. It's already been playing out here over the last, really, the last couple of quarters, as it, as it relates to our Global Products business. Everyone, you know, as supply chain began to improve and lead times reduced, it allows our customers to be able to back off what they have to carry and still be able to deliver on their commitments. That has been playing out. We think that, you know, there's still a little bit left here with resi, going forward. Still a little bit more in the, in the indirect fire and security, but, you know, we've already seen a lot of that impact on our book to build business, in over the last couple of quarters. We're positioning here to get through that over the next quarter or two, and then be positioned to be able to build backlog and have conversion, you know, strong growth in 2024. Has there been any spillover effect to the direct channel a s lead times have come in? No, on the direct channel, actually, 'cause we, we ultimately, you know, from end to end, we're responsible for delivery to the customer. Whether it be even in our, even in our resi direct stores, you know, we saw, we saw a nice growth in our resi direct stores because we ultimately own the channel, and, and, and we saw a nice pickup there. On our Building Solutions business, you know, as far as the predictability of our projects and how we're converting, we're, we're very tight relative to what is gonna be consumed and how we're gonna deploy it to the field. George said that earlier, Gautam, the order rate for the Building Solutions business is very strong in Q4. Yeah. Thank you very much, guys. Take care. Our last question will come from Andrew Obin with Bank of America. You may now go ahead. Yes. Yeah, good morning. Can you guys hear me? Yes, we can, Andrew. Yeah. As we think about these, you know, semi fabs and EV plans, you know, I think Eaton was kind enough to give a sort of range for average content per plant. Could you guys just sort of do something similar, you know, how big a unit goes on average into one of these? We can just sort of size the opportunity. Then the part two, when do you guys actually book these projects in your backlog formally, right? At what stage? Is it a year into construction? Just trying to sort of, you know, follow up on your commentary, how, you know, you should start booking more equipment eventually, but just trying to size the timing and scope of this into 2024. Thank you. Let me talk about the, on the front end, the demand. So what you've seen over the last couple of years, we have been very aggressive, not only with the development of our product portfolio, but also our capacity to be able to serve the market. If you look at our, you know, orders and applied, we have been getting more than our fair share. We believe that market share-wise, we're up a number of points here on a year-on-year basis. We've been building backlog in our applied equipment. We can follow up and get you an average size, but right now, because of the expansion, we've more than doubled our capacity, and so, and we're pacing with full utilization of that capacity. We're, we're ultimately making sure that we're gonna be positioned with the demand, and that from a lead time standpoint, that's been very important to be able to then be able to, you know, respond and be able to create the value with our offering and then be able to then convert on time to be able to capitalize on the demand. Some of these projects are, you know, they are, they can be over a year, but there are now a lot of projects coming into the market that cycle time matters, and you can create a lot of value because you have a shorter lead time, where we have, you know, orders that we're taking on now that we're gonna deliver next year, in 2024. From a positioning in the market, we have positioned ourselves to get a very strong order book in our applied business, and that is a core strength of ours across the globe. It relates to, to what you said, EV plants, data centers, you know, the chip manufacturing plants, and the like. On the average size, you can imagine when you get these large data center customers, they have very large installations and have multiple, multiple, you know, pieces of equipment that are deployed to be able to support the capacity that they're building. An additional caller, Andrew, we mentioned that earlier, the stimulus we have had in the U.S., or in Europe, so the IRA or the equivalent stimulus in the, in Europe, have not impacted demand so far. We believe that those trends we are starting to see are going to be maintained. Last one, we book an order when we received a signed firm contract, Andrew. Gotcha. Okay, and just a follow-up question on supply chain. Are you seeing any ability as, you know, some companies are talking about disinflation or even deflation? Are you finally getting back ability to extract pricing concessions from your supply chain into 2024? Yeah, we've always said, when you look at our procurement organization, the work that they do, even through this period of time, you know, we've been strategically sourcing and making sure we're leveraging our scale and demand to drive productivity, drive savings, to try to offset, you know, some of the inflationary, inflationary pressures on the commodities and the like. Our team has done a really nice job through this cycle to do that. The answer is, of course, yes. I mean, we're, we're now planning for, you know, continued strong productivity, with our scale, with our buy, making sure that we're positioned at the lowest cost with the leverage of our, you know, overall volumes that gives us competitive advantage. You know, when you look at our product cost or all of our costs within, within our cost of goods. Thanks so much. On that, I wanna close the call. I wanna thank everyone for joining us this morning and certainly your continued interest in Johnson Controls. I do believe we're at the beginning of an era that will be defined by deep decarbonization and sustainability, and we are, as Johnson Controls, well positioned to be an important contributor to empowering our customers in every industry to create healthy, safe spaces for people in the planet. I think our strategy is clear. It's playing out. We have a strong portfolio, and now it's just about continued execution. With that, operator, that concludes our call today. Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.