Well, good morning, and welcome to the home of YORK. This is how Johnson Controls began. A professor and a technology innovator that had a problem at hand that needed to be solved, and he solved it with technology. 140 years later, we're here. When we think about it, the future of many of the scientific discoveries that are now being deployed in human society requires even more of that kind of innovation, application-specific, technology-based innovation. The scientific discoveries that I'm talking about that are now being deployed widely in society are not just AI that requires more thermal management at an economic price point and being energy efficient, but also biologics manufacturing and other forms of advanced manufacturing, which we'll talk more about. Let's start with data centers, the greatest infrastructure build-out in human history. We expect data center CapEx to reach $7 trillion by 2030. This growth of AI factories of intelligence, depends on mission-critical infrastructure, and that's where we play. These data centers can only scale with highly efficient thermal management or cooling heat extraction at a fraction of the cost, at a fraction of the energy that they require today. Otherwise, we can't deploy the future chip generations that all the chip manufacturers are continuing to launch. That's not just a problem for the future, that's a problem right now. There's a constraint. The data centers can't get a hold of enough power. They don't want to divert power to cooling. That's where we play, and we'll talk more about that today, not just at the component level or at product level, but we are taking a position in the entire thermal management chain. We have biologics. Biologics is the next generation of drugs that's already here. Just like you hear from what it's called, people are manufacturing biology, live biology. That requires thermal management or very precise and high-capacity thermal management controlled within very tight tolerances to avoid yield losses that some of these factories are experiencing today in the 30% to 40% range, which of course, dramatically impacts the cost of these drugs, cancer curing, but also delaying drugs that are about to be launched or are in the pipelines of all of the large pharmaceutical companies. They can't do what they aspire to do without high capacity, high precision, and highly energy-efficient thermal management. That energy efficiency is not an academic point. All of these industries that I just talked about are much more energy-intense than their prior incarnations. AI factories, the data centers, are infinitely more energy-intense, use more energy, both for the compute but also for the thermal management than cloud storage data centers. That was the data centers of the prior generation. The same thing is going on in biologics. Biologics plants are, on average, about seven times as energy-intensive as traditional pharma manufacturing. I could go on and on. I could talk about other forms of advanced manufacturing, batteries, semicon, and so on and so on. These are industries that are also pushing the boundaries of the performance of their products. As they do, in many cases, they are requiring even more precise indoor operating conditions, and that's where we play. The energy, though, that they consume, if you draw the map or a line and project into the future, there's not going to be enough energy on this planet to fuel all of those industries. That's one of the reasons why the cost of energy has continued to go up and up over the last couple of years and is projected to increase, increasingly so in the future as well. To be able to help them do what they do with a high capacity, high precision thermal management, we also need to be able to do that at a fraction of the energy that's being used today. Human society needs help to basically decarbonize or reduce energy intensity, whichever word you want to choose for that. What we have to do from a technology innovation point of view is actually the same. We have a really important role to play here. We, in some ways, were born for this time when our capabilities in thermal management are more important than they have been in our history and perhaps in human history. These are all constraints that I was talking about, constraints that you will meet our innovators today, that they are working very hard to resolve the technology-based innovation. That, in a nutshell, for me, is why I chose to join this company. What other place could you go work where what you do, what your team does really matters? Really matters for the development of human society and where technology-based innovation, based on the types of capabilities that we have, already exists in the organization. We haven't quite fully unlocked our potential yet. We'll talk more about that later today. We have the raw capabilities, and we have a few more things going for us in terms of our potential that we're going to work on unlocking here. Let's talk about where we are today and a couple of topics that we're going to spend time on together. Great companies are really built around three things. Number one, you have to work on something that matters, that you can develop a passion for, that your people can develop a passion for. You have to pick something that you can be the best at. Number three, you have to be able to do this in a way that creates an economic engine so that you can keep fueling the work that you're doing that matters, that people are passionate about, and that we can continue to evolve our ability to be the best at. The great thing with Johnson Controls, for me and for all the colleagues that you're going to meet today, is that all those three things come together, and that's actually what we're working on. We have, what I would say, raw capabilities for what it takes to win. We have the two bookends that you see on this slide. We have impressive and unique differentiated technological skills and thermal management. Not only that's where we're going to spend most of today about. We also have one of the industry's most comprehensive field footprints. That really matters because customers, of course, buy our solutions not to just buy them and use them for a couple of weeks, but they plan on using our platforms for decades in many cases, and they need that life cycle support. Both these bookends are capabilities, and you'll meet many of the people here today, that were built over decades. Of course, on the technological capabilities, like I said, we're in the home of YORK here. They've been built in and around this area over the last 150 years. Think about it this way. My grandparents' grandparents, that was the generation that worked here on thermal management 150 years ago. All of what you're going to hear about are skills and capabilities that have evolved over time from generation to generation of leaders. Two fantastic strong bookends. We'll go a little deeper into those. To have those bookends, and those are great capabilities. How do you unlock them? We'll talk a lot about that here today as well. First, you have to clarify. In a large organization of almost 100,000 people, you cannot be working on 15 things on the same time. It has to be clear to everyone what our priorities are. Over the last year, we have developed and clarified for our people what work we're going to be focusing on, and those are articulated in our three strategic pillars. They are really centered around many of the things that I talked about in my introduction here. We are going to help the world unlock the constraints in deploying AI in human society by making it much easier and faster and more economical to stand up at data centers. We're going to enable, for example, the biologics manufacturers to do what they do without losing 30%-40% of their yield. We're going to very actively help the world decarbonize or reduce our dependence on energy by making sure that everything we do consumes just a fraction of the energy that our technologies need today over time. Clarity on its own in a large organization like this is an accelerant, because when you align across the organization, so your salespeople know that these are the priorities, and we help direct their efforts towards these strategic pillars. When your R&D teams and your product management teams know these are the priorities and your innovation roadmaps start to change, the wheels start to not just work better together, or the cogs work better together, but over time, you're able to work a little faster. Having clarity on its own is an accelerant. Number two, what we've been working on over the last year is really our business system, and that is really the main theme of today. You're going to hear about how we're going to unlock our potential, these core capabilities that we have that haven't fully been unlocked yet. You're going to hear how we're going to do that with the business system. The strategic pillars is where we point the effort and focus the organization, and the business system is how we're going to improve this company, and you'll hear a lot more a little bit later what that is all about. Those two things together, orchestrated in the right way, which we're working on, will and is creating this economic engine that will help us continue to make even more room for investments in innovation, for example, but in other areas as well, while we also improve the financial performance of our company. Let's talk a little bit more about our strong technological capabilities, the capabilities that have really been built in this facility, in this area over the last 150 years, as well as in our controls engineering and innovation center in Milwaukee. As you saw on the last quarterly call where we talked about what that differentiation actually is built on, it is built on the fact that we own both the unique technologies and each one of the subsystems, and in this case here illustrated for an HVAC unit or high-performance chiller. We own all the technological capabilities within each one of those subsystems. We also manufacture all of those subsystems. We both control the ability to innovate within each one of the subsystems at speed, as well as precisely for the types of customer applications that we're going after. We also own the cogs. We can make trade-offs and choices, and we can do that while we're innovating as well. We do that for each subsystem, but by owning the capabilities across the entire system, we can make system-level decisions on how to eke out even more performance out of the whole system that we're launching. We can choose at what speed we'd like to go at in innovation, and we can greatly impact the COGS, because as many of you have heard, 90% of your COGS is controlled when you design the product and not later when you manufacture it, because many of those decisions have already been made. In the chiller here, there are 1,000 patents and innumerable amounts of trade secrets behind these products that we have in the market today. You could argue, have we really leveraged these skills over time? You'll see later on today, we'll talk about how we're unlocking greater speed of innovation and increasing our capacity for innovating even more. We have the raw capabilities that you see articulated on the right, which is an example of energy consumption. In principle, we have the capabilities to help customers cut their energy consumption in half already today through the capabilities that we have in our HVAC systems, our control systems, Metasys, as well as our digital and AI-based overlay systems. Again, we can debate how well we have unlocked that potential. That's what we're working on. That's what the business system is here for. That was an example of how we're innovating on the subsystem level as well as the holistic system level to create a highly differentiated offering for our customers. That was an example on an HVAC chiller level. That same way of working, we have over the last year, been applying to the thermal architecture or the thermal chain of AI factories of data centers. We've taken positions beyond chillers, beyond air handling units with the Silent-Aire franchise, and beyond the learnings we've had over the last decades of serving those data center applications. We've moved left on this chart into closer and all the way to the chip and built a portfolio of capabilities now that will allow us to apply that same kind of thinking, systems thinking, holistically across the thermal chain in a data center. That way of working will allow us to not just reduce the amount of power that needs to be diverted to cooling while providing more cooling today, but over time, as we move into a two-phase cold plate world, will actually allow us to dramatically cut the amount of power needed for the whole thermal architecture for the entire data center. Some of these innovations, which we'll talk to you about at some later point in time, are going to be truly category changing for thermal management over time. We haven't maybe talked to you too much about the details of the Alloy acquisition and the Accelsius partnerships, but they both have one thing in common. These are highly science and technology-oriented companies. With Alloy, we didn't acquire a building or some hardware. We really acquired a group of highly talented engineers out of, for PhDs, out of MIT and Harvard in Boston. We're super excited about what we're going to be able to do there to really make an impact on the world, in the data center world. The other bookend that I talked about, if the clicker could work, if you could advance one slide, please. As I talked about here previously, was our global field presence around the world. This is something that's been built over decades, and we're not only talking about service people, as you see on the right-hand side. Many of our customers are not buying commodity products, right? They're buying something that needs to work with the system that they're designing, whether that's a biologics plant, a data center, a battery plant, semicon plant, or for that matter, academic research hospital. They need advice early in the design of their overall system from people like our sales consultants, our solution architects, to guide them on what their best choices are for the outcomes that they're trying to drive. The depiction on the right here really talks about our service capabilities, which are the large group of people that we have in the field in about 100 countries around the world that help and support our customers to really get the value out of the systems that they've purchased over the life cycle of when they're using these products, which in many cases is 20 plus years. They really rely on our people for that long. They have people changes in their organizations. They don't always remember how to operate certain things. At certain points in time, something changes in their overall system. Something needs to be tweaked on our side of the equation. That's where our service engineers in the field come into play. As you can see, we have a significantly larger team around the world than most of our competitors. These are people who weren't just hired from high school yesterday, right? These are people who have, in many cases, decades of experience, domain expertise, not just on the technology side, but also in terms of helping customers think about how to run the system as part of their overall system. Great competitive advantage. Here again, we can ask, hey, have we really leveraged this advantage? Have we unlocked our potential here that we have? We haven't yet, but that's what we're going to show you, that what we're working on today with the business system. What is the business system? Business system is really how we are going to transform this company, and that's why we're going to spend the rest of the day showing you how we're doing that. Let's take a step back. For those of you who are not familiar with this, we're of course not the only company that is applying a business system. Many have some efforts. Fewer have really managed to, over time, make it part of how they run the company. That's what we're doing here today, and you'll meet a few people who really have understood how to do that. We're going to show you how we're doing it. Let's take a look at this image here. This is a Formula One pit stop. I'm sure some of you might have seen some videos in the 1990s, I'm told. I'm actually not a Formula One fan. One day I'll have to learn more about that. In the 1990s, it would take nine to 10 seconds to change the tires. Fast-forward, today, they're able to do it in less than two seconds. How have they done that? Cross-functional, continuous improvement. Establishing standards. Executing on the standards. Going back. Continuous improvement, cross-functionally, again and again and again, and they just continue to get better and faster. That's sort of the idea that you should have in your head when you think about a business system. A business system, when implemented well, changes the culture of a company and creates a situation where a team of people, a group of people, is able to just continue to improve and improve and improve and improve continuously. There's no end to it. Think about it in another way. A business system is very much about speed. About speed of execution. About eliminating things that slows you down. You'll see plenty of examples of that today. It is, of course, there's some approaches, there's some tools, but it's very much a way of working together, human beings, as a team. Think of your favorite sports team. I'm sure you've heard analogies of, "Hey, we had all the best players," I won't start with any baseball analogies now. I'll just say that the Brewers, Milwaukee Brewers, don't really have any big names, but they just keep on winning. They have a system for how they do things, how they train people, how they work together. You've heard that in other sports as well. That's pretty much the mental picture you should have of a business system as you walk around here today. You're going to see it, by the way, being practiced at Gemba, where value is created, where the action happens. It doesn't happen back in the office in the headquarter, right? The business system is all about teaching people to work together at Gemba, where value is created. It's also a lot about problem-solving, but we'll come back to that. Speed to solving problems. More broadly, the tools and approaches that are part of the business system, some of which you will see during the day, fall into these three categories. Simplify. We have a set of approaches and tools that help us simplify what we do. What should we not work on? What's less important? What's more important? Let's focus on what really matters. Kind of like our strategic pillars in some ways for the enterprise. We have accelerate. That's really built on what many of you will have heard about, called Lean. Lean, a person who went to Japan many, many years ago regrets not calling it Learn. Lean makes it sound like it's all about cost. It's actually not. It's about speed. Speed to learning. Speed to learning that you have a problem. Speed to figuring out why you have a problem. Speed to counter-measuring. Why not solve? Because you only counter-measure until you find a better way. It's speed to learning, but it's really speed, as I said before. Of course, today, amplify. There are off-the-shelf-ish tools available to apply AI and digital while we're improving processes, while we're working on speed, that just weren't available a few years ago. A few years ago, we would have to hire data scientists. We'd be competing with Google and Microsoft and the tech companies for talent like that. Now with the tool sets that they've developed and the wider availability of digital and AI people, we've been able to now create approaches for how we build in AI and digital into our business system, and as we improve the processes and gain speed. I think of the speed part as we take something that used to take months and weeks and turn it into weeks and days. With amplify, we're able to take the weeks and days into days and hours, and sometimes even minutes. You'll see some examples of that later today. Some of the foundational approaches within the business system that you're going to see during the day are the following five. These are sort of general concepts that the business system builds on. Number one, standard work. For anything that you do in a company, or in a sports team for that matter, make sure that the expectations or the best known way of doing it is defined and clear for everybody. Let's make sure that if you're playing defense, you know what your role is on defense, that the best known way is defined and that you're trained, and everybody knows what the best known way is. Until you find a better way, of course. You always have to start with a standard. You'll hear about problem-solving. We want to teach everyone in this company, and we're well on the way to become really good problem-solvers. Most human beings, in particular, those who've gone to college and have more advanced degrees, tend to think of themselves as outstanding problem-solvers. What I found when you work together in a company cross-functionally, your organization's problem-solving capability isn't always that strong. The more problem-solvers you can have in a company close to where the action is, the more likely you are to be able to spot a problem, to get to an understanding of why you have the problem, and to get the countermeasures quickly. Problem-solving is something that is a very strong element of our business system, and that's why all the best of the leaders that we have in the room says problem solvers on the back, because we want to remind everyone that everyone needs to be a strong problem-solver. You have something called value stream mapping. Value stream mapping, and you'll hear plenty of that today as well, is an approach to look at an overall process, starting with the customer, going end to end to figure out where is value created and where is there waste? What's holding us back from going faster, for example? Why do we have to have so much inventory in the process? It could be physical inventory in the factory, or it could be something as simple as we're waiting for approvals in an administrative process and there's a bottleneck somewhere. Value stream mapping is a team-oriented way to enable a team to together map out an end-to-end customer process, always anchored in the customer, to be then able to see where we are going to apply our improvement efforts, such as Kaizens. Kaizens are groups of maybe 8-10 people that get together for 4-5 days to solve big problems. Not just make a plan for solving the problem or analyzing, but solve the problem rapidly in a week. As you will see later, we're running lots of Kaizens now, and of course, those need to be pointed at the big problems that we identified in the value stream maps. They're always cross-functional. The people on these teams are always cross-functional. They typically also always involve an AI or a digital person so that we can apply those approaches, digital AI approaches, in the week when we're making the improvement. Visual and daily management. You'll see some examples of that too. Once we've improved a process with some of the tools and approaches that I just talked about, we typically stand up what we call visual daily management, which looks like something that you see on the screen here, where the team that's working in the process meet on a daily or on a weekly basis to basically track how we're doing, or how they define what winning looks like for that process. Each column here is one metric. That's one aspect of what winning looks like. Each line is, the top line is daily. The second is typically weekly, maybe monthly. The third line is if we're off target. If you see red or you're green, you didn't almost win the Olympic medal. You're on or you're off. The third line is the Paretos of where or why you might be off. The fourth line, typically handwritten, is the team as they stand there on a daily or weekly basis. They are agreeing, committing to each other what actions they're going to take to get back to green. If nothing else, it creates the accountability so that when they stand there tomorrow morning or next week again, we're all reminded about what we committed to each other to drive improvement. All these tools help with faster problem-solving and also faster and better sustainment of all the countermeasures that we were implementing. Where are we on the journey? I already got that question on the way in here. You guys are good. You get on the questions right away. The way to transform a company with the help of the business system, I have learned over the last 2 decades, 2 prior companies I worked in. You always have to, I have learned, pick high-impact areas that are widely recognized to be big opportunities. That's not a list of 60. That's a shorter list, 10 or less. In those impact areas, this could be things like why are our salespeople in Michigan only spending 10 hours a week selling? Seems like you could sell more if you could spend 20 hours a week selling. At least that's what I've learned in my career. That's a high-impact problem, not just in Michigan, but we know that problem exists in several places, but we've decided to start in Michigan, go narrow, and go really deep to really understand the problem and start to implement the countermeasures. As we were doing the work, we were training not just the people on the front lines, but we were training and bringing in leaders into the value stream maps that we were doing, into the Kaizens that we were doing. They could themselves see that this cross-functional way of working at Gemba really enables us to get to countermeasures and implementation and sustainment much, much faster. This is a better way of running the company, and this is the way we're running the company. There's no other way we're running the company. That also needs to be clear to everybody, not because I said so, but because they're seeing it themselves, and they're seeing the enthusiasm and the motivational impact this has on our people on the front lines. You can see some of the numbers here. We have ignition, I would call it. Ignition. Now we're moving beyond ignition, and we're starting to scale and roll out some of the improvements that we've driven. You'll hear about many of them during the day here, to other areas. You can see there are a lot more cities and locations added here, and this is now starting to accelerate here over time. You don't change a company in a year, a week. If you have 100,000 people, it takes a little while. Results are already starting to show up in the P&L, and they will continue to show up. The idea here, like I said, is to build the engine, the team, the capability that just keeps on improving and improving. There's going to be no end to the improvement that we're going to be able to drive. This is the way that we are going to use to unlock our full potential that I started to talk about here earlier in the presentation. What you're going to see today are really excellent, I think, examples of the power of the business system. We're here at JADEC, our advanced development and engineering center, home of YORK. We've been innovating here for 150 years. You're going to learn a lot about our unique technological capabilities within thermal management. You're also going to learn about how, with a business system, we are going to double the capacity of this team, of this facility, without adding capital, without adding more people. We are going to add more people, but if we didn't add, we could still double the speed and the capacity of innovation. You'll agree and understand much better after the tour. That's the kind of potential that we're talking about with the business system. We're then going to take you to one of our manufacturing facilities. It's not our largest facility, but it just happens to be in this area. That's the facility, one of 40-plus factories that we have around the world. With the work that the team has done there, we're now able to quadruple the capacity of that plant without adding capital, without adding people. It's just simply applying the business system, and it's a combination of people who know how to do this together with people who know our processes, our company, our applications. If you put these types of people together, they do the work at Gemba. They do the value stream mapping, the Kaizens, and so on. These kinds of results are possible. Finally, we're going to end the day in Baltimore in one of our local market offices. There you will see what I think I've mentioned on some of the quarterly calls earlier this year and last year, how we're helping both our sales and service teams double the amount of time with customers, double the amount of selling time with customers. It's the same approach, value stream mapping, Kaizens, cross-functional teams, including our digital and AI teams working together at Gemba. These are the kinds of results that are possible. You can't copy-paste and do everything in six months everywhere in every corner of the company. This is what we're going to be rolling out over the next couple of years here in the company. Before we start the tour, just want to mention that you are going to meet a number of leaders, and you will also have a couple of guides with you. Not professional tour guides, but they are people who are doing this work, senior leaders in the company. I also want to make sure that I highlight here that for us, overall, as a leadership team, one of our promises to our employees is to make sure that we have a safe working environment, that their families can count on them coming home because they work in the way they came to work, and because we have a safe working environment. We will make sure that we provide the right safety gear for you during the day. Sometimes you'll hear people talk about PPE. It's basically safety stuff. Listen to your guides, and we'll provide you with the right type of equipment at the right locations. Just having the vests, people being aware that we're moving around, of course, is one of those elements. Very good. These are the people you're going to meet during the day, in addition to the guides that you have. They will introduce themselves. You'll hear that the majority of these people have worked for Johnson Controls for decades. Feel free to ask them questions, how they're thinking about the whole theme of using the business system to unlock our full potential. I think you're going to find some people who are really quite enthusiastic about what we're doing here. You're also going to find a few people who joined us more recently to help us accelerate the pace at which we can go. A great group of people. As you can see from some of these titles, there are some VPs, but mostly, we have people here who are doing the actual work. They are not full-time presenters to groups of visitors like you, not at all. They are the people doing the work. I think that's sort of the objective of the day here, is for you to get a chance to meet the people who are going to apply or are applying the business system, and who are going to lead the improvement and the transformation of our company. Our job as leaders is to support them, to help guide them, sure provide some directions, priorities, those strategic pillars, but at the end of the day, they are the ones doing the work. When I say we have ignition, it's ignition with people on the front lines. Why I'm saying it takes a few years to go implement everywhere, well, it's because we have to not just get to the top 200 leaders, we have to get to our people on the front lines. This is a known approach, by the way. It's a known journey, or at least it is to me and a few others on the team here. I can tell you when I say we have ignition, we truly have it, and we're now truly starting to build momentum beyond the ignition. You will see it from our colleagues. Don't take it from me. You should take it from the colleagues that you're going to meet here. Very good. With that, we are now going to break into our groups and there we go. You have a vest, so that should be a clue where you should go. Look for the color, same color of your vest. That's the team. You're going to have two over here, two over here. Please, you're now free to get up and then go join your team. I will be walking with one group during the day, and then I will see you in the wrap-up as well. I hope you enjoy and have a great day here. Looking forward to it. Please head to your color-coded table to receive your headset and safety glasses. You will move as a group to your first station. Thank you. Good afternoon. Before we begin, here are our customary forward-looking and cautionary statements as well as non-GAAP financial information. Additional details can be found on our investor relations website, where this presentation has been posted. First of all, I wanted to thank you for going to Gemba with us today. I think we made a clear case for what is changing at JCI and what the potential value creation opportunity is here. What I wanted to do over the next 15 minutes before we move into Q&A is bring all of this together and kind of demonstrate what the opportunity JCI has to offer. That opportunity is anchored in really three separate. Can you move to the next slide, please? In three separate differentiated opportunity. First, our technology, what you saw at JADEC, where innovation and the ownership of the different subsystem provides us an ability to create new technologies faster than the competition and out-innovate our peers. It's also a great framework, a microcosm of our ability to drive differentiated value proposition where it matters the most, for mission-critical customer as well as our data center customer. Our global field presence, a very differentiated field presence, where our business system actually comes to life. For the ones that were at Baltimore facility, you saw what that could bring, as well as our manufacturing footprint. Our global manufacturing footprint is a great competitive advantage and provides tremendous amounts of opportunity, which I'm going to cover in a minute. Finally, our business system. The business system is what turns discipline and culture into tangible, predictable result for the enterprise and for our shareholder. We can scale everything we've shown you today over time and drive compounding value and continue to address the growth opportunity that's ahead of us. To try and summarize a little bit the 3 stages you've seen, starting with our innovation capability at JADEC. JADEC really translates product innovation into advantage. A whole ecosystem, a whole thermal solution, not just a chiller, but you saw the CDU, you saw our cold plate with Alloy, and you saw all of the sub-components that allows us with the compressor, with the VSD to provide differentiated offering. We are the only OEM that has that capability in-house, both for innovation and testing and re-engineering. You've seen also our ability that this business system has to accelerate that pace of innovation, reducing the cycle time of innovation, allowing our team to be much more productive and create new innovation faster. That results into chiller that provide 50% less consumption, that are 25%-30% less cost burden for our customer, but also massively shorten our time to market. Next, that is, you saw how we take that technology and convert it into manufacturing excellence. That's where the business system shines earlier into the cycle. You saw team being able to improve the capacity, the production of that facility, four times higher than it was three or four months ago. Not by building a whole new factory, not by investing a whole bunch of CapEx, not by creating some magic transformation, but really applying the business system from value stream map through Kaizen, sustaining with daily management, and really transforming the output. What does that mean? Four times more production, four times more revenue. 43% on-time delivery four months ago, 100% on-time delivery today. Happier customer. From a capital intensity standpoint, very little CapEx required to achieve that, and an inventory that's reduced by up to 50%. Great outcome from a business system into a real practice manufacturing world. Lastly, at Baltimore, you saw our capabilities, and where the field execution brings that technology developed at JADEC, the manufacturing you saw at ACE, and actually bring solution where the customers are. Where we engineer solution, provide the execution of the system, and live with those products through their life cycle. You also saw where we can execute better, where the opportunities lie, both from the productivity with our seller, where we manage to double the time those seller are able to spend with customer, allowing them to drive more pipeline and ultimately better secure orders. You also saw where our engineering cycle time, not the engineering of new product, but the engineering of solution for our end customer, was cut by 70%, with much more to come, with the potential to get to 90%. Where we found a way to reduce about a third of the non-value-added time that our field team was spending, particularly our technician, doing little red tape minutia that didn't drive revenue and didn't drive customer satisfaction. All of those three sites, JADEC, ACE, the Baltimore branch, all play a key role. They play a key role for our life cycle opportunity. They also play a key role for the largest growth opportunity of the company as today, which is data center. We are very well-positioned to capture that growth, and we have opportunity to improve our operating leverage through the utilization of our business system. Remember, we started very narrow. There's a few sites, a few factories, a few workstream, and we went very, very deep. We solved at Gemba, and you saw that during your visit. The goal is to take these learnings, these capabilities, and scale them across the enterprise. There's also opportunity to digitize and improve and accelerate that expansion, that scalability throughout the enterprise. The level at which we are right now in those three sites really show you the power of a strong business system supported by a frontline team that really get energized and feel that the adoption is not a top-down approach, but a bottoms-up. Let's move on to the two big opportunities that are in front of us. The first one being our service opportunity. We have the largest frontline organization of all of our direct peers. 50,000 colleagues strong. This is a franchise that's extremely hard to replicate and took us decades to create. We can maintain long-term relationship deep in the market, and we can continuously improve the life cycle opportunity with those customers by providing differentiated service offering. You saw during the visit in the branch that the business system is already removing some barriers and that some Kaizen have led to really early wins, but the service opportunity continue to improve. We have performed fairly well in service over the last few years between mid and high single digit. We believe we can drive higher single-digit growth over time through a better productization of our service offering. What do we mean by productization? Is really creating a service offering that leverage the digital capabilities we have, the service delivery system, with outcomes that the customer are looking for. By improving that service attach rate, we can keep customers longer, drive higher revenue over the life cycle, and be there when it's time to replace those units. We also need to scale our standardization of our service through the major verticals that provide the biggest opportunity. Data center, obviously, is a nascent opportunity from a system standpoint. The service opportunity will compound over time. I'll talk about that in a minute. As we move through that cycle faster, those service opportunities will compound, and our service revenue will benefit from that. Talking about Data center. Data center last year, in 2025, was about 12% of our revenue. We think with the opportunity we see through all the life cycle of data center, but as well with the differentiated technology we've demonstrated with you today, as well as the acceleration of the capacity of production of the enterprise, that it will be about a third of the company within the next five years. We are very confident of that for one key reason. The life cycle churn time of a data center customer is about 60% faster than a traditional customer, because the vast majority of our customers do not use their chiller at 100%, 24/7, whether it rains or shines. Therefore, we think that opportunity will, over time, compound the growth opportunity from the data center and continue to expand our capabilities there. Talking about capital efficiency. Over time, we've made a lot of investment, particularly in the last three years, in creating hard capacity in the market, building factory and roof line, under which we've been able to build more units. That has allowed us to maintain a certain level of capacity. As the data center growth continues to accelerate, we see the demand expanding. In the shaded green area that you see between the blue and the green, we believe that the opportunity that lies in front of us in terms of creating soft capacity out of those hard capacity dollar investment will allow us to maintain a very competitive growth rate as an enterprise, meaning we have decoupled the need for capital expenditure with the top line revenue growth of the company. However, if you look at the health of the pipeline of the data center, not just this year, next year, but over the next five years, we believe that at some point, hard capacity will be needed. With the work that is underway in the implementation of our business system across our 40 factories, we believe that shouldn't prevent us from still performing between 95% and 100% free cash flow conversion, even with a much, much higher growth rate, as well as a much higher profitability rate, maintaining a very high quality of earnings. That will be also based on a very disciplined capital allocation. The ability to compound return over time is anchored in that disciplined approach. First, focusing on investing in innovation. That investment in innovation is, of course, everything you've seen at JADEC, but also making the right tactical acquisition over time to double down on technologies that allows us to create a competitive advantage and sustain it over time. Balancing near-term performance with value creation, obviously, will be critical, and so continuously making investment in our field execution and service, digitizing that platform, and doing more and more of the exercise that you've seen today in our Baltimore branch. We have a very healthy pipeline of M&A opportunities. We have a healthy opportunities to drive further growth organically. The two will drive a better capital efficiency because the capital we will use to deploy against that growth opportunity, as I just described it to you, will provide better return overall. Finally, we are committed to returning 100% of our free cash flow to shareholders and maintain a very strong balance sheet to be able to support that healthy pipeline of M&A opportunity. Talking about growth. We have a clear path to accelerating our growth. Our long-term algorithm has been, for quite some time, pegged around mid-single digits. If you look at the opportunity by vertical, whether it's data center, mission critical, or the decarbonization end market, or if you look at it by domain, whether it's HVAC or controls, we believe we can further accelerate the growth trajectory of the company, and we have a clear path to a high single-digit organic growth overall as an enterprise. What does that mean for the entirety of our value creation framework? If you don't mind moving to the next slide. We're going to improve. Our value creation framework. We're going to improve the shape of our growth algorithm. First, organic growth, as I just mentioned, moving from mid-single digit to high single-digit organic revenue growth. We are not changing, and we are doubling down on our ability to drive operating leverage at 30% plus from where we were in the current algorithm. We will still commit to double-digit growth in our EPS, our capital efficiency will allow us to grow at that pace while maintaining 95%-100% free cash flow conversion. A change in growth without impacting either the bottom line or the ability to leverage the bottom line or the cash generated for shareholders. Finally, what you've seen today is a small microcosm snapshot of a much larger opportunity. The business system is how we're going to run the company and how we're going to drive that opportunity sustainably, consistently over time across the enterprise. I think we demonstrate that from a technology standpoint, from a capability standpoint, from a leadership standpoint, from a frontline engagement. We are all set to really create a differentiated outcome for our shareholder. With that being said, I think we're going to open up for Q&A. Thanks, Marc. At this time, I'll invite Joakim back on stage. We'll start the Q&A session. We have about 30 minutes allotted for questions where we'll open it up to the room. If you'd like to ask a question, please raise your hand and a mic will be run over to you. When you ask a question, I just ask that you state your name and the firm, please. Thanks a lot. Nigel Coe from Wolfe Research. First of all, thanks a lot for putting this together. Really, really good day. Very informative. Great bus as well, by the way, so thanks. I'd be curious, why were the four service sites chosen? Are they particularly good, particularly bad, some in the middle? What I'm trying to get at here is, obviously, the CapEx improvements, early signs are really, really encouraging. Yeah. Do you think that's representative of what can be done across the 400 field offices? Yeah. The headline is, they're totally representative of what can be done. Without a shadow of a doubt, we have these precise opportunities and more going forward. We've just gotten started. We just shared with you a couple of problems that we worked on. Problems are just opportunities waiting to be unlocked, as you heard earlier today, right? JADEC we chose because YORK is the heart of this company. Thermal management is extremely consequential for the continued development of human society in many ways. I could probably keep going for an hour on that. YORK, we wanted to go to JADEC. The two other sites were just in proximity, but they're very representative of what the opportunity is. Thanks a lot. UBS. Quick question on just that point, because when I look at that CapEx chart that you put up, you're creating a lot of synthetic capacity, is the way I think about it. Which is obviously the biggest debit to the incremental margin algorithm. Just given Alloy quadrupling the revenue in two years with no hard CapEx, it just doesn't seem to me the 30% incremental margins is overly ambitious in the context of that type of synthetic capacity improvement. Obviously, there's a lot of heavy lifting. It's very easy for me to say that from the outside looking in. Maybe there's just, you want to deliver on it and maybe outperform and underpromise, overdeliver, or is there something else that I'm missing, that I'm not interpreting that correctly? The second question, before I get my mic taken away, is really about data center market share. You talked about chillers and subsystems within the chillers, and then CDUs and now cold plates with Alloy. Is that how the buyer of the data center is purchasing that equipment? Is it allowing you to win or is that something in the future that now you have to sell into the marketplace to kind of earn the share that you think you have right to? Thank you. Yeah. Do you want to take the guide question? I'll take the first. The algo? Yeah. You got to remember, this is a long-term algorithm now based on a high single digit, potentially faster at time, growth rate. The 30% has a little plus at the end for that very reason. There will be periods, particularly the next 12 or 18 months, where we will do better than 30%, as the cost opportunity and the leverage comes in. Telling you a three- to five-year algorithm is forever, call it whatever number you have in mind, I mean, 50% is going to be hard to defend at this stage. If we continue to drive the business system the way we've laid it out, the opportunity is very clear. Yeah. We'll keep updating the algo as we make more progress. The opportunity, to go back to Nigel's question is, fairly well understood. Having been part of transformations like this a couple of times, you can't always gauge this early in the journey how fast you can go. That's what we're going to be figuring out over the next year or so. As we learn more, we will keep you updated on the algo. Talent, by the way, is typically a rate limiter or an accelerant. You saw a mix today of very talented individuals with deep domain expertise in this industry, in their individual functions, augmented with some talent from other industries to come help accelerate our journey here. We'll be doing more of that here going forward. We'll keep you posted as we make progress on the journey here. On the data centers, today, you're correct. I couldn't think of a single example where somebody buys, starting from the chip now, cold plates, the liquid loop, the technical loop, the CDU, the air handling units, which are not going away, on the contrary, and the chillers, and the cooling tower if one is needed. One of the reasons for that is because nobody has a real technology-based value prop to prove that we can perform at a different level than the subsystems can on their own today, which is what we can prove on the chillers. That's kind of the point we were trying to make this morning with the 5 subsystems being able to optimize for the whole system. What we're working on is to apply exactly that way of working to develop technology-based differentiation for the entire thermal architecture of a data center. Because so much is at play in the data centers, as I think most of you know, it's so difficult to get hold of power, and once you have it, you want to, of course, use most of it for compute. There's a cost side of it, there's a capital side of it as well. These are customers who are very savvy, and if somebody can come up with a holistic solution that just delivers better than the individual pieces, there will definitely be counterparts for that. As a matter of fact, I think we didn't, at least we forgot to mention it on the tour that we were at JADEC this morning, our innovation center, I forget I'm talking to the audience on the camera here as well, is that every week almost we have a major data center customer hyperscaler or a colo that has sent a group of engineers to spend a week with us to co-innovate together. I'm not speaking about theoretical things here. I'm speaking about conversations that we've been having for quite some time with the engineers, the technologists on the data center side of things. Thanks. Julian Mitchell from Barclays. Hi. Hey. Maybe just a first question around sort of thoughts on the portfolio. I think high single-digit organic growth. Yeah total entity. Is the implication of that then that no major divestments are needed, growing at such a good rate? Then on the second part was more of a technical one, as you see data centers move towards more liquid cooling, how does that affect that churn or replacement rate of cooling equipment? Good question. On the portfolio there, we don't have any new news versus what we've spoken about before on quarterly earnings calls and so on. That is that we maintain a very shareholder-oriented view on how we're assessing what to do or not do with a portfolio, things coming in, things potentially going out. We're really about maximizing shareholder value here, right? Now, as you saw in one of Marc's slides, not every portfolio has the same growth opportunity, or not every part has the same margin opportunity or cash generation profile, right? I don't know, there are probably companies out there that have the perfect portfolio. I guess I was never really blessed with that in my career. I think of it as a sports team. You have the offense or the striker, and then you have the midfield, and you have the defense. I'm mixing different sports, I realize. Some parts of our portfolio are going to drive higher growth and some have a higher margin opportunity. Some, although lower growth, have a very attractive cash generation profile, which helps with investments in other parts of the portfolio. For now, what we're doing until we conclude on what to do with this or that part of the portfolio, we're making sure that we try to improve every part of what we own. That was the first question. The second question was I actually have to say that the honest answer is I'll have to think about that a little bit. I don't know that it's really all that different. You published a very good report here recently, so I know you've done a lot of work on the topic. Do you have a point of view on that? I think that may be a faster replacement rate in the- Yeah cooling because it's not going to require input and rack and ship places. Yeah. I think all of, like Marc was alluding to, all of what we do in data centers will have a faster replacement rate than the rest of our portfolio. I'd have to think a little bit more about the liquid cooling specifically. Yeah. Hi, it's Joe at Wells. On that topic, just when you think about kind of margin profile in data center and the equipment versus the service side, and just how you think about the life of a data center and what that means for the service opportunity as you continue to grow that install base of the equipment, but how much service opportunity you're going to have on that relative to traditional business. Yep. I can take that one. Yeah. Yep. A lot of what we do in lifecycle services is about making sure that customers stay up and running. The worst thing that can happen is unplanned downtime, and then you have revenue loss and perhaps other consequences. The concern in the data centers about revenue loss is exponentially higher than it is in almost all other verticals that we serve. The service attach rate, that was one of the stations that we visited here in the Baltimore commercial office, that was a general discussion about all verticals. The attach rate, the initial attach rate of service contracts is much higher in data centers than it is for the industry on average. What they're looking for, too, in terms of value creation from us, response times, what we take on and so on, is more comprehensive than the average service business that we have. Per chiller, if we stay on chillers, the opportunity is much larger in data centers, than in the average industry. From a margin standpoint, that service productization I was mentioning, as well as the natural concentration on where the chillers are located, provide potential margin opportunity over time to go from a 40% margin to something greater over time. Just on air handling and this idea that direct to chip and what that means for requirements, the growth that you're talking about in front of you on the colos, just to address that a little bit more in terms of what you're seeing on the requirements for? Air-cooled- Yeah in the facilities. If you think about it in terms of our opportunity per gigawatt or per megawatt, I'll just simplify it's going up, it's increasing. Which Julian actually addressed in his report. The marketing I'm giving you, Julian, it's amazing. The simple sort of explanation is there are more things that generate heat in the data center inside the server room than the actual chips. It's not enough to just cool the chip, you need to cool the room as well. I've, over the last couple of weeks, visited I don't know how many data centers, but even if they're liquid-cooled, there are even more air handling units going in than we had anticipated originally. Nicole DeBlase from Deutsche Bank. I guess first, just going back to the discussion around owning the entire thermal chain and making that a benefit to the data center customers. Do you think you have all the pieces of the pie or the puzzle that you need to address that whole thermal chain today? Are there any white spaces where you feel like you need to put more effort in organically or inorganically? Second quick question is just, with all the changes that you're making with the business system, how do you get buy-in all the way down to the employees on the plant floor? Mm-hmm. Yeah. The first question is, we have the core technological capabilities in the entire thermal architecture or the thermal chain today. We haven't done what at least I talked about with our group, which is take Alloy, basically heat transfer capabilities. I think we talked about this at the quarterly call as well. We're going to use their technology, their know-how to basically make our CDUs much more differentiated. That will happen within the next year in terms of when it hits the market and sales. Before that, of course, we're going to do pilots with large customers. It will turn our CDU into something a bit more differentiated than everything else that's on the market. There are a number of things we have to do organically, and possibly there could be some acquisitions, but we don't need any major capital deployment to build out the capabilities in that thermal chain. How do you get the buy-in from the shop floor? Basically, as you heard today, and speaking to the audience who weren't here, we toured our innovation center, spoke to engineers who are working on innovating new products. We toured our factory. We didn't actually speak to individual operators on the floor. We toured our commercial office here, but here you spoke to individual contributors as well. All these business system activities that you heard about today, the value stream maps, identifying waste, the Kaizens that we, small groups of people working together for five days to address some of these wastes and opportunities. All those Kaizens include people on the shop floor, if it's in manufacturing, or individual sellers, or individual engineers or individual procurement people in those Kaizens. Well, I think you heard Eric talk about that. The way you get buy-in is, basically, you start with a value stream map because you bring all these colleagues from these different functions in together, and you've identified a problem to solve. You typically try to start with for the customer, and then you map out what all now needs to happen to serve the customer in a way that we'd like to serve the customer. When you do the value stream map, during three, four days together in a room like this, actually, this is the room where some of these value stream maps were done. When people start to help to try and define how the work is done today, first thing you find is people don't agree because they do it differently. I was taught differently. I thought this was the way it was supposed to be done. You have this realization that, oh, okay, maybe this isn't as defined as we would like it to. The second thing is people realize what amazing opportunities we have to simplify the process and remove waste. Immediately, they sort of launch into, okay, what would we have to do to improve this overall process? They define which Kaizens we're going to run, and then they're part of that. The business system is, in some ways, it's a gigantic change management tool for involving people at all levels in the organization to work towards one common goal. The reason you can't just go copy-paste everything you've seen on the tour today is because you have to have people go through this change management process to get their buy-in, and then you can count on that the change that we're implementing is going to sustain. You create a new standard off of which next time we do a value stream map, we'll find even more opportunities, and it's a virtuous cycle. It never ends. Thank you. Hi, Joe Ritchie, Goldman Sachs, and thanks again for everything today. It was amazing. Appreciated the swag as well. Yeah. You look good in that hat. Yeah, thanks. Thanks. I'm going to be wearing it a lot. You answered the question earlier on margins to Marc, your answer to 30% plus. It's interesting with high single-digit growth over the long term. Sounds great. If you think about your last couple of quarters, the order rates were well above high single digits, right? 30 and 39 the last two quarters. As you kind of think through, maybe this is the velocity question, or answer that you gave earlier, Joakim, but just turning those orders into growth in the coming, let's just call it 12-24 months, how much visibility do you have into that? and the ability to potentially run faster in the medium term? Yeah. We've had very healthy order entry. Our backlog is at record levels. While all this is happening in our pipelines, our funnels for new business continues to grow and is very healthy. We're quite optimistic about that continuing. The work that you saw at ACE, our manufacturing capacity capability, that exact same work is ongoing, as you heard, in eight or so factories. Many of them don't only serve data centers, but they manufacture a lot of our data center-oriented products. Just like you saw in ACE, month-over-month, our capacity and our lead times are coming down. Our on-time delivery is coming up. I think we're going to continue to improve very nicely here, and we'll keep you updated on what the rest of the year is looking like, as we speak here in the future. Things are looking very good. Hey, Timothy Wojs from Baird. Thanks for everything. Milwaukee guy. Yeah, exactly. You showed us some of the things you did in manufacturing and some of the things you're doing on the service side. I don't know if you would want to split the organization that way, but if you looked at the opportunity going forward, do you see more opportunity from a margin perspective in the service business and kind of the branch business or more on the manufacturing side? There are significant opportunities on both sides of the house. I think we've spoken about before that we have 40, it's actually 43 or 44 plants around the world. With what you saw at ACE, we're probably not going to need 44 plants in the future. The opportunity there is significant. Then, as you saw here in our commercial office, we have significant capacity opportunities, in sales and service and project engineering, project execution. By the way, these were just the topics we picked for today, right? There are other areas that we're exploring as well. They all have one thing in common. It's like we're breaking the back off of growth, top-line growth, and cost growth. The cost in manufacturing, the composition of it is different than the field cost. The field costs are very people-oriented, right? There it's more about getting more out of the talented people that we have. We'll continue to add people in some functions, definitely not in G&A, but in sales and service. As we grow, we may need to do that despite what you saw today. On manufacturing, there the opportunity is in terms of productivity, of course, is to get more out of the same people or if we consolidate plants, a little bit different story, but you also have the fixed cost opportunity, and you have material cost opportunity as well as logistics cost opportunity. Both are significant. How we go about capitalizing on them is a little different. We'd be remiss if we didn't talk also about the inventory opportunity. It compounds from margin to cash. It's not quite 50/50, but overall, it's hundreds of basis points. Yeah. Hi, Toby Okwara from Morgan Stanley. Wanted to ask two questions. One, in the data center business, there's been some discussion on the shift to more industrial controls versus traditional building. How has that kind of changed your innovation pipeline and conversations with customers? The second part on chiller capacity and the market is, do you have any sense of where the mix shift may be going in terms of water versus air-cooled? On controls, I know there's that discussion. The way I think about it is there are thermal controls, temperature, humidity, and the stuff we do. Then you have all the controls that you need around power, and then there are controls around what kind of load is coming in for the data centers, right? I tend to think of it more as in what use cases do you need controls for. I think the way the market is going to play out is that, in particular, since we are going to build out the whole thermal chain, controls is an essential part of that. Controls is never generic controls, right? It's always very application-specific controls. I think as I look into the future, I think controls will fall more into one of those three buckets versus the other way around. Yeah. Air-cooled versus water-cooled. I think if we were maybe 18 months ago, there was a trend where people anticipated water to grow as a bigger share of the market. The vast majority of the market is air. I think we've seen the market staying about where it sat in terms of air-cooled chiller. Part of that has to do with the level of innovation we brought to market and the ability to actually drive some very strong performance, as well as the uncertainty of where those data center would actually be built. We see air as being a little bit more flexible from a location standpoint than water over time. Thank you. Probably our last question. Hey, Piyush, Citigroup. You kind of highlighted the different phases where you're implementing your business systems, engineering, sales, service. Maybe if it's possible to rank which department is kind of leading, where there are more opportunities. Ultimately, we want to understand how fast you can convert your backlog. Some color there. The backlog has grown. I need to repeat for the camera. Record order entry, record backlog. Of course, it's the order entry from data centers is very healthy. The eight factories that we chose to prioritize for implementing what you saw at ACE today, are the ones that are mostly focusing on data centers. We feel very good about where we're at. We'll keep you posted as and when we can do better than what we've said here about the next couple of quarters. We feel very good about where we're at. All right. Thank you for the questions. At this point, I'll turn it over to Joakim for some closing comments. I'll just kind of summarize a little bit, but also reflect a little bit personally on some of the reasons why I chose to join. First, a little context. I think we live in an incredibly interesting time if you work for a company like we do. Scientific discoveries over the last decade are now in mass implementation in society. AI, because of the advancements in compute, biologics, not the old traditional pharmaceuticals, and I could keep on going, semicon, batteries, and so on. All these technological advancements that are now in application have two things in common. Thermal management is so important for the performance of the processes that are involved in those industries, number 1. Number 2, they are all much more energy-intensive than their previous incarnation. AI data center versus cloud data center. Biologics plant, seven times more energy-intensive than a classic pharmaceutical plant. Energy costs are increasing. The need for energy-efficient, high-precision, high-capacity thermal management has never been higher. It's super exciting to work in a business, in a company like this. What we're trying to do is, of course, we're trying to build one of the most consequential industrial tech or infrastructure tech companies for our time. What's so cool about Johnson Controls is, hopefully, your takeaway will be today, as you saw in JADEC, our innovation center, we have 150 years at the heart of YORK. My grandparents' grandparents, it was that generation that started the innovation work there. Talk about a bookend to have in terms of capability. The raw talent that's been built over generations in JADEC within thermal management, technology-based capabilities, it's just amazing. Now, we can debate, have we really unlocked that at speed over the last years? I think the answer is no, and we'll come back to that. We also have the other bookend, which is our 50,000 field colleagues. We saw some of them here in Baltimore. People who have worked here for decades, as you've heard. In many cases, they're capitalizing on customer relationships, as you heard from JP, that have been built over generations of leaders as well. We have these incredible capabilities, and we have more than twice the field footprint than many of the other people that we compete against. We have these two phenomenal bookends that we've now chosen to leverage and point at some of the most consequential technology deployments that are happening in human history, and by the way, are growing much, much faster and need our capabilities, right? Number one, we're going to up our growth that way. Number two, with the business system, we are, as we try to show you today, unlocking our full potential, both in innovation by doubling our capacity and speed of innovation, as well as manufacturing, where you saw how we're quadrupling the capacity of a plant without any major CapEx. Then here in our commercial office, where you saw that with a business system, we're able to, for example, double the amount of hours with customers. It's the business system implemented and led by our people on the front lines as well as different management levels that make this all possible. The combination of the people that you met with the deep domain expertise as well as capabilities of being able to deploy a business system and not just motivate, but educate people so that they can really do it on their own, and that's going to just accelerate over time, is what gives me such great confidence that we have a bright future here at Johnson Controls. Thank you for your time today. We look forward to welcoming you next time. We'll pick some other areas to show you then what we're working on. I know that it was a long day. Some time in the bus. We try to make it worthwhile for you, learning experience there as well. We thank you so much for your confidence in us. It means a lot for us and our people. Thank you. Thank you.