So being here, it's my pleasure to have up next Lennox International. We have Alok Maskara, of course, CEO, and also it's great to have Jeff Ditlevson, who runs the commercial business at Lennox. I know residential gets most of the attention, but there's a lot happening on the commercial side as well. So maybe start off, Alok, with perhaps just how do you see sort of the current trends playing out, particularly on the residential side? Are you seeing any sort of odd behavior from distributors or channel partners around the A2L transition? I know it's very early, sort of seven weeks into the year. Yeah, great to be here. Thanks, Julian, for having us here. From our perspective, I think everything on the channel and what we see on the demand side seems continuation of what we talked about and where we were end of last year, but it was good to see other companies come out and see similar trends in terms of strong demand exiting the year, strong demand entering the year, and we were sort of pleased to see that. When we kind of talked about our earnings and our unusual behavior, we came up with a number that was, "Okay, here's what we think pre-buy was." And we talked about, "Hey, some of it's pre-buy, some of it's probably share gain, some of it's the reversing of destocking, who knows all of that." But looking at everybody else, it seems like we have overestimated some of the pre-buy, and it might have a lot more share gain or just reversal of the destocking. So we are pleased with the trend. I mean, I think the market remains strong. We continue to see the same trends that we saw earlier continue. I haven't seen the proverbial cliff, nor have I seen the air pocket. Although it's possible there'll be air pocket sometime around March, April when 410 inventory starts running out everywhere. Right now, I would say most of the actual equipment being installed is still 410. So I think we're starting to see some 454B equipment starting to get installed. There's still a lot more uncertainty for us to overcome, but we are pleased with the demand trend. And I think sometimes people worry about, "Okay, the distribution channel sounds comfortable," whether you obviously control most of yours. The third-party side, I think I'm curious what your thoughts are on inventory levels there. But I think people sometimes worry about the contractor part of the industry. Is there sort of hidden inventory that just sort of your perspectives on the contractor side and your third-party distributor inventory? On distributor, I don't think inventory is inflated by any standard. Remember, they are destocking since COVID. They destocked after the SEER transition. I think the inventory is pretty normal, I would say, right now. There may be a little bit of a build-up as normally is with any transition as you manage phase in, phase out. On the dealer side, some of the larger ones, could they have taken a barn and put some units in there? Maybe. Nobody's got a warehouse to put these units in. Would a small dealer put three extra units in their garage and keep their car out? Yeah, they could do that. But you're not talking about meaningful numbers on the contractor side. Most of them are constrained for cash, but they're definitely constrained for space and where to put it. The other thing they worry about on the contractor side is if you don't sell the 410 in a year, they become obsolete. Nobody wants to take that risk for margin gains or viewpoint or pricing benefits. So if there's any, it's small. Maybe a week or two here and there, not months. Got it. And that's for the AC side of things. So how are you seeing the traditional furnace business playing out? The furnace business went through extreme destocking because at that point, there are fewer SKUs, less complexity. Distributors during COVID loaded up. We're glad to see that behind us now. I think those sales are back to normal. Obviously, weather makes an impact, and we have seen what the weather is. I mean, this is a furnace season. We're hardly selling any real air conditioning right now. From a furnace season perspective, we are pleased. We're just delighted to be back to normal. At the same time, there's a long-term trend from furnaces to heat pump that continues. We haven't seen any radical shift or any dramatic changes in that either. Overall, we are pleased with furnaces. More importantly, I think our technology now allows us, and so do some others, to do more of a hybrid system. It's heat pump and furnace. So that way, during fall and spring, they're using a lot more heat pump, and then it automatically switches to a furnace during really cold days. So to us, that adoption seems to be increasing more. And I think that's where control technology gets better. Contractors and dealers get more experience in that. And furnace market share is much higher. So we're actually pleased with where we are on that. Away from the very near term, just thinking about the year as a whole, I think a lot of people in this room would say that maybe your revenue guidance in the home comfort business, sort of, I think, flattish revenue. It looks sort of lighter than what some of your public peers have talked about. Sort of how would you kind of characterize that? Is it caution around market share, or it's more you had a view on pre-buy and that informed your guide, and maybe that view has shifted a bit since? Yeah, it's a combination of all of that. We clearly have a view and still have a view on pre-buy. We're continuously dialing it in as we get more and more information. That shaped it, and we sort of showed that on the walk, Julian, very clearly. People could make their own assumptions on that. There is a concern around temporary share gain. I mean, last year, some of the competition were out of units. We're going to try to hold on to 100%, but realize we won't hold on to 100%. So some of the share gain reversal has sort of baked into it. There's consumer uncertainty baked into it as well. If you think about last year was not a good year from market growth perspective, we are not expecting a good year here either. We are looking at end consumer demand being flattish, new home being flattish, and where we projected. I think the biggest thing that probably also has now come to light that we are not was impact of tariffs, so there's a concern around the consumer impact of tariffs and inflation, but then also all of us will have to go to price increases, so in addition to the A2L price increase that we did, pretty much every OEM will have to implement another price increase this year just to offset the impact of tariffs. Now, nobody's willing to commit to that fully because we don't know exactly what the tariff is going to be, what's going to split, but I think a low single-digit type price increase is most likely right now. It could be higher than that, depending on the Mexico tariffs and the Canadian pieces. Still, a lot of moving pieces is the message, just a lot of uncertainty, and we're just waiting for some of the uncertainty to settle out. On the margin front, I suppose you're sort of assuming, I think in home comfort, that the net of price and mix and inflation, you don't really get much of an earnings net benefit from that combination, which I think maybe strikes people as odd given the history of Lennox. Sort of any thoughts around that? Sure. On margin, I think if we just take backwards, right, we have expanded over 300-400 basis points just in the past two years. And that's all been because we want to make margins as a manufacturer and also as a distributor. We are early in that journey. So I think that progress will continue, 2025 being just one of the years in that journey. This year, I think we probably put a lot of weight on inflation. If you think we talked about, we talked about 2%-3% net inflation, and that's the piece which probably impacts margin the most. I think on pricing and others, we are in good spot. I think our pricing is holding very well, so that's positive. If you think from volume, it continues to be strong. So some of it's going to come down to inflation, impact of tariff, and how we offset that. That's why I was talking about during the year price increases that many of us will need to take actions on and pull that forward. But we have always had the view that we'll share all the information we have, and if we're going to be error in there, we'd rather be on the conservative side versus on the aggressive side. And on that tariff front, you mentioned it a second ago just before we switch over to commercial, but any sort of odd behavior you've seen in the industry or you're worried about it when people are talking about how to react to pricing around tariffs or? No, we haven't seen any odd behaviors. Some competitors are already out with surcharges. Clearly, we are looking at it, and others will follow too. I think that's pretty expected behavior. Some consumers who are in Canada, they might be ordering a little bit more before the 30-day window. It's not going to change the dynamics meaningfully, so I do think some of our friends up north are concerned about tariffs, and they might try and stock up ahead of anything, but in general, our supply chains are fairly resilient right now. The tariffs have some long-term changes. We'll all need to work through that, but that's a matter of months and years, not a matter of weeks. In the short term, we are going to be very focused on not making the mistakes we made during COVID, so let's not jerk the supply chain around too much. We'll make sure we keep our customers happy, keep high fill rate. We're going to push back some of the tariff impact, productivity actions they are taking, what actions can we take together to offset the impact of tariff, and then finally, the remaining, those extra costs, we'll have to pass it on. I mean, that's just unfortunate, but we'll have to pass it on, and I think so would the rest of the industry, but no abnormal behavior. Besides, every morning there's a new tariff, so we try to scramble and see how to update the model because the aluminum, the steel, the tariff from China, each of them start compounding itself, which makes the price action almost inevitable. Is the way to think about steel, higher tariffs mean just domestic steel prices will move up? Yeah, it's just a demand-supply thing, right? Imports raise up a tariff, and domestic would produce higher. The other thing to keep in mind, a lot of the components that we bring from outside and even there, they are not as good into hedging and putting raw material supply. So the secondary impact of those tariffs is also meaningful for us. So there's a primary impact because we buy a lot of steel, we buy a lot of aluminum, but there's a secondary impact as well. Thank you. And then turning to Jeff, who's impatiently waiting. Commercial side of things, just the broad market environment, I think there's always a sort of a large core of investors nervous that like commercial markets about to fall off a cliff for some reason. Sort of maybe help us understand your thoughts on that market at present. Yeah, we're still seeing pent-up demand. There's a lot of talk about interest rates, but when you look at our business in particular, the new construction piece, which is more sensitive to interest rates, that's a low percentage of our business, right? So we can still pull from those decades of installed base, get our emergency replacement initiatives going. So we still see a lot of volume out there. So pent-up demand is still what we're seeing. Got it, and then there's some element of the refrigerant change clearly affecting your business. Tariffs and steel will affect your business. Kind of how do you assess the confidence in passing on a lot of these costs on the commercial side to customers as you kind of need to? Yeah, I mean, that's something that we're being thoughtful about. I mean, first, we got to take care of our customers. We've got a lot of productivity initiatives that we're also working on to try to offset some of that. But we operate as well. So if that is the lever that we have to turn to, we. I think one of the benefits Jeff has in a lot of the commercial account, the contracts automatically have escalators built in based on commodity pricing. So that will naturally start offsetting it. It just has to last for more than a day, right? It's a question of how long will these tariffs last and when the pricing comes out. So that's actually a little bit easier given how sophisticated some of these contracts are with escalators built in. I see. Got it. And on the volume side, I think sometimes in the past, Lennox has talked about the sort of high age of the installed base in commercial. Kind of any updated thoughts around that? And do you see any impetus among the customers to get that age down and accelerate replacement rates? Yeah, we do see some catalysts on the horizon there. You look at the installed base. From that 2000- 2005 time period, there was a massive installed base put into service. And when our units get to be about 15-20 years, that's when they typically need to be replaced. And there tends to be a catalyst there with the repair. The The cost of repairing them really goes up. A lot of parts and service in that time frame. So we're now coming up in that zone. And even talking to some of our customers, they're planning two-three years out for this wave, talking to us about how do we prepare for that. The other big catalyst that I see is just how efficient our units are getting. I was up in Oklahoma a few weeks ago talking to a school district, and school district wanted to spend the money wisely. Initially, they wanted to go in with our lowest price units, first lowest first cost units. But after talking to them about the total cost of ownership and the efficiency benefits of some of our new models, they switched to our premium tier, what we call our Model L series because of that savings they get from just how efficient the units have gotten. So we see a couple of catalysts there. The education vertical always grabs the attention because of the ESSER funding and the tale of that. When you look around the sort of municipal bond environment and the slope of that funding sort of coming down, how comfortable do you feel with your own, let's say, K through 12 vertical, maybe out of a sense of size of the business within commercial? Yeah, we feel really good about it. While some of the federal money is no longer with us, what we're seeing is a pickup in the state and local bond activity, which is going to keep it afloat. But I don't want to get too much into some of our numbers, but we feel really good about it, and we're actually investing in some of our resources to go attack that market even further due to what we're seeing. I think one thing to keep in mind, since we were supply constrained, key accounts got all our focus and attention. So now that we have a little bit more capacity, we have the luxury of going and looking at verticals like this. On the point on increased capacity, the new Mexico plant's clearly sort of a big deal, a big change for the business. Sort of where are we on the ramp up in terms of, I guess, unit production rate, but also the costs and the margin effect of the plant? Yeah, we think we'll be at kind of run rate, kind of exit rate, if you will, steady state velocity, kind of mid-year. But the early signs are absolutely fantastic. I mean, I've been down there several times. I'm so pleased with the progress. The units coming out of that factory are extremely high quality. I might even say higher quality than some of our U.S. factory. And that's just due to the investment that we've made down there with our first class machines and our sheet metal fabrication, just as an example. We've also got great access to talent down there. I mean, just as an example, we can get degreed engineers working hourly positions, which is unheard of here. So feel really good. The cost, yeah, we're still working through the cost. There's still a bit of a headwind, I would say, the next couple of quarters. But just really pleased with the quality overall with our factory down there. When we think about the sort of revenue base of commercial, looking out a couple of years when the plant is at full production, how much can it add realistically to the scale of the business or market share? Yeah, we think it can really help us. I mean, just to maybe throw some numbers out, I mean, the factory that we built down there is primarily targeted at the emergency replacement space. I'll call that 30% of our roughly $5 billion TAM market. We used to be a player. We used to have high single digits, maybe even low double digit share. We lost all that share because of capacity constraints, and now the business is almost nothing for us. We're hoping to get that up into mid-teens, maybe high teens over the next two, three years, just to put some numbers to it. But really excited about it. We ran a pilot in one of our big metro area markets. It went really well. And what we were probably most pleased about is just the warm response we got from some of the contractors that we had to short units over the past several years because we didn't have them. So we've got kind of these tranches of. I'll call them warm leads because we've still been selling these same contractors, maintaining that relationship, non-emergency replacement units. So they still know us. They still like us. They like our direct model. So it's been a very warm lead. We're also selling through our residential contractors as well because they buy a portion of emergency replacement units through our Allied business. Much of their business is emergency replacement as well. And then, of course, our National Account Services business, where we've got 800 technicians out on roofs, also help us. So we've kind of got these tranches of warm leads out there. We're super excited about the potential growth there in emergency replacement. And from a manufacturing output perspective, that has changed. We said we can add 20%-25% to our current revenue base, but that's revenue base for the commercial HVAC, which is a subset of the BCS segment, right? So that still remains. It just might take us a year or two to get there. Got it. And on the margin front in the division, you have this sort of, I think, aspiration to push up margins this year despite inflation and the sort of new plant costs. What's the confidence in managing to get that margin upturn? And then you have this sort of low mid-20s, 2026 goal on margins. You'll probably be close to that this year. Kind of where can that go in the long run? Yeah, confidence is really good. I mean, you mentioned kind of that range in 2026. I mean, if you look at one of our peers, AAON, that's kind of right where they're at right now. And so we don't see no reason why we can't kind of be in that zone. But this emergency replacement business is one of our biggest growth levers in commercial. And we're seeing margins on par with the rest of our business. It's going to help us with factory absorption, getting those economies of scale. We've also got, I think we're going to benefit from price this year as well, in addition to a number of factory productivity initiatives and also our parts business. That's something that we've, I don't want to say neglected, that's not the right word, but I haven't really invested in that. I think Julian and Mark talked a lot about manufacturers' margin, first distribution margin. We haven't really talked about that in commercial because we're busy building capacity. We were busy just serving our current customers. I mean, starting the end of this year, next year, we'll start talking about that in commercial as well. So you can't just be satisfied with one of the competition who's not a distributor of their own. We got to start raising the bar on commercial. And I think about something as you come up with new long-range targets, we can start talking about that a lot more. Got it. And on that point, the residential business, I feel like you sort of talked about the manufacturing plus distributor margin a couple of years ago, and then maybe because of the whole noise around A2L transition, it sort of took a back seat and there's a new plant on the commercial side. In Resi, where are you on that process of capturing some of that distributor sort of value? Still early innings. I think from our perspective, that's beyond the 2026 targets we've talked about. We'll get to the 2026 targets, not even capturing our entitlement on the manufacturers plus distributor margin. And that's kind of the next phase. We were very confident we can get there. It requires a few things. The first part is just how we approach our go-to market. So we have revamped our go-to market. We have changed incentive structures. We have added a lot more salespeople. We are giving more autonomy to our local branch leaders, doing a lot more of the regional pricing that good companies like Wells Fargo and others have been doing. So I think they've been copying them shamelessly on how to do that better as a distributor. Second piece of that always comes down to is selling more of products that we don't make, things like the Samsung. So the Samsung JV, and that's because I don't increase my fixed cost. All I do is sell more through the existing infrastructure. So that leads to better drop through for us overall. So I think that's an interesting piece on that. But don't forget parts and accessories. We are still underweight in that. And then finally, in the distribution efficiency piece, we have a lot of room to go there as well. We are redoing our entire distribution network. And starting sort of next year, the way we move boxes is going to be fundamentally different than compared to where we move it today. That would lead to better fill rate. That would lead to more efficiency and a better utilization. So a lot more to come on to that. But we are confident. We are excited. We feel good that the 2026 numbers are within our reach, even without capturing the entitlement of manufacturers plus distributor margins. Great. I don't know if there's any questions from the audience. If not, I suppose one for me would be going back to that 2026. There was sort of the tease that you'd update the targets, and there was sort of a micro update, let's say, on the Q4 earnings. Yeah, how do you feel about those goals? And I suppose, when do we get the next step looking out towards the end of the decade more? Sure. We feel very good, and you will see we are already within the range. Now we are talking about going to the higher end of the range, so I think that's what we have been talking about this range for years. Now to get to the middle range and talking about the high end, it feels good, so I think we are confident. We feel good. Keep in mind that when we gave these targets, that was 2022, and we usually give three-year targets or five-year targets. We intentionally gave four-year targets, and I remember people asking us, "Why are you giving four-year targets? That just changed." Now I have to remind people because we have said 2025 is going to be messy. There's potential pre-buy that's going to happen before A2L transition. So all that's coming out to be true as well. 2025, there's more uncertainty. We actually face a lot more certainty in 2026 around our targets because the impact of pre-buy, the impact of negative productivity on the commercial factory, all that will be behind us by 2026, right? So I think we get cleaner comms, better footings. We feel good. Sometime between now and 2026, maybe early 2026, we'll land up holding an investor day and talk more about our next three-year targets. Still a little early. We want to first deliver what we've committed to. Maybe within the next 12- 18 months, we'll hold an investor day and talk about the new phase, which will include manufacturers plus distributor margin and our roadmap on how we are going to get there. Great. And you mentioned the Samsung JV. With everything else going on in the industry, perhaps people have sort of slipped their mind a little bit. Sort of where are we on that front? How are the share gain efforts going? First of all, it's going very well. We are blown away on the contractor feedback on our product, both on the residential. Good. This is a product that's top of the class with a very low market share, and our sales team is a really good sales team without a good product, so the match here is almost perfect. We just launched it, so I can't go into now the sales that are coming along, but the growing enthusiasm between our salespeople, our contractors, our design engineers, to be able to put a package together, whether it's for a commercial building that has VRF, that has our rooftop units, that has our parts and accessories, our installation, our recycling, our service contract, that's super powerful in getting the VRF. On the residential side, same thing. The room above the garage might need a mini-split. Your main house needs a standard unitary system. Putting that whole package and displacing some incumbents and things there, we are very excited about it. Samsung, as you know, rarely ever co-brands. The fact that we are Lennox powered by Samsung, that halo effect of the brand to us is also very positive just from a consumer lead generation perspective and how we incentivize and run through that. Great. And then maybe lastly for me before the audience response questions, I think thinking back to that Investor Day three years ago or so, the extremely conservative balance sheet leverage goal was something that stood out and sort of made sense in a way, new management and so forth. Today, you've been in the role a number of years. Is there scope to do more with the balance sheet now, do more acquisitions? All of that. I mean, our priorities remain. Number one is invest in ourselves, which we have done. We have had record capital investments for the new factory. We are doing a lot more on the distribution side, upgrading the ERPs because we were just underinvested in. So I think that priority still remains. Second is we maintain what I call polite/competitive dividend. We increase it every year, and I think we'll continue doing that. Third for us, this comes down to acquisitions. I think while the OEM space is probably pretty consolidated now with the recent Bosch deal, recent Nordyne getting bought, we are down to a fewer players, more consolidated. But the rest of the industry is still very fragmented when it comes to parts and supplies, IAQ, distribution, contractor space. So there's a lot of opportunity within the North America HVAC umbrella. So I think there's a lot more in that. And then share buyback. I mean, we're not going to sit on cash forever, right? So as the opportunity comes in, we have been less aggressive on share buyback simply because we were investing a lot more in the business. But as we get to the tail end of that, which is kind of now, we will start looking at more share buybacks and continue to maintain that discipline. We like where we are from our balance sheet and capital. It gives us a lot of flexibility. Yeah. Great. Well, I think with that, we'll switch to the audience response. Survey to the first question, do you currently own Lennox stock and what sort of weighting? Great. So very low ownership today. Second question is around sort of general bias to the name. So very, very even. Third question, I'm looking at sort of through cycle earnings growth. Here, the peer set is probably broad U.S. multi-industry, I guess. So in line with peers, which maybe seems a bit low. The next question, looking at sort of that point around excess cash usage from here. So share buyback is around half of it. Next question. This one looks at sort of P/E multiple on the near term that Lennox should trade at. So generally around a sort of market or S&P multiple. And then I think the last question now is around sort of what's, I think, we saw at the beginning, the ownership level is very low. So what's the main reason for that? So core growth, which I would think that would be a reason to own Lennox, but there we are. Well, look, with that, thanks very much, Alok and Jeff. Yeah. Thanks, Julian. Thank you for coming. Thank you. Thank you. Thank you, Jeff. Take care.