Good morning, everyone. Morning. Welcome to Lennox Investor Day 2026. I wanna take a moment to welcome everybody who's here in the room in Richardson, Texas. Also everybody who's joining us online. As you would probably known, we are proud of what we do, and we really appreciate the time you're taking to learn about Lennox and how we create value for our customers and our shareholders. As is our usual practice, I wanna start with safety. We have an excellent safety record, and we like to keep it that way. There is no safety drills planned for the day. If there's an emergency event and the alarm goes off, please proceed towards the nearest exit as shown on these maps. In case of a severe weather emergency, we will shelter in place away from these windows in the hallways, in the stairwell, or in the restrooms. In case of other evacuation emergencies, we will walk down the stairwell towards the emergency meeting point outside the building entrance. Please follow me or one of your other hosts in a red polo shirt in case of an emergency. Before we begin, our legal team and Chelsey have asked me to remind you that during today's event, we will be making certain forward-looking statements which are subject to numerous risks and uncertainties, as outlined on this page. We may also refer to certain non-GAAP financial measures that management considers relevant indicators of underlying business performance. Please refer to our SEC filings available on our investor relations website at investor.lennox.com for additional details, including a reconciliation of GAAP to non-GAAP measures. I want to start today's main session by highlighting our core values and our guiding behaviors that shape our winning culture. Our core values of integrity, respect, and excellence are, and have been for the past 131 years, the foundation of our success. Our guiding behaviors that define these core values were updated in 2022 with increased emphasis on accountability and customer experience. One of the benefits of hosting the Investor Day in the DFW area is that you get to experience our culture and meet our talented leaders who drive our success. I wanna thank all the leaders who are presenting our story over these two days. In addition, I wanna thank everybody who was part of organizing this event, the volunteers who have worked tirelessly for weeks to ensure that the event runs smoothly. Now, I do wanna take a moment to introduce our executive leadership team who run this high-performance company. Let me start with Dan Sessa, our Chief Human Resources Officer, who has assembled this talented team over his illustrious 18-year tenure at Lennox. Michael Quenzer, our Chief Financial Officer, has been with the company over 20 years and in the role for two years as my finance partner in driving accountability. Prakash Bedapudi, our Chief Technology Officer, who's led the development of all the world-class products and information technology for the past 17 years. Joe Nassab, the President of our BCS segment, who's been with the company for over 15 years and started his current role on the same day that I joined Lennox. Sarah Martin joined Lennox last year as the President of our HCS segment and brings a fresh perspective on how to accelerate profitable growth at Lennox. Monica Brown, our chief legal officer, has been with the company for over 13 years and been in the role for 14 months with a passion to fully harness the power of intelligence, artificial intelligence in the legal department. Mary Ellen Mondi, our VP of marketing, joined Lennox three years ago. Her impact is apparent in the digital advancement we are making to improve customer experience. Finally, John MacQuarrie joined us with the recent Duro Dyne Supco acquisition to ensure that we deliver double-digit growth in our aftermarket parts business. At this moment, please join me in thanking all our leaders and event organizers for driving the success of Lennox and this event. During the main stage session, I will share an overview of the strategy followed by Sarah Martin and Joe Nassab, who will highlight the transformation underway at HCS and BCS segments respectively. This will be followed by a short break that will allow you to mingle with our leaders, after which Prakash will give you an overview of our advanced technologies that are fueling our transformation. Finally, Michael will wrap it up by summarizing the anticipated fiscal impact of our strategy over the next five years. We will welcome all your questions at the end of the session. Let me start my presentation with a video that recaps the progress we have made since our last Investor Day in 2022. I have four messages that I want to emphasize during my presentation today. First, as the industry continues evolving, Lennox's competitive differentiation will be even more powerful given our one-step direct-to-dealer model. Second, we remain bullish about the long-term potential of the North American HVAC industry. Third, we have invested in initiatives that will continue driving above-industry growth from Lennox while also delivering margin expansion. Finally, we remain committed to continually enhancing the shareholder value through flawless execution and while remaining disciplined with capital deployment. Our disciplined capital deployment is reflected in a strong ROIC of 39%, which is one of the financial metrics that we are immensely proud of. If you're new to the Lennox story, I should also mention that we have delivered top-tier shareholder return since our IPO 27 years ago, and we were welcomed into S&P 500 in December 2024. Lennox was founded with a differentiated value proposition of serving our contractors directly. Even 131 years later, 75% of our revenues comes from our one-step channel, which provides us greater intimacy and insights compared to our competitors. Over 80% of our revenue comes from non-discretionary equipment replacement, which makes us more resilient during economic cycles and less reliant on growth from new construction. The last point I want to make on this slide is that our BCS segment, formed post-European divestiture in 2023, is now a significant contributor to our overall success, delivering approximately 40% of our total EBIT. Having two strong segments has made Lennox more resilient and was a critical factor in the company delivering over 20% EBIT in 2025 during the residential channel destocking. Our recent successes are built on a strong history of innovation dating back to our founding in 1895. Since then, Lennox has continually innovated to better serve our customers' evolving needs. Recent innovations include our expanded heat pump portfolio, our advancement in control technologies, our digital data infrastructure to leverage AI, and our JVs and acquisition to expand our market reach. As the industry evolves, our core differentiators will create an even stronger structural advantage for us. Our greatest asset is our direct-to-dealer relationship, where we are shoulder to shoulder with the 10,000 contractors who are served through our own 250 stores outlet and supported by a proprietary digital e-commerce platform. This approach is gonna be even more valuable as our channels continue to consolidate and advanced AI technologies make it even more efficient for us to serve our customers. Our single ERP platform, combined with a united data infrastructure, creates the best opportunity for usage of AI tools to generate insights and fuel productivity and growth. Our recent acquisitions and partnership allow us to expand our addressable market and better serve our customers' evolving needs with a portfolio that includes ductless equipment, water heaters, accessories, and expanded commercial service offerings. These acquisitions and partnerships will further increase our competitive differentiation as there's more convergence between traditional HVAC industry and the plumbing industry due to channel consolidation and heat pump technology overlap. The long-term attractiveness of our industry is due to six mega trends that enable above-GDP growth for the HVAC industry. Electrification and the associated energy efficiency are accelerating demand for heat pump, which can be 300% more efficient than traditional gas furnaces. The industry's equipment is becoming environmentally friendly, as required by regulation and as demanded by the consumers. The refrigerant change from R22 to R-410A in 2010 addressed the depletion of ozone layer, and the refrigerant change to A2L reduced the global warming potential of HVAC product. We expect this trend to continue as more states start implementing their own regulation. The introduction of new refrigerants makes it more expensive to repair older equipment versus replacing it with a new unit. As weather patterns become more extreme, they create greater strain on HVAC equipment. For example, when the ambient temperature goes from 80 degrees to 90 degrees, the strain on the cooling system goes up by 30%. This additional strain can shorten the average useful life of the equipment, which then requires more frequent replacement. The focus on healthy living and air quality has increased consumer awareness and demand for additional equipment and accessories that protect indoor air from pollutants, allergens, and even harmful bacteria and viruses. This is a long-term tailwind for both residential and commercial HVAC industry. The ongoing migration to southern climates with warmer weather helps with overall equipment penetration. It also shortens the average equipment life as heat pump equipment in harsh southern climate often has equipment life of 10-12 years, while the legacy gas furnaces in northern climate have equipment life of 20 years. The advancement of AI and digitization is giving consumers more information, more control over the HVAC equipment, resulting in greater indoor comfort. This consumer awareness is also driving growth of equipment brand preference, slowly shifting the brand preference selection from the contractor to the consumer. This shift will benefit equipment manufacturers. In addition to these mega trends, the North American HVAC industry is also shaped by specific industry trends that also accelerate growth. Consolidation among OEMs continues as today there are at least two fewer North American-focused HVAC manufacturers versus last Investor Day in 2022. This creates stronger brands, more scale efficiencies, improved quality, all of which increase the consumers' and the installers' trust in the replacement equipment. Our install base is aging, and there is pent-up demand as many owners deferred replacement during the last few years as the industry was dealing with supply chain shortages and two back-to-back regulatory transitions. There is convergence between the trades given the overlapping heat pump technology. Convergence is also fueled by consolidation among contractors and distributors, each of whom are positioning themselves to be a multi-trade service. The shortage of skilled labor and trade professionals is not getting better despite higher labor rates. This is increasing the relative cost of repair versus replace, while also placing a premium on easy-to-install equipment and accessories. Advancement in digital controls and connectivity has created an opportunity for manufacturers to offer post-install engagement service options for both consumers and contractors. Putting it all together, let us spend a few moments discussing the growth algorithm for the North American HVAC industry, considering both the mega trends and the industry trends. There are many variables that influence the growth algorithm, and some of them are listed on the left-hand side of the page. Similarly, there are different type of quantitative models that can be applied to these variables to predict the HVAC industry growth rate. There are various different types of growth rates, sell-in, sell-out, which can often have wide divergence, especially during periods of uncertainty. In my short four years of HVAC industry, I have observed that none of these algorithms are perfect. There are often 25 different prediction between 10 different experts. We are not gonna talk about industry unit forecast for 2026 or any other year. I wanna reiterate our view that the HVAC industry units are going to grow at least 3% CAGR over the next several years. Personally, I feel that the growth rate will be higher than 3%, especially because of the low starting point at the 2025 year end. I'm not discussing this to convince the skeptics, but I'm discussing it to share with you why we are convinced about the attractiveness of the North American HVAC industry and why we are 100% focused on it. Let's turn the page and talk about more exciting things like Lennox. When we last held the Investor Day in New York in December 2022, we guided you towards a set of financial and strategic targets for 2026. 18 months after the Investor Day, we increased our 2026 financial targets, given that we had a fast start. As we stand here today, even after a challenging 2025, we are pleased to report that we are on track to meet or exceed the long-term targets for both revenue and ROS. We used our strong cash flow to invest heavily in accelerating organic growth. These are high ROI investments. We are confident that they will position us well for the future. Our cash conversion for years 2023 to 2026 will be over 90% at the high end of our cash flow guidance range for this year. I'm grateful for the trust of our shareholders and our partners. I wanna thank our 13,000 employees who have worked hard to deliver these results. This is our accountability in action. Promises made, promises kept. In 2021, Lennox's full year segment margin was 14.4%. That improved in 2022 due to growth, productivity, and the divestiture of the European business. Since then, we have further increased our margins by 400 basis point, achieving a record margin of 20.4% in 2025. While we are pleased with the progress on the transformation plan, I want to emphasize that many of the recent investments and initiatives are yet to deliver their full potential. The growth benefits of heat pump investments, emergency replacement initiatives, parts and service acquisition, and our JVs with Samsung and Ariston are going to become meaningful only in the next planning period. Similarly, the margin upside from enhancing our distribution network, elevating pricing excellence, bolstering supply chain resiliency, and investing in cost productivity initiatives is yet to be realized. This makes us excited and confident to unveil our 2026 through 2030 transformation plan. Our new transformation plan also has three phases. We are currently in the growth acceleration phase that we started last year. After this, we'll move to the expansion phase for two years before entering the elevation phase, the final phase of the 2026 to 2030 transformation plan. In the growth acceleration phase, our focus would be to further improve our Net Promoter Score by improving fill rates through our distribution network, while also generating productivity post A2L conversion. In the expansion phase, we will grow our share of wallet as our momentum expands from new heat pump products, joint ventures, and acquisitions. Our digital investments will make it easier for customers to do business with us. We are also planning for margin expansion as network optimization and factory productivity initiatives start to deliver benefits. Finally, in the elevation phase, our impact will be elevated as technology and channel convergence starts gaining momentum. The regulatory changes required for heat pump water heaters and higher efficiency furnaces goes into effect, further benefiting our elevation phase of transformation plan. Our revamped distribution network will elevate the impact of our core initiatives, such as emergency replacement and growth in aftermarket power. Putting it all together, our value creation framework has four differentiated growth vectors, three drivers of margin resiliency, supported by core enablers of technology, talent, and LUMS. Let's go to the details of each of these. The four differentiated growth vectors that will drive Lennox's above industry growth are, one, heat pump. Two, emergency replacement. Three attachment rate for parts and services. Four, total addressable market expansion. We expect each of these growth vectors to drive at least 50 basis points of differentiated growth for Lennox. For those who went on the tour of our product development and research center yesterday, you witnessed the investments we are making in new heat pump technology. Later in today's presentation, you will hear about this from Sarah, Joe, and Prakash. Sarah will also highlight the opportunity for us to expand our total addressable market through joint ventures. Joe will highlight the investment to grow emergency replacement and service attachments in his presentation. We have made significant investment in developing these four differentiated growth initiatives and are looking forward to the accelerated growth momentum in our planning period. Just like growth, we have three well-defined initiatives that'll expand our margins over the next few years. The investment in our distribution network to establish a hub-and-spoke network that relies on consumption-based replenishment pull system versus the legacy push system will generate significant cost savings while improving customer service levels. The frequent regulatory changes in our industry will continue improving our mix, and the investment in upgrading our pricing processes to enable dynamic pricing will further expand our margins. Finally, we are investing in automating both our manufacturing and SG&A processes to generate productivity and expand our competitive edge. As a reminder, we have a very resilient manufacturing footprint, single ERP, a world-class data lake that is being utilized to unleash the power of AI on our entire operation. Technology enables our success at Lennox, whether it's the front-end technology to delight our customers, AI technology to accelerate growth and productivity, or a sustainable innovation that develops leading energy efficiency product. Later today, Prakash will get into the details of each of these. I don't wanna steal his thunder, I won't spend much time on this slide. However, I do wanna spend a few moments talking about AI and how Lennox is maximizing the potential of AI. We believe we have a unique opportunity to benefit from AI, given that we have a single MRP system, common engineering platform, and a really rich historical database. To take full advantage of AI, we have created a unified data lake that works with leading AI engines to maximize impact on our business. We are driving AI impact in four different areas. First, we are challenging and enabling our employees to become more efficient using AI. Example of this will be our legal tools, such as iManage and Ironclad, that make our legal team more productive. We are using AI capabilities to rewire our core processes to generate enterprise excellence in key areas such as pricing, software, SIOP, and new product development. We are embedding AI into our own products and solutions, such as control, e-commerce, and dealer service dashBoard. This is making it easier for customers to do business with us while increasing their loyalty and our share of wallet. We are also working diligently to incorporate our products into other people's AI investment. For example, our rooftop products are often used to cool data centers. Our Duro Dyne products are critical for installing ductworks in data centers, and our refrigeration technology can be used for liquid cooling. While we don't have the chiller technology that is common in today's data center cooling application, we remain optimistic that our development and investments will create new applications for our technology in data center liquid cooling. Our business operating system, the Lennox Unified Management System, or LUMS for short, is a set of efficient management processes and a digital repository of our best practices. This includes key elements like a balanced scorecard for goal deployment. LUMS helps us execute better and helps us leverage our scale to punch above our weight class. One example of LUMS is the introduction of company-wide digital tools and processes to make it easier for customers to collaborate with us. We have introduced Net Promoter Score process, and the resulting insights have led to investments in upgraded marketing and e-commerce technology stack. We are standardizing and upgrading our software tools required for contact center, digital asset management, product information management, and many more. We know that our greatest asset is our loyal dealer base. We know that our data assets used with AI tools make it easier for our customers to work with us. Another aspect of LUMS is a relentless focus on improving customer experience at Lennox. As part of LUMS, we are making significant digital investments to deliver exceptional service to our customers. This includes attracting, converting, servicing, and retaining our customers. We are managing these initiatives in a unified way across all of Lennox. The early results are very encouraging. We are happy with the improvements in our Net Promoter Score, yet we know that we have many remaining opportunities to delight our customer. This remains our greatest asset that's not on our balance sheet. Let me wrap up by summarizing why we have great confidence in our future. We participate in an attractive growth industry and have solid initiatives to accelerate differentiated growth. We are expanding our margins and making them more resilient by strengthening our supply chain and expanding our BCS business segment. Lennox Unified Management System drives our execution consistency, and we are very disciplined with the capital allocation decision. Advanced technological solutions fuel the loyalty of both our unique one-step and two-step customers. Our talent and culture, driven by our core values, remains our primary differentiators that make our customers wanna work with us. With that, I welcome Sarah Martin to stage to discuss our Home Comfort Solutions segment. Thank you. Morning, everyone. My name is Sarah Martin, and I lead our Home Comfort Solutions business or HCS. It's a little less than a year ago that I joined Lennox, and I spent my first months listening and learning, listening to dealers, to technicians, to our field teams, and to our leaders across the organization about what we do well, but critically, about where we can improve. Through this process, it became clear very quickly that HCS does have many of the characteristics of a high-quality business but also has significant untapped potential. We're working on unlocking that potential by refining our investment and focusing on correcting where we've either underserved the market or where we've not yet delivered fully on our commitments. Our end goal is twofold. Firstly, to enhance the power of our direct model to deliver stronger growth and margins, and secondly, to amplify the impact of our indirect model with investments in new products and distribution capabilities. I'd like to take time today to walk you through some of those enhancements and focus areas which will underscore why I believe the HCS business is well-positioned to accelerate growth and expand margins over the next several years. Before I talk about where we're going, I do want to spend a little bit of time on our segment highlights, as well as our view of the current environment and an assessment of how we delivered in HCS on the commitments made at the last Investor Day in 2022. This should demonstrate not only the resilience of the organization, but more importantly, that we've laid a strong foundation for building long-term growth and profitability. HCS is made up of three businesses, and that allow us to service the residential end market, whether direct to dealer or one-step, or indirectly through distribution or two-step. These businesses are led by some of the most experienced and passionate leaders in the HVAC industry, including Lanessa Banister, who has 12 years with Lennox under her belt and over 25 years in HVAC overall, and Bobby DiFulgentiz, who has 20 years with Lennox behind him. At our core is Lennox Residential, which is a one-step direct to dealer business. Being direct gives a competitive advantage through proximity. We're closer to contractors, to technicians, and ultimately to the consumer. This gives us a tighter feedback loop, earlier insight into demand patterns, and a real-time view of customer sentiment. Allied and ADP are predominantly two-step businesses, selling to HVAC distributors. This allows HCS to leverage our technology and manufacturing to serve the independent distribution space. This extends our reach. It allows us to support different customer needs and to remain disciplined about how and where we deploy capital. Whether one step or two step, the nature of the demand we serve is exactly the same. Approximately 80% of our business is replacement driven, which is non-discretionary. What that means, putting in a different way, when a homeowner system fails, it gets replaced. That's important because it makes this business fundamentally more resilient regardless of economic cycles and much less dependent on residential new construction activity. To support this model, we have a significant organizational footprint comprising five manufacturing facilities, nearly 30 distribution sites, and almost 250 Lennox store locations. We have more than 6,000 dedicated employees that make all of these results possible. As we operate in a replacement-driven world, that we are structured and scaled to ensure products and services are available and reliable and that expert support is local really, really matters. Dealers, contractors, and distributors need to be confident we're supporting them with speed and with certainty. HCS's strategy is unique in that it combines both a direct and indirect model. It's focused on non-discretionary replacement demand, it's enabled by technology, real physical distribution reach, and a customer experience mindset. These things provide the foundation for everything else that I'll talk about today. It is well known that the residential environment is experiencing near-term volatility. It would be disingenuous to suggest otherwise. In the last two years, we've experienced two regulatory transitions, channel destocking, significant affordability pressures driven by higher inflation and interest rates. These dynamics have introduced short-term volatility, influencing both contractor and homeowner behaviors. Despite all of this, what's most important is recognizing what we can control. In other words, we don't set the interest rates, we don't dictate weather, we don't control timing of regulatory transitions. What we do control is how effectively Lennox operates within that environment and how we can outperform the industry even when conditions are challenging. To do this successfully, we make a key distinction between what's cyclical and what's structural, and it's what's structural that's really important. Structurally, the fundamentals of this industry remain the same. Equipment continues to age, repair costs continue to rise, efficiency and refrigerant regulations continue to add complexity to systems. Of course, we see increasingly extreme weather continuing to shorten equipment life. If we prioritize positioning HCS to respond to the structural characteristics of the industry, then our focus shifts from chasing short-term volume to controlling the controllables, protecting the economics of the business, and improving execution. Simply this means having the right products in the right place at the right time to support replacement. It means making it as easy as possible for customers to do business with us when it matters most. It means improving fill rates, pricing discipline, enabling the attachment of parts and supplies, all while delivering an exceptional customer experience. These are all areas where execution and not demand determines the outcome. This is how HCS is thinking about outpacing the industry, not by assuming a different demand environment, but by executing perfectly within the one that we have. Finally, before looking ahead, I think it's important to reflect on the commitments that we made coming out of the last Investor Day cycle. The expectations that we set in 2022 were very clear. Lennox committed to executing through regulatory change, strengthening how we go to market, improving customer experience, adding capacity where it mattered most, and unlocking more value from its unique distribution model. These were five key commitments that would deliver growth, and we delivered against those commitments. We worked successfully through wo major regulatory transitions, SEER2 and the move to A2L refrigerants while remaining competitive and mtaintaining our customer trust. At the same time, we strengthened how we go to market in HCS. Revenue operations were built, pricing processes were upgraded, and new business development resources were added. These changes improved execution discipline and gave the organization better tools to manage complexity, which has been key to navigating volatile market conditions. We also focused on improving customer experience through investment in fill rates, adding digital tools, and creating structured feedback loops. This makes it easier for dealers to do business with Lennox. Over time, this focus has been reflected in sustained improvement in our Net Promoter Scores. In parallel, we expanded capability in heat pumps, coils, and air handlers, and in multifamily, reinforcing execution discipline and reliability across the business. Finally, the team made good progress on our distribution excellence journey, restructuring sales and distribution to establish regional P&Ls and updating incentive structures to reflect margin performance, not just revenue. These changes improved accountability at the right levels, sharpened decision-making, and directly contributed to improving our fill rates. While we're encouraged by what we achieved, it's also important to be clear about where we fell short. We set an expectation to significantly increase heat pumps as a percentage of total sales by 2026. There was progress, but we did not deliver the growth that we had set out to achieve, and I don't want to gloss over that. What matters most is that we understand why and that we have taken steps to address the gaps, and I'll spend more time on heat pumps later in the presentation. In reflection, what stands out for HCS is that we were not perfect, but we believe we've been credible. Lennox has demonstrated the ability to execute complex commitments and to recognize when adjustments are needed and to invest where the business requires it. That consistency exactly what we mean by stating promises made, promises kept. It's also the foundation for the growth opportunities that I'll walk through next. Earlier, Alok talked about the overall strategic framework, and I'll double down a little bit on heat pumps, attachment rates, distribution efficiency, and pricing. I'll also talk about some of the core enablers, such as technology and LUMS. Our focus is on using that framework as a basis for consistent execution. In the next few slides, I'll demonstrate what this means for HCS. As I mentioned earlier, Lennox missed its goals for heat pump expansion. The biggest reason for this is that we have portfolio gaps that reduced our ability to service customers. We lacked heat pump and air handler offerings that would appeal to customers in the warmer southern climates, specifically in the southeast, where cabinet size and form factor really matter. In response, we've expanded the portfolio meaningfully by adding products that meet the form factor requirements, including side discharge units to address tighter lot lines. At the same time, as technology's improved, we've developed and launched a cold climate heat pump to support the northern regions. We also revitalized our ductless offerings. The Samsung joint venture launched in 2025 really strengthens our position in this category. The JV brings a technologically advanced product portfolio with strong quality, global brand recognition, as well as integrated controls. This enables a more seamless customer experience, something many of you will have seen yesterday on the PD&R tour. Adding strategically to our portfolio gives Lennox a more complete and competitive lineup designed to meet a wider range of applications and customer needs. This means we have a much greater opportunity for growth acceleration over the next years. Today, heat pumps represent roughly 15% of our total sales. That includes low single-digit penetration in ductless and low double-digit penetration in ducted systems. At an industry level, heat pumps represent closer to 30% of sales, with approximately 10 coming from ductless and 20% from ducted. That gap's really important. It reflects areas where we have underperformed historically, but it also highlights the opportunity ahead. With a more complete lineup, we see the potential to gain share across a broader set of applications, and that's why we describe heat pumps as a multi-year entitlement opportunity rather than a single inflection point. The second growth driver I want to spend time on is attachment, particularly of parts and supplies. This is where our thinking has changed and evolved in a very meaningful way. Historically, parts and supplies existed alongside the equipment business, but they were not managed with the same level of focus or intent, and that limited our ability to consistently grow attachment even though the underlying demand was absolutely there. Today, we're taking a much more deliberate approach. Parts and supplies are being treated as a distinct growth engine across the enterprise, not only in HCS, but increasingly across the commercial business. This includes OEM parts, aftermarket components, and installation supplies, all managed with a focus on availability, category breadth, and ease of doing business. A key element of this shift has been the addition of dedicated expertise. Through Duro Dyne and Supco, we've brought in teams that come from a purpose-built parts and supplies business, that talent brings deep knowledge, strong supplier relationships, and an operating mindset centered on breadth, speed, and reliability. This gives us confidence that parts and supplies attachment is now embedded into how the business operates day to day. There's an innate understanding of customer need, inventory strategies, systems, and incentives that are more aligned. Our leadership attention is focused on making parts and supplies a more consistent component of the overall customer experience. To put this in context, our attachment rate today is in the mid-teens. We view best in class as operating at levels around 40%. Just like heat pumps, that difference highlights the opportunity that exists within our own customer base if we act with intention, leverage the skill sets that we now have in the wider business. Also as with heat pumps, this is not about a single year or a single initiative. It's about building a steady, repeatable capability that expands our share of wallet over time and strengthens our long-term customer relationships. We think about growing share of wallet with the customers we already serve, it's equally important to recognize that the direct model is not the only way that HCS serves the market. Our two-step channel through our Allied and ADP brands plays an important role in HCS and allows us to expand our addressable market. We participate in this space with the same discipline and consistency that defines our direct business. Our two-step model leverages long-term distributor and customer relationships in key territories, and it offers portfolio options that target unique segments that are underserved by the one-step business. At Allied, the multifamily line, including the flagship MagicPak brand, continues to be a good growth engine, and the coils and air handlers at ADP give us the strategic advantage of servicing the widest available range of system configurations. We continue to refine and invest in our two-step businesses, adding new distributors, launching new products, including an entry-level AC, and developing new strategic partnerships that will drive growth over the next years. As we look at the expansion of our addressable market, we've identified strategic partners who are helping us to accelerate our ambitions, broaden our reach, and enhance the customer experience overall. Let's have a look at this video, which illustrates well how we're leveraging partnership to add value to our Lennox customers. Our partnerships with Samsung and Ariston strengthens our ability to participate in adjacent markets where complementary technology, product breadth, and category expertise accelerates our path forward. These collaborations matter even more as the industry moves towards higher energy efficiency requirements, broader electrification, and increasingly technology overlap between HVAC and water heating. Success in this environment will require integrated platforms, new technologies, shared controls, and unified home automation experiences. A great example of this can be found in the convergence of heat pump HVAC systems and heat pump water heaters expected later this decade, including the 29 regulations highlighted during yesterday's PD&R tour. Partnering with Ariston allows us to expand into hybrid solutions that combine our HVAC expertise with their leadership in water heating technology. Through Samsung, we gain advanced ductless capability and a controls architecture that connects naturally to the home ecosystem, as well as support for product innovation that fits emerging applications and installation constraints. Finally, these partnerships allow us to move faster, meet more customer needs, and position Lennox for a more electrified and integrated future. Whether we deliver from partnerships or from in-house expertise, our success relies heavily on operating a highly efficient, agile, and effective distribution model. Product availability has a significant impact on both customer satisfaction and share. As mentioned earlier, Lennox has invested heavily in this capability, and we've delivered on our initial commitments, but our strategy continues to refine as customers' needs evolve. Our distribution organization has come a long way. While the physical footprint is not yet fully optimized, we continue to improve it with intention. We're taking deliberate steps so that each change strengthens the system without disrupting the supply chain or the consistency our dealers depend on. We've redesigned the organization to clarify roles, improved accountability, allowing decisions to be made closer to the customer, and aligned our sales and store teams to operate as a single front line. To ensure we're measuring success and identifying opportunity, we've built standardized dashboards to improve visibility and drive consistency across the entire system. We also upgraded the core digital tools and systems that support our network. This includes new warehouse transportation, point of sale, and contact center systems. We've strengthened our focus on parts and supplies, as we've already seen. We've made meaningful progress, but we're still early in realizing the full potential of this network. The work underway will transform distribution into a true competitive advantage rooted in consistency, responsiveness, and a superior customer experience. We're pushing fill rates higher and elevating the reliability our contractors expect. We're advancing and simplifying our hub and spoke model through the FDC to improve speed, inventory placement, and overall flow. We also see clear opportunities in margin entitlement, automation, and labor management systems, all areas where disciplined execution can unlock structural improvements over time. This next distribution phase is all about momentum. It's about taking the progress already made, building on it with purpose, and executing with the discipline required to capture the full benefit of the network that we are creating. Later today, some of you will see this firsthand at the FDC tour, where our recent investment in a 1.2 million sq ft facility demonstrates how we're redesigning and simplifying our distribution and planning platforms to improve performance over time. We are certain that pricing discipline is critical in volatile markets and continue to invest in our capabilities remains a priority. We've built a strong pricing foundation, regionalizing our P&L to empower the teams closer to the customer, streamlining the back office, and redesigning our sales incentives from revenue to profitable growth. We're now taking steps to invest in systems that provide not only efficiencies, but which also create differentiation, provide upscale analytics, and offer deeply segmented and dynamic pricing, leveraging the power of AI. As with distribution and heat pump initiatives, pricing is not about short-term actions. It's about reinforcing the economics of the model with agile systems, so we can continue investing with confidence. LUMS provides the operating discipline and framework that connects strategy to execution, enabling our businesses to deliver on the commitments that each makes in their customer charter. The customer charter is not just a piece of paper. It's a powerful tool because it sets clear expectations, creates transparency, and reinforces accountability. We share this with our customers as we're transparent about our ambition to improve our service levels and seek feedback and engagement about what they see and what they want to see from Lennox businesses. It works because performance is visible and our leadership teams are held accountable for execution and attainment. This drives a level of ownership that delivers results and keeps the customer experience front of center of everything that we do. They have some of the best support and educational programs throughout the industry. They're always wanting to know can we do better to make your job, our job as a dealer better? Lennox is very fortunate to have a group of technical training instructors that have walked a mile in the shoe of a technician. You can tell that they really care about the products that they're producing, and they also really care about the technicians. I probably use Lennox Pros at least 50 to 75 times a day on a mediocre day. It helps us focus on customer service. Also, the quality of the call when we go out there, we have the product, we have the parts, we can get the customer taken care of then and there. It saves everybody time and money. We can just text the chatbot, and it gives us a list of troubleshooting techniques that we can go through one by one and ultimately find problems that we were not even thinking about. If I need a piece of equipment I know we don't have in stock while I'm sitting with a homeowner, I can go ahead and order it right then and there. They get pretty excited about that we can take care of them right away. Ultimately, ease of doing business is felt day to day by dealers and technicians. We continue to enhance our dealer and technician experience and are fully committed to investments in digital tools with around 50% of our sales in residential now through LennoxPros, building self-service AI training tools, product information, and other key resources to support our dealers' needs anywhere and anytime. These investments reduce friction and increase customer confidence that Lennox is agile, responsive, and serious in our support, which is exactly what you want in a replacement-driven business. In closing, when I look at Home Comfort Solutions today, I see a business that's structurally resilient, operationally improving, and increasingly focused on its highest value opportunities. It's a business that simultaneously delivered on its commitments while recognizing where we must do more. It's also a business that understands that we are accountable for focusing on what we can control. Our customer experience, ease of doing business, and building an agile and responsive organization that executes. It's this that delivers sustained long-term outcomes in a replacement-driven market. This is why we continue to invest in major initiatives like distribution, portfolio, expanding attachment, partnerships, two-step opportunities, as well as critical systems and tools. Executing these initiatives well will deliver the value we need to support our growth and profitability ambitions over the next years. This is so that we can continue to gain share and deliver margins that are appropriate as both a manufacturer and a distributor. Thank you. I'd now like to introduce Joe Nassab, President and EVP of Building Climate Solutions. Good morning, everybody. My name is Joe, and I lead the group here that we call Building Climate Solutions. I've been with Lennox for 15 years now, and in this assignment since the middle part of 2022. We had the opportunity that year in December to visit during the Investor Day. I remember it well. Recognized lots of faces in the crowd, but also very nice to see new faces in the crowd. A few years have passed since. I'm encouraged by the solid progress that we've made. From this update, I hope you take away the following. First, that we put in the investment and the effort to build a very resilient foundation that was critical to earn back the trust of our customers. We're turning our attention to growth. Second, we're laser-focused on expanding margins, ensuring that our work shows up where it matters the most. Third, we're scaling up with terrific talent and teams. They're deep, they're skilled, they're humble, and they're very, very hungry. What I'd like to do is begin with a 30,000-ft view of the segment. Building Climate Solutions consists of two equipment businesses and a service division. Here you see our sales mix, financial history, and other highlights. Since 2022, we've grown consistently. Sales are up by over $500 million. Return on sales has also grown consistently from 15% to over 23%. We've meaningfully increased manufacturing capacity. Equipment is distributed from 19 fulfillment centers across the country, and we have 140 service branches where our service teams operate from. Roughly 4,400 people are part of our team. A few words on each of the businesses. Our commercial rooftop unit is all about delivering comfort and air quality. They serve many different markets, from national accounts to schools, warehouses, restaurants, convenience stores, grocery stores. Lennox units sit atop thousands of buildings in North America. The business is led by Geoff Dethlefsen Many of you met Geoff yesterday. He's in the back of the room. He's been in this role now for two years. Our Heatcraft division competes in the refrigeration space. They design, and they manufacture climate-controlled solutions for the cold chain. Heatcraft systems keep food safe and fresh in grocery stores and convenience stores, cold storage warehouses. Bob Landy's coming up on 25 years with the company. Bob leads our Heatcraft team. Rounding us out is Lennox Commercial Services. LCS consists of our national account business and AES, the company which we acquired in 2023. The services that we provide encompass now the full life cycle, from initial system installation to ongoing preventative maintenance to planned replacement activity, ending in the recycling of decommissioned equipment. Chris Drury is a 22-year vet. His anniversary is this coming Sunday. He leads our service team. Here's a very important point. Each of these three businesses, they deliver essential solutions. They're essential to the environment, they're essential to the economy, and they're essential to the flow and to the movement of commerce. Alok touched on this a little bit earlier in his discussion, but I think it's worth repeating. We're very bullish on our prospects, and we are for many different reasons. We serve industries which are heavily replacement-driven. In any given year, between 70% and 80% of total shipments are replacements. The install base is large, and it's very old. Old systems, as you know, are less efficient. They're costly to service, and they're difficult to maintain. At a certain point, a smart economic decision is to replace. As it relates to weather, there's no debating the trend of extremes. Extra cold winters, extra hot summers, they tax equipment. This shortens life. It also fuels demand. Advanced indoor air quality is shaping system design in the commercial HVAC space as well. Industry standards are elevating ventilation and outdoor air requirements. As a result, we see attachment rates for these things increasing. We have electrification and efficiency. The world's slowly moving away from fossil fuels. We see this especially with our national account business. Many of them have made bold sustainability commitments that require replacing thousands of systems annually well into the next decade. These trends, they play in our favor, and they do so, as Alok said, over the long term. As I said, we've come a long, long way since 2022 when we were last together. I told you then that we'd be focusing on a handful of things. Told you that we'd work to solidify our foundation, manufacturing and quality in the supply chain. Told you that our teams would execute with discipline. Robust operating systems, they make all the difference. I also said that we'd deliver consistent growth, both top line and bottom line. Well, since then, we've successfully completed two regulatory transitions, fortified the supply chain. We've improved our operation in Stuttgart. We doubled capacity with the new factory in Mexico, improved quality, expanded points of distribution, increased front-end resources, and we enhanced our portfolio with that AES acquisition. We're encouraged by our progress. We're also encouraged with the improvements on the financial side. Encouraged for sure, I also tell you we're very far away from being satisfied with where we are. I'll spend the balance of our time addressing these four areas, beginning with innovation, with a little bit of a focus on heat pumps, service efficiency, and Low GWP refrigerant. Next, we'll touch the emergency replacement market. That's a biggie for us. We're constantly fine-tuning our operations and looking forward. Factory productivity will be a major source of margin expansion. Fourth, we're scaling up services because demand is robust, and it's increasing. Lennox, as you know, has a very proud history of innovation, and our direct model provides a distinct competitive advantage. Being the industry's only manufacturer and distributor and servicer enables unique customer access and intimacy. The power of direct demands consistent communication and collaboration and on-site presence. Every single interaction sharpens our understanding and raises our insights. Our product management and engineering teams are focused on developing solutions for building owners and specifying engineers, installing contractors and service technicians. They all matter, all of them, and all of them have unique needs, from total cost of ownership to installation ease to speed of service. Highlighted here, we have three examples, beginning with our ultra-high efficiency heat pump. Many of you saw it yesterday. Technology for this originated out of the DOE Cold Climate Challenge. Concurrent with that, our team worked side by side with one of our largest customers, in fact, over 50 separate meetings, engineer to engineer, to develop heat pump technology specific to them. As a result, we designed a system backwards compatible with their electrical infrastructure. The electrical side of the equation has been one of the biggest barriers to heat pump adoption. This ultra-high efficiency system will save hundreds of thousands of dollars per store. Another commercial rooftop example is our Xion platform, also showcased last night. Last year, Xion won the HVAC All-Star Awards and was recognized by contractors with the most service-friendly design. Xion delivers technician-focused features in the standard efficiency category. This platform is ideally suited to the emergency replacement market. On the refrigeration side, Heatcraft was the first OEM to release an A2L offering. They actually designed a dual convertible solution that allows customers to install equipment initially using A1 refrigerant and then upgrade in the field with an A2L conversion kit. This versatile design is both a financial and peace of mind win for contractors, for end users, and also wholesalers. After the break, Prakash will expand more on this topic of innovation and share many of the other exciting things that are on the horizon. On to emergency replacement, one of our largest growth opportunities. You touch this often with Alok and Michael. It's a big part of the market, due to pandemic-related supply challenges, we were forced to pull back. We've aggressively reentered. Geoff and his team have very clear eyes on what's required to win. It's a combination of four elements. We call them here the four rights: the right products in the right place at the right time with the right price. It's very simple in theory. The trick, though, as with most things, lies in the consistency and quality of execution. To that end, we've made lots of changes, and we've made plenty of investments. Started with that new factory in Saltillo, effectively doubling our capacity. We have leading platforms in Xion and Raider. Inventory is fully deployed across our network. Today, we have 40% more locations than we did in 2022, and I expect that number will increase meaningfully in the next few years. We've staffed a team with a dedicated group of sellers, and to make things easier for customers, developed a quick quote tool to maximize transaction ease and speed. While starting off with a fairly small base, emergency replacement sales grew 50%+ last year. We expect them to grow higher than that this year and continue to grow at an accelerated rate for years to come. Shifting to operations. Like most every other company, we learned painful lessons during COVID, and it's why we've worked tirelessly to retool our supply chain. We made a major push to dual source our most critical parts and components. That had been a significant issue. It's not any longer. We built a new factory dedicated to high- volume, low- variation equipment. Equipment tailor-made for the emergency replacement market. A few years ago, capacity was a significant issue. It is not any longer. Having this second factory, while it simplifies Stuttgart and enables them to focus on premium configure-to-order products, systems that are in demand with our national account customers and out of the verticals like education. It's exciting for me to see our operations folks are now charting the future with strong, seasoned leaders, with fully staffed factory teams. With the complexity of two regulatory transitions now in the rearview mirror and a much more robust supply chain, we plan to reduce factory costs every year, and this will drop millions of dollars annually to the bottom line. We come to another growth engine, services. Here are a few interesting statistics. As I said earlier, we have 140 branches around the country. We employ about 1,000 technicians. That number has increased steadily. I expect that will continue. We have 900,000 rooftops under contract. The average age is 15 years. The systems that we service heat and cool over 180,000 commercial buildings. Last year, we recycled 15,000 units and recovered a bunch of refrigerant. Due to the size, the age, and critical nature of these systems, demand for services is extremely consistent. It is consistently increasing. It's true in good economic times. It's also true during the challenging times. As you know, this is a people business. It's a technical business. Our growth is regulated by both human and technical capacity. We're increasing both in two ways. We hire and train about 200 technicians every year. Most of them come out of trade schools. These young folks apprentice under a lead technician for a year in what we call our BuildATech program. We're also keenly focused here on productivity, and with each of our 1,000 technicians, our goal this year is for each of them to perform one extra service call a month. It all adds up. It all adds up. A few years back, services comprised less than 20% of our segment revenue. It's grown to 25% today. As you see, we aim to increase that even further. Our growth will come from cross-selling AES services and solutions, from increasing the attachment rate on parts and accessories, including products from Duro Dyne. While we have a strong base with our national account customers, there are many that we're seeking to go even deeper with, and there are many others that we're working actively to convert. Growing services will make Lennox better and more predictable and even more valuable. Now, before I wrap up, I wanted to spend a moment on our investments in digital tools and training, which ultimately enable this business to work at scale. These investments are all about making things easier for customers to work with Lennox. That commercial quick quote tool I talked about is one example. So too are the extensive training programs that we develop and deliver to contractors and technicians and counter reps and wholesalers. We aim to ensure that Lennox customers are the most highly trained and competent and confident in the industry. You got a little taste of that yesterday at the new training center just down the road. Beyond that, we're implementing new tools in our service division to make it easier to schedule and complete calls. We're very confident that these investments, too, will enhance loyalty and also accelerate growth. That was a very quick spin around Building Climate Solutions. My hope is that you take away a couple of important points. We have solidified our foundation. We're pleased with our progress, but as I said to you, far away from being satisfied. We've made promises, and we've kept the promises. Bob and Chris and Geoff and our 4,400 associates, they have put points on the Board. They have terrific energy and momentum. I feel it and see it every day in every one of these operations. I'm exceptionally confident in this team and excited by what is to come. As I wrap, we wanted to share with you another short customer testimonial. For commercial customers, confidence comes from certainty. One source, one owner, operational certainty from install to end of life. Being able to have just that one-stop shop was huge. That by far the easiest and the best process ever. It starts with advanced commercial HVAC equipment and controls, engineered for performance, efficiency, and backed by expert support. We're 100% Lennox. We believe in that. Selection of equipment's huge. That's probably one of our largest things. For us, it comes to reliability, feasibility. With tailored curb adapters and HVAC accessories, Lennox streamlines every installation, reducing complexity and saving time. We also offer unique products such as smart curb adapters that feature a removable sealed door for easy wiring access. There might be a little bit more cost up front, for us, the crane time, the labor time, and then just accounting for all those miscellaneous parts that you'd still have to purchase, you add that in, I think you'll be happy. Our HVAC replacement programs deliver dedicated teams, licensed crews, and dependable on-schedule execution nationwide. Proactive, self-performing preventative maintenance helps maximize uptime and reduce total operating costs across your portfolio with 24/7 access to performance data through a customer portal. When service is needed, Lennox delivers fast, dependable repairs, keeping buildings running smoothly and minimizing disruptions. With a comprehensive lineup of commercial HVAC parts and supplies, we support every job at every step. When systems reach end of life, Lennox provides free EPA-certified HVAC recycling, helping you meet sustainability goals with compliant disposal and reporting. Sometimes getting rid of the old equipment is a huge headache. Nowadays with EPA and just good sustainability and good practices, we don't want those just to be broke down somewhere. It was a big peace of mind for our Board. I felt it was a great investment for our school district to be able to do it. From initial installation to end-of-life recycling, Lennox offers what few can, a true full-cycle HVAC partnership. All right. Well, thank you very, very much. We're gonna take a short break. Many of the Lennox leaders will be in the back of the room. As you know, the restrooms are out in the hallway there, and we'll reconvene at 10 after 11. Thanks again. With tech support, it has to be during business hours where we're running all throughout the night. We might be out late on a call with a problematic unit where we've ran through everything we normally do, and we just can't figure it out. We've had a long day, and we can just text the chatbot, and it gives us a list of troubleshooting techniques that we can go through one by one and ultimately find problems that we were not even thinking about. Welcome back. I trust you had a pleasant break and an opportunity to engage with our team members. As referenced by Alok earlier, my name is Prakash Bedapudi, and I've had the honor of leading global technology function at Lennox for more than 17 years. To begin with, I want to emphasize three key messages that will guide my presentation. First, front-end customer experience. We are investing in smart thermostats and digital platforms that make Lennox easier to do business with and easier to own. The objective is to reduce friction for dealers and homeowners, strengthen engagement, and create a connected experience that drives satisfaction and loyalty. Second, artificial intelligence and automation. We are applying AI to enable better diagnostics and faster service, helping technicians resolve issues more quickly, improve the consistency of service, and reduce equipment downtime. AI also helps us streamline processes internally so we can move faster and scale best practices across the company. Third, sustainable product innovation. We are building on our track record of flawless regulatory transitions and moving aggressively into next-generation products that deliver efficiency, performance, and reliability. This is about designing for the future and creating a portfolio that can win across climates, segments, and price tiers. With that framing, let me start with our technology capability and capacity, and then I'll walk you through a few proof points to highlight product innovation, digital experience, and AI. This slide gives you a sense of the scale, depth, and breadth of Lennox's global technology capability and why it's a real competitive advantage for us. In recent years, we've broadened our innovation capacity in North America and worldwide to speed up product development, boost product vitality, and maintain differentiation. In Carrollton, Texas, where some of you visited yesterday, we continue to invest in advanced labs and engineering capabilities that support our core residential and commercial platforms. At the same time, our India technology center has scaled significantly, giving us 24 by seven development capability and access to top-notch talent. Thanks to these investments, we've seen a significant rise in product vitality shown by a higher share of sales from products launched within the past three years. This is an important sign that our R&D efforts are effective and that innovation is having a real impact on our business results. We have over a 500,000 sq ft of lab space, a strong and growing patent portfolio, and a global team of more than 1,500 technologists focused on delivering real customer needs, whether that's efficiency, reliability, affordability, or ease of installation. The key takeaway here is Lennox has built a scaled global and highly connected technology organization that enables faster innovation, better execution through regulatory transitions, and sustained product leadership. While our technology capability has expanded significantly, we're not done. Many of you joined us last night at the new Waterview campus, and that facility represents the next step in our capability build-out. The new R&D lab we are adding will let us conduct large commercial test chamber work in-house. Boosting development speed and cutting outsourcing costs. We're launching a customer innovation center at our Heatcraft Refrigeration Business headquarters in Atlanta, Georgia, dedicated to developing and testing high-capacity, Low GWP, and CO₂ refrigeration systems, including liquid cooling for high-density heat rejection applications. In addition to product development, these facilities support customer and partner engagement by providing practical training, installation, servicing, and maintenance of our products. Looking back at the commitments we made at the last Investor Day, I am proud of how the team delivered on the promises. We have had two major regulatory changes in a very short window, and our team executed both transitions on time with safe, reliable, and high-quality products. At our last Investor Day, I shared that we would scale our new product launches, contributing to 50%-55% of revenue by 2026. We are well on our way to achieving the target this year. We also committed to advancing our digital solutions to improve customer experience. For the past two years, we've added AI-enabled diagnostics across product platform. Strengthened online tools our dealers rely on for product access and coding. On the innovation product leadership, we promised meaningful progress, and we delivered. We launched next-generation high-efficiency cold climate heat pumps, the most compact air handler platform, and introduced the S40 Smart Thermostat, which has already earned recognition for its intuitive design and features. We're doing all of this without sacrificing quality. In fact, the expanded capability and more rigorous validation allowed us to raise our quality standards as we increase our speed. Finally, our commitment to driving productivity and enhancing our supply chain has yielded positive results. Through engineering and sourcing-led cost reductions, as well as significant productivity improvements within our manufacturing facilities, we have increased our product cost competitiveness while consistently upholding Lennox's high standards of quality. This page reinforces an important point. Innovation leadership at Lennox is recognized externally by our customers and validated in the marketplace. During the past decade, our commitment to sustainability, efficiency, and customer-focused design has been recognized with over 40 Dealer Design and HVAC All-Star Awards. These distinctions cover both residential and commercial sectors, underscoring the strength and leadership of our product portfolio. What matters is why we earned recognition. Our solutions provide greater efficiency, improved connectivity, easy-to-use interfaces, and dependable performance. Our sustainable product innovation strategy has proven very effective. It is achieving success with dealers, appreciated by customers, and clearly differentiated within the marketplace. This aligns directly with my initial remarks. Sustainable product innovation at Lennox is a demonstrated track record, not merely an aspirational concept. That's a perfect lead into my next section, because it isn't just about innovation, it's also about flawlessly executing regulatory transitions. This slide highlights how Lennox has successfully navigated through two of the most complex regulatory transitions in our industry, SEER2 and Low GWP, and turned them into a competitive advantage. The SEER2 transition was executed smoothly with minimal design modifications and very little disruption to our dealers. Since our solution left the indoor units unchanged, only the outdoor units required design changes. The Low GWP transition was a major multi-year initiative that required coordinated efforts from engineering, product management, marketing, operations, and sourcing teams worldwide. We prioritize product safety and ease of installation by integrating refrigerant leak detection into furnace and air handler controls, streamlining installation. Innovations such as FlexCoil supported seamless transition for dealers without workflow disruption. We've also brought to market our cold climate heat pump technology, which won the DOE challenge and further establishes our leadership as the electrification megatrend gains momentum. We addressed supply chain issues, including refrigerant canister shortage, by pre-charging units at the factory for longer line set lengths. This transition did not slow us down. It strengthened our position and built confidence with dealers, customers, and regulators alike. This page explains our commitment to product differentiation after the A2L transition, highlighting how this approach matches customers' top priorities. First, on product differentiation, we are focused on leadership where it matters, higher efficiency, better comfort, ease of installation, and serviceability. We are regionalizing cold climate heat pump technology, ensuring performance is optimized for the environments where the systems operate, not just designed to a single operating point. Second, controls and integrated solutions. We are the industry leader in OEM manufactured thermostat attachment, and we are continuing to build integrated system solutions that include indoor air quality, zoning, and connectivity. Third, regulatory compliance. We are developing advanced system architectures that not only meet future Low GWP and natural refrigerant regulations, but also do so while maintaining leadership in cooling, heating, and furnace efficiency. Finally, cost, reliability, and quality. Through value engineering and in-house development of key technologies like variable speed drives, we are lowering the cost while maintaining the reliability and quality our brand is known for. Together, this portfolio ensures we are not just compliant post A2L, we are delivering differentiated solutions that strengthen our competitive position and support long-term growth. As we advance innovation across these four pillars, a key facilitator supporting our efforts is LUMS, Lennox Unified Management System. This operating model standardizes our product development processes, enabling disciplined execution by integrating lean principles, automation, collaboration, and continuous improvement to accelerate progress and deliver superior results. This slide shows how we are using AI to fundamentally accelerate product development, not just to work faster, but to work smarter. By applying AI to optimize design, we've been able to redeploy roughly 10 weeks of development time to more value-added tasks, delivering better performance at a lower cost. That's a meaningful improvement in speed to market while strengthening product economics. Artificial intelligence supports every phase of the NPL lifecycle, from initial ideas to product launch and post-launch review. This integration enables faster, better decisions and reduces rework. As we accelerate how we develop new products, heat pumps are one of the clearest examples of where that speed and focus really matter. Yesterday, you heard the team talk about heat pumps, and today you heard from both Sarah and Joe reinforce the strategy. This slide highlights how our heat pump system portfolio designed to win across regions, price tiers, and applications. On the indoor side, we have streamlined and optimized our air handler lineup to be size and cost competitive, including air handlers to replace traditional furnace applications and multiple mounting options that give contractors flexibility in the field. On the outdoor side, we are taking a very intentional approach to regional optimization, matching the system designed to climate conditions while improving the cold climate performance and overall efficiency. At the same time, we're driving material cost reduction and long-term differentiation by investing in our own power electronics, giving us greater control over performance, cost, and supply resilience. This portfolio meets regulations, broadens the markets, and adds value to dealers and homeowners, allowing Lennox to gain market share and as heat pump adoption grows. This slide highlights how controls and connectivity are becoming a powerful differentiator for Lennox. We've broadened our thermostat portfolio to cover the full range from entry-level smart thermostats with simple, elegant control to ultra smart thermostats with richer functionality while delivering a consistent, unified app experience across the Board. Equally significant, connectivity enhances dealer relationships by facilitating greater utilization of service dashboards, improved diagnostics, and seamless integration with broader ecosystems like Samsung SmartThings, Ariston IoT Cloud, and emerging standards like Matter. Ultimately, controls and connectivity improve customer experience, strengthen loyalty, and bolster Lennox's status as preferred system. We are applying AI across two complementary value themes. First, growth and customer delight. Using AI to make Lennox easier to do business with, improve the homeowner experience, and increase win rates. Second, organizational efficiency and productivity. Using AI to eliminate manual processes, improve decision quality, and reduce cycle time in core workflows. Let me share how we are using AI to materially improve the customer experience, not as a concept, but at scale and in day-to-day execution. We are already seeing a strong adoption of our agentic AI tools in the field. More than 9,000 technicians are actively using our AI tool, and the feedback has been exceptional. 95% positive, which is a strong signal that we are improving both ease of use and quickly resolving problems in the field service and tech support. We've logged over 41,500 support sessions across technicians and homeowners, and the tool can recognize and interpret more than 250 error codes, helping users to move faster from symptom to diagnosis to resolution. We use AI across enterprise, including tools for technicians and homeowner support, software coding agents like GitHub Copilot, AI-driven selling platforms such as LennoxPros, as well as dynamic pricing and process automation. In summary, AI is helping Lennox win on experience and efficiency at the same time. That's a powerful combination as we scale growth and expand margins. This slide brings together why we are confident in our ability to win both with AI, with evolving regulatory, and customer needs. First, our front-end digital technologies are focused on one simple goal: delivering the best customer experience, making Lennox fast, reliable, and easy to do business with. Second, artificial intelligence and automation. These are increasingly integrated into our operations, expediting decision-making process, enhancing productivity, and supporting more rapid and high-quality execution. Sustainable product innovation is central to our strategy, creating solutions that address efficiency and regulatory needs while providing value to customers. We built a strong technology infrastructure that is secure, scalable, and ready to support advanced digital capabilities across the enterprise. Together, these capabilities position us extremely well to lead through change, outperform competition, and deliver sustainable growth. Thank you for your time and the opportunity to present Lennox technology and innovation efforts. Innovation is most important when it is reflected in our financial results. With that, let me welcome Michael to the stage. Good morning. It's great to be here with all of you today. As you heard from Alok and our business leaders, our strategy is centered on our customers, strengthened by technology, and brought to life through disciplined execution. I will walk you through the financial engine that this strategy enables, including the results we've delivered, the levers driving sustained performance, and our path to our 2030 financial targets. Let me start with how we've been performing recently. Over the past several years, we've delivered strong results in growth, higher margins, and cash flow through operational excellence across the business. Our revenue reached $5.2 billion, up 16%, and margins expanded to just over 20%. This is solid performance, especially given the industry worked through two regulatory inventory de-stocking cycles in 2023 and 2025. With those cycles now behind us, we see additional growth ahead. A significant achievement has been our margin expansion. We've increased adjusted operating margins by more than 400 basis points through strategic divestitures, pricing excellence, and productivity gains. We're also converting profit into cash at a high level, delivering an industry-leading ROIC of approximately 40%. That performance reflects targeted capital expenditures with good ROI, working capital optimization, and acquiring businesses at attractive valuations, all while maintaining healthy debt utilization that keeps our leverage near 1.5x. The results you see on this page are driven by what matters most: a strong management team and the Lennox Unified Management System, which keeps us focused in delivering year after year. Let's take a closer look at our key drivers behind our profit performance. Over the past three years, we have increased profit by $325 million. This chart shows how our team delivered that improvement through product mix gains, price and cost management, and sustained cost productivity improvements. The mix benefit comes from upgrading our products to meet the new 2023 DOE and 2025 EPA regulations. On pricing, we've protected our margins by offsetting more than $475 million of inflation with $625 million of price. We've also remained committed to investing in the business. Since 2022, we have deployed more than $50 million to improve the digital customer experience, launch new products, advance our ERP systems, and expand distribution capacity to improve fulfillment rates. Let's shift now from profit to cash flow. We convert profit to cash at consistently high rates, generating approximately $2.2 billion since 2022. Free cash flow remains solid, even with capital spending running $100 million above depreciation and with about $200 million of temporarily elevated inventory in 2025 that will convert to cash flow in 2026. We also see improved accounts receivable and accounts payable, unlocking more than $100 million of cash flow. We achieve this through better processes and increased IT automation. We see additional opportunity ahead. I will show you how we have deployed our cash flow. We take a balanced approach to capital deployment using each option to strengthen the company. Our strategy begins with capital expenditures. We've been investing above depreciation to make up for past underinvestment and to support growth and productivity initiatives. We expect capital expenditures to normalize relative to depreciation after 2026. From there, we deploy capital through consistent dividend growth, opportunistic share repurchases, and selective M&A at attractive valuations. All of this is supported by maintaining an investment-grade debt profile that gives us the flexibility to execute through economic cycles. Let's now dig deeper into each of these deployment methods, starting with dividends. Our dividend philosophy is straightforward. We aim to provide a modest and reliable dividend that grows over time and reflects the strength and consistency of our cash generation. Since 2022, we have increased the dividend each year, delivering nearly a 14% CAGR from our IPO. We expect dividends per share to rise with earnings in the years ahead. Let me now turn to share repurchases and how we have used them over time. Like our dividend performance, we've been consistent with our share repurchases, buying back stock when it trades below intrinsic value. Since 2006, we have repurchased more than 60% of our shares outstanding. We currently have more than $1 billion remaining on our Board authorization. We expect additional authorizations as we deploy the substantial cash flow we will generate in the years ahead. Next, a look at our portfolio actions. We've been active in shaping the portfolio, beginning with the divestiture of our European operations in 2022, which positioned us to pursue complementary acquisitions and strategic joint ventures. In 2023, we acquired AES at an attractive 6x multiple, strengthening our relationship with large commercial national accounts through a complete offering that includes equipment sales, installation maintenance, and end-of-life recycling. In 2024, we formed a joint venture with Samsung to sell ductless product through a Lennox distribution channel, enhancing both brand quality and product offering. In 2025, we expanded our product portfolio in two ways. First, we formed a joint venture with Ariston to sell water heaters. We acquired Duro Dyne and Supco, which expanded our ability to manufacture and distribute a wider range of commercial and residential parts and accessories. Looking ahead, we will continue this bolt-on approach. We plan to expand our parts and accessories platform, building on the Supco and Duro Dyne acquisition. We also see opportunities to expand commercial service presence and accelerate our controls and indoor air quality offerings. With that, our review of the past several years is complete. Now let me turn to where we are headed and outline our new five-year financial targets. As we introduce our new five-year financial targets, our approach remains consistent with the framework we have used in the past, with a focus on revenue growth, margin expansion, and strong cash flow conversion. We are targeting revenue of $6.5 billion-$7.5 billion, profit margins expanding from roughly 20% today to between 22% and 23%, and cash conversion of more than 90% of net income. These targets reflect the investments already in place and a record of management meeting the commitments we set. I will walk through the specific revenue and profit drivers behind each of these goals. Our plan to achieve our revenue growth target starts with healthy underlying market growth. As Alok noted, we expect solid demand in both residential and commercial markets over the next several years. We've analyzed the past 20 years of industry shipment data. When we look at a typical equipment replacement cycles, repair patterns, and the impact of new construction expanding the install base, our modeling across multiple simulations indicates market growth above 3%. That gives us confidence that our baseline assumption of 1%-3% growth is realistic and achievable. The next growth driver is share expansion. We see meaningful opportunity where our share is below the industry average and in product categories that customers currently source elsewhere. Sarah and Joe highlighted these areas earlier, including heat pumps, parts and accessories attachment, water heaters, and commercial emergency replacement. Across these initiatives, we expect an additional 1%-2% CAGR. Importantly, the midpoint of these growth initiatives reflects only about 40% of the full opportunity we see today. With no major regulatory changes on the horizon for the next five years, price and mix should normalize to typical levels of 1.5%-2.5% per year. Our 2025 acquisitions of Supco and Duro Dyne will add another half percentage point to our revenue CAGR. Taken together, healthy end markets and execution under growth initiatives position us well for sustained sales growth. Let us turn to our long-term profit targets. We have already expanded profit margins substantially, and we see more opportunity ahead. First, we expect cost inflation of 1.5%-3% per year, which will pressure margins. Our pricing actions, better pricing processes, and cost productivity initiatives will more than offset inflation and lead to net margin improvement. These cost productivity initiatives include optimizing our distribution network, value engineering cost out of the products, insourcing select components, advancing manufacturing automation, and using technology to improve SG&A productivity. Together, they're expected to deliver 1%-1.5% of annual cost productivity. As we have done consistently, we will reinvest a portion of these cost savings into initiatives that drive future growth and additional productivity. Combined with a 30% incremental margin on higher sales volumes, these actions support profit margins expanding to the 22%-23% range. That same margin discipline shows up in our free cash flow. Over the next five years, we expect to generate more than $4.5 billion in free cash flow. That gives us meaningful capacity for both share repurchases and bolt-on M&A. Now, let me close by bringing it all together with our long-term financial algorithm. As I said at the start, we have a proven record of setting long-term targets and delivering on them. Using the midpoint of our new long-term targets, our financial algorithm compounds consistently. It starts with solid revenue growth from our markets and targeted initiatives. From there, our manufacturing, engineering, and distribution teams drive cost productivity that expand operating margins. We then convert a high percentage of net income into cash and deploy that cash to repurchase shares and repay debt. This approach is expected to deliver double-digit returns for our shareholders and makes Lennox an attractive investment opportunity. I will now hand it back to Alok for a few final closing comments. Thank you, Michael. Appreciate you summarizing the fiscal impact of our simple long-term strategy. I'm gonna wrap up by recapping our long-term strategy. On top of the pyramid, we have four growth vectors that will drive our differentiated growth. We've talked about all of them throughout the presentation. We have three margin drivers below that that will expand our resilient margins. Supporting growth and margin expansion are our three core enablers: advanced technology, execution consistency, and talent. Advanced technology establishes product supremacy and enables success by using digital and AI as core competencies. Our execution focus through LUMS makes it easier for customers to work with Lennox. Finally, our talent and our values are the bedrock of our strength and critical to our success. We started today's presentations with our values, so I'd like to highlight our talent initiatives before we end our formal session. We have a very strong employee value proposition that allows all of us to be unified in saying, "We are Lennox. Come, grow, and stay with us." To maintain and enhance this value proposition, we have been investing in developing leaders, building bench strength, and strengthening our culture. We measure success through employee surveys and our balanced scorecard that shows that 70% of our leadership roles are filled internally. Our culture is the leading reason for our employees staying with us and our customers doing business with us. To sum it all up, I just wanna say that I'm more excited about Lennox's value creation potential today versus when I joined the company four years ago. I'm confident that our best days are still ahead of us. With that, I wanna invite all the speakers back on the stage for the Q&A session. As they make their way back to the stage, I do wanna take the opportunity to thank our employees and leaders who have worked tirelessly behind the scene to organize this successful event. To manage the Q&A process, we will start with the questions from the front row and then make our way back slowly. You would have noticed that we have reiterated our 2026 guidance this morning, which means that we have no meaningful update on 2026. Hence, I'm really hoping that your questions will be focused on the long-term strategy that we presented today. If you have a question, raise your hand and either Sam or Alice- Hi, good morning. Thanks. It's Joe O'Dea from Wells Fargo. can you start on some of the growth opportunities around kind of penetration when it comes to attachment rates and where you're setting targets on those as well as the heat pump, kinda timeline on targets so you go from an attachment rate of 18-40 or 25-40 when we think about HCS, BCS on the service side, or where you think about kind of heat pump as a percent of sales? Where do you expect those to be when we next come together for an Investor Day? Sure. I mean, that's a good internal and healthy debate we have been having, but I'll give you some insight. We don't think we get to full opportunity within the next five years. I mean, some of these are much longer term penetration opportunities. What we have built into each of those, and then Michael obviously hedges that appropriately from a financial sense, that we would be between half and three-quarters of the way of those full opportunities. In each of these opportunities, we had a bar on where we are today, and we had a bar on where we have full opportunities, and we said we'll be between 50%- 75% of that full opportunity in the next five-year period. That's what led to our growth algorithm, saying each of those initiatives contributes about 50 basis points of growth. Just one on investment priorities, because you talked about kind of a large opportunity set, and as the portfolio gets bigger, it expands those opportunities. Is it if you kinda narrow that focus within HCS, BCS, and if you kinda rank order in terms of over the next, call it 12-18 months, 12-24 months, just how you're thinking about those investment dollars and sort of the highest priorities within the portfolio? I think I'll start by saying that a lot of the investment needed for the next few years has already been made. As Michael says, often the costs are in our P&L, the benefits are not. I think that should probably give you the bigger overview of the answer. At the same time, on things like distribution, on things like parts and supplies, which are across both the segments, and we share those investments, and there's still more to be done. Prakash highlighted the opportunity for us to invest more in testing, product development, customer experience and training, which is also across both the segments. I think from each of the segment perspective, the core investments, whether it's manufacturing in BCS, distribution in HCS, those are already in our books. I wouldn't expect anything significantly incremental to that. That's why in Michael's walk, you didn't see a drop down for extra investment beyond what we get out of our just regular drop through on volume. Good morning, Tommy Moll from Stephens. Thanks for taking the question. Wanted to ask about the parts and supplies attach rate for the resi business. Ultimately, you're asking customers to break a old habit. They've been buying parts and supplies from someone down the street. You gotta get them to now to do that in your store. I'm just curious what additional detail you can provide on how you're gonna make that happen. Alok, you mentioned shoulder to shoulder. Is that gonna be enough to get it done here? It is. I mean, it's a frustration of ours that they don't buy it from us. It's a frustration of theirs, our contractors as well, because now they need to make two stops versus one stop. Yeah, they've got used to it because our equipment's very good. They like buying from us. We need to make sure of something what Joe said in his segment that applies to parts and supplies as well. We gotta have the right part. We gotta have it at the right place, right? We gotta have at the right price, and we gotta make sure that it is at the right time when they need it, whether it's to deliver to their place, to pick up from the store. I mean, the four rights that Joe mentioned are same. We've done lots of surveys, applies to residential and commercial. It is just something we are learning, and Tommy, you know this, is it requires investment, it requires category management, it requires parts distribution centers, it requires small package shipping capability. We are getting to a stage where we wanna deliver one order, one invoice, one shipment. When we do that, our contractors would rather buy from us because it's maybe annoying to us, it's frustrating to them to have to make two stops. Hey, Tim Wojs, from Baird. Thanks for all the details. Maybe as you move from kind of a factory driven or a centralized model to something that's maybe more regional or local or decentralized, how do you make sure there aren't any sort of like unintended consequences, you know, that may change, as you go through that process? What are some of the, I guess, internal incentives that you changed, and I guess, is that all kind of fully implemented at this point? Yeah. You know, we like to think that we were always customer-centric model, but you're right. I mean, a lot of it was factory centric, was to make products in the factory and then push them into the distribution center. Now, what we are doing is we're gonna hold the factory inventory at the FDC and pull it. Quite a few things we are doing to make sure it doesn't upset the apple cart or doesn't change funding. First of all, the rollout is gonna be slow. When you go to the FDC this afternoon, we're not gonna take all our regional centers and start moving the model immediately, right? We're gonna do it one at a time to minimize the risk. That's kind of the number one thing, right? Second is, you heard Prakash and others talk about it, we are using AI heavily, because this is gonna be as good as the forecast we can get to and the pull system we can do. It's significant rewiring of this. For the past few years, some of the investment that Michael highlighted was in a new WMS system, so we do have the new warehouse management system, a new TMS, a new transport management system. All that's already done. This is not new for us. We've been preparing for this for about two years, and we've already built the digital blocks, taking care of the outdated tool, and have done a lot of process improvement, such as Sales, Inventory, Operation Planning, to make sure that happens. The best way to do it is not a big bang approach, but a slow one at a time to minimize risk and roll out. So far, we feel very confident about this working. Okay. Sure. Thanks. You've done a nice job of articulating the growth drivers across the two segments of the business. They're different, right? I mean, there's different opportunities here. There's also different opportunities for margin expansion. Can you give us how in the 2030 outlook you think about both revenue growth and margin expansion between the two segments, understanding that they're starting at a different point? Can Michael answer that? Yeah. If you look at the total revenue growth to the midpoint of our guidance, it's at 6%. BCS will grow a little bit faster than that, mostly because the inorganic acquisition side of it. When you look at organically, though, we see it about a 5.5% organic growth across the organization, pretty much equal across HCS and BCS. From a margin expansion, it might lean a little bit more toward the HCS. Some of those cost productivity and the pricing process improvements will lean a little bit more to that direction. In general, both should be growing at about the same rate organically for the next five years. Thanks for all the detail. On, on the kinda resi assumption of the 3+ units, is that, something that you're kind of the shape of that recovery, is that, you know, above that range as you kinda bounce off the bottom in 2027 and 2028 and then settles in, or are you thinking this is a bit more of a, you know, steady progression of 3% from here through 2030? You know, we think there's obviously a short-term bounce that we are going to experience. We don't know when, and that's going to come it is. The bigger point, Steve, is no matter what the industry does, we are very confident of the differentiated growth initiatives that we are going to drive. Like, listen, we are not good at predicting industry growth rate, that's at least something we have established over the past four years. That none of us are great at predicting the industry growth rate. I think what we're going to focus on is differentiated growth. Here are the four things we are going to do that's going to be in addition to the industry growth rate. Listen, if it grows above 3%, that's great for all of us, right? If it goes below, we're going to fight harder on the differentiated growth to still make our long-term targets. Yeah, I was gonna say, I'm not very good at forecasting either. We're on the same page on that one. Makes both of us together on that. Yep. Then just on the capital deployment side, I mean, you know, your share count's pretty low. I know that really doesn't matter from market cap perspective, but, like, is there any pivot to, l ike, does the appetite for buyback just, like, run out a little bit or, you know, and maybe a little bit more M&A? Maybe how much buyback are you kinda thinking about on a run rate basis every year? Yeah. Obviously, we're gonna generate a lot of free cash. You saw $4.5 billion, so we're gonna use that in one of two ways. We're gonna opportunistically look for M&A, but it has to fit the criteria that we want for the right price around the core business, around parts and accessories, around service offering. If that happens, we'll definitely wanna do that, but it's more bolt-on. We also believe that consistent share repurchases over time add a lot of value, so we can continue to see that over the next several years as well. Okay, great. Thanks. Thank you. Thanks. UBS, I wanted to ask, Alok, you just mentioned about the stuff that's in your control versus not under your control in terms of outgrowth, and you do have a forecast for 1 points-2 points of outgrowth. I think it was 1 points-2 points. I don't have the presentation in front of me. Maybe you can attribute that to I assume that a lot of that's in building and winning back some of the emergency replacement. I think the Mexico facility really helps you do that. Maybe just attribute that outgrowth to specific either segments or products and how confident you are in delivering on that, just given that you have visibility on that is in your control. That's a great question. We operate the company in six business units, three under HCS, three under BCS. Each of them have a very specific set of growth initiatives. In some cases, it's about regular conversion, like, of dealers and contractors. That kind of drives our regular share. We've been doing that for years, and that continues, right? If you think about it, others are more about specific initiatives like emergency replacement. If we build that all up together, what we are driving towards is two points of growth that's differentiated above the market. On a very simplistic basis, I take the four ones, like heat pump, emergency replacement, attachment rate, and TAM expansion, and say it's equally spread among all of that. That's kind of the way I look at it. Michael can give you a little bit more detail because he's actually his Excel often is more detailed than my PowerPoint. I don't know how that happens. Maybe he'll give you more. That's why we balance each other well. Yeah, this is $500 million revenue opportunity I think you saw on this slide. If you break it down, about $150 million for parts and accessories, $125 million for emergency replacement, $125 million for water heater and Samsung, and then about $100 million for ducted heat pumps as well. That kind of breaks down the $500 million. Again, that's to the midpoint of our guide, and it's still, you know, less than 50% of what we think is the full opportunity that Joe and Sarah are gonna push and execute against. Great. Just, just one-- That's very helpful. Just one follow-up. Alok, you had mentioned this refrigerant opportunity in data centers. Maybe just give us a little... I assume it's small and a long way out, but maybe you can just provide a little bit more color around what specifically you mean, what opportunity that can be? Yeah. I mean, it almost was a point of saying we don't have any meaningful exposure to data center today. Our products do make it a data center one way or the other. In future, when I think the data center cooling technology evolves and it becomes more about two-phased direct-to-chip cooling, that's where technology will apply. At this stage, we have no meaningful revenue and nothing really to declare to talk about that. We are focused on our four core growth initiatives. Maybe the next Investor Day, the technology would have moved far enough advanced along that we can talk about how our technology could apply in data centers. Thanks a lot. Barclays, maybe a first question just around the water heater push. You know, you mentioned that, what was it? A $125 million revenue opportunity. You know, you've got well-capitalized strong competitors there already. Kind of how much market share should we think about Lennox trying to take? You know, over what kind of time period? You know, what kind of counts as success there on the market share front? Secondly, Alok, just following up on the data center point, you know, help us understand kind of what are your discussions with customers like and maybe flesh out a bit more the reticence to get bigger in that market sooner. On the first one, just to clarify, when Michael gave you the number of $125, that was water heaters and ductless from Samsung. That was combination of those two. It'll be a bit of a phasing because Samsung we launched last year, which means this year would be kind of meaningful from revenue. Ariston we're launching this year, so it'll be next year before we reach meaningful revenue, because there's always a one-year lag from the launch to getting to meaningful revenue. It's a combination of those two. On water heaters, listen, we're not gonna talk about us being the leader or being 20%, 30% share in. That's not our goal. We are doing this to serve our customers better, to make sure we can provide them the convenience of one-stop offering. You know, we have 250 locations, typically within 20 minutes drive from one of our contractors and milk runs that deliver the products every day. We're gonna make it easy for them to buy water heaters. These guys are not big buyers of water heaters like a big plumbing contractor. The goal is that I would say we are looking at small market share. I don't think this is about displacing number one or number two, or even number three in that space. It's about getting our share from our dealers by making it easy for them to order both from us. I was hoping to avoid that. Thanks for the reminder. Julian, I mean, listen, in data center we are not reluctant to get in the market. We are not anti-data center. We just don't have the product or technology. Most of the data center business today is using chiller technology. For good or bad, the way Lennox is, we just don't have the chiller technology. My comment was all about at some time, we are gonna go beyond the chiller technology in data center, and some of you are more of an expert on that than I am. That point, there'll be opportunities for Lennox to participate. We are skipping the current technology of chillers because we just don't have it. Thank you. Chris Snyder from Morgan Stanley. There's a lot of, you know, in the presentation about the direct selling approach. I guess is that really just a margin opportunity for the company? Like, you know, we could look at OEM plus distributor margins, and is that what you are going after? I wonder is there also, you know, maybe some opportunity to... I mean, if you're taking, you know, margin from someone else in the channel, is there any ability to like donate that back or give it back to the homeowner, which could maybe help drive some share for you guys through a, you know, just helping out with the affordability challenges? There's clearly a margin opportunity, and we've talked about, and Sarah mentioned that a couple of times as we have the entitlement to take margins for manufacturer and distributor, and that's more of a intellectual thing of we gotta make sure we wring out the inefficiencies, whether it's in our distribution network, manufacturing network, pricing processes, so we can benchmark ourself against the best-in-class manufacturer, best-in-class distributor, and do both. I think that's one effect. Actually the bigger reason we emphasize that, it positions us very well for the future. If we were not direct, we could not be selling water heaters, right? If we were not direct, we could not be doing the JV with Samsung. If we are not direct, our parts initiatives would not have the appropriate team and the connection to the dealer. Being shoulder to shoulder or as Joe Wright might should say, belly to belly with the dealers, is more about serving them properly, serving them better. As the distributor channel consolidates, the dealer channel or the contractor channel consolidates, puts us in a great position to work with them to eliminate unnecessary middlemen, which I would call as unnecessary inefficiencies between us, the manufacturer, and them as the channel. That's where I think the bigger opportunity lies. I don't think it translates into pricing going to homeowners, 'cause one thing that's very well established in this industry is pricing cuts do not lead to share gain. That just doesn't happen in this case. We sell to somebody who sells to somebody who sells to homeowner with labor, with accessory, with warranty, with financing. The whole chain does not work with price cuts from us leading to market share. That just doesn't happen. Thank you. I I appreciate that. Michael, you kinda talked about, you know, when you guys are modeling out growth, looking at the installed base. I would just, you know, be curious on how has the installed base for Lennox grown. Because I would think that at the industry level, the installed bases have slowed over the last 15 years. You know, we've seen the housing stock growth has slowed, and I imagine HVAC is hitting or maybe not yet, some sort of like theoretical ceiling on where the penetration rates go. You know, just be interested on how, you know, Lennox's installed base has trended. Yeah. We think the install base continues to grow. Every year you have new construction additions. Every year you have add-on replacement, putting air conditioning in your garage or different units. That's where a lot of mini split has actually expanded the cooling and the installed base. We see the install base has continued to grow. We've also seen the average life of the system shortening for all of the reasons that Alok put on the page. When you combine that with shipments over the last 20 years, and especially more shipments toward the south with heat pumps, we see a relatively normal kind of failure rate going into the future and assuming replacement rates are also normal, we'll see at least 3% growth from that algorithm. Jeff Hammond, KeyBanc. Alok, you touched on, you know, different pieces of kinda distribution profitability and how you're getting there, but maybe hit it more head on like I think a couple of years ago or a few years ago you were saying, "Hey, distribution's breakeven. We can make it much more profitable." Just give us, you know, the big progress steps you've made over the last few years on that end, and what are the big next steps to kinda continue to push on that? Sure. We three, four years ago did not look at distribution and manufacturing as separate. We even today do not incentivize people, necessarily those being separate. What we have gotten better is benchmarking and creating regional P&Ls. Everybody from a territory manager up to a regional director, to a district manager, all have profits as part of the incentive. That's created a lot of visibility and incentives to make that happen. That part is done, right? Second piece on distribution that was getting efficiency is our network. Which I think Sarah described as a ball of yarn, I call it as a spaghetti on the wall. Going from that to a hub and spoke, there's gonna free up significant efficiency opportunities, and that starts happening this year with full impact on next year. That's the next big step on that it comes out, right? Third thing on that, to come down to is our network and our stores are still under leverage. My sales per square foot in a store has an opportunity to be much higher. I don't need to open more stores to sell more mini splits, more water heater, more parts and accessories. If you think about those three factors, and for intellectual reasons, let's just say they are equal. I would say the first one, we are probably 60% there. We have made good progress. We gotta redo the incentive plans again to keep going up the profit chain. The other two, we are just beginning. I would say we are less than 1/3 of the way towards the final goal of freeing up distribution profitability and getting to more reasonable profitability level and distribution. Sarah, do you wanna add anything to that? I think you've covered it pretty well. I think you said it. The second one, I think is the most immediate one in front of us. Going from a push model to a pull model, and that will be over, you know, a year or two, is gonna have an impact all the way through our supply chain, as well as creating efficiency in the factory. I wouldn't add anything specifically, except that's probably the one that I think is gonna add the most value in the first couple of years. Thanks. Ryan Merkel. My first question is on incremental margins. The targets imply like a 29%-30% incremental margin, which is more or less the five-year average. My question is, which initiatives provide the most upside to that target in your mind? I gave you the revenue initiatives. If you think about that, the commercial emergency replacement's one of the highest ones there. Really great margins within that. Outside of that, the rest of the margin expansion is really gonna be about cost productivity, redefining our distribution network, getting all the cost productivity within that. We've just launched our new products, the new regulatory change within 2025. Normally, after that, we go back and redesign and re-engineer, and Prakash can add to this, and we take a lot of cost out of the product after we go through a regulatory change, and it's gonna be about manufacturing productivity. We have not delivered over the past several years much manufacturing productivity at all, and we think there's a lot of opportunity there. Those are gonna be the main drivers in margin expansion. The source products will be a little lift to margins, but not as much as the others. All right. Thanks for that. My second question is, you've talked about improving fill rates to the high 90s, and I think that's at the store level. Correct me if I'm wrong. You know, what is baked into the guide for fill rate improvement by 2030? Can you help us think about quantifying the revenue opportunity if you achieve that? I think We give you ranges on revenue opportunity, which I think was appropriate. On a high end of the revenue opportunities, you should think of us getting to a 96%-97% fill rate, probably still not at the 98% level. I think we're gonna get closer to that. On the low end, you should think of us as being a 92%-93%, just given. I mean, there's a statistical correlation to fill rate and market share, and there's a correlation to NPS and market share, and those are the two variable we constantly optimize, and I need to raise bar on both of them. A higher NPS, higher fill rate gets me to higher market share and a higher end of the revenue guidance range. On fill rate, the challenge has been quite a few things, right? The centralized planning thing was just not working, so I think the decentralized nature that I mentioned earlier, that's gonna help more where there's supply chain exports for every regions that make it happen. AI is gonna play a huge role in that. I mean, we are spending significant amount of time, effort, and resources upgrading so that we can use SAP IBP versus a lot of manual spreadsheets and planning. Just like we are bad at forecasting industry growth rates, turns out we are also bad at forecasting what products are gonna be needed in what ZIP code. This is where, again, AI is gonna help us get to what products we can expect to go in which region and getting a more agile thing. Finally, getting our product classification to the ABCD level, like big distributors, and Ryan, you're familiar with all of them. You know, I wanna have a more sophisticated dialogue with you next time. We're saying, "Okay, I'm filling As at 99, Bs at 94." We wanna have that level of discussion. When you have that level of discussion, Ryan, then I will say we are closer to the goal than where we are today. Great. Thanks. Just a quick one on the, on the margin target, the 2 points roughly of margin expansion. Is it similar across the two segments? The spirit of the question is that, you know, BCS is really high level, so. Yeah. The margin improvement will lean a little bit more to the HCS, but both will drive margin expansion. Okay. Great. Thanks, Mike. On the free cash conversion target, 9%+, strikes me that a good number of the initiatives, the outcome initiatives, around parts, around, you know, maybe what the JVs requires inventory investments. I'm just wondering, is there gonna be a significant inventory investment the next couple of years? Do you think you can still be within that 9% conversion? Yeah. We feel with greater than 90% in our current working capital as a percent of sales, we can work within that target. We also have opportunities on accounts receivable and accounts payable to help fund this, and even raw materials within the factory. In the end, that's what we wanna do, is deploy those savings to more finished goods and get them closer to the customer, to Ryan's point, and try to win fulfillment, 'cause that's what matters for the customer. Just a quick one. Sorry, I know this is the 3rd question. At the earlier question about changing customer behavior, getting them to come in for parts or whatever else, is there any kind of direct marketing initiatives behind this plan? I mean, from our marketing perspective, realize that majority of it's tailored towards the dealer. When you call direct marketing for, it's more about educating our dealer. We do a pretty good job with our captive dealer base, like the Lennox dealers, through our own internal pieces, and a lot of it's now moving to digital. Over the next few years, we have to be better at lead generation. We are working on that. That's what get loyalty. We have to be much better at training our dealers, so especially using digital tools, so we are working through that. We have to be much better at retaining our dealers. As we look at some of our digital tools, we realize that often we are able to attract our dealer, but we don't do a good job retaining. That's where marketing plays a bigger role, whether it's about doing the value proposition. If you're in the tool, you would have seen our CRI index. We will look at customer retention index, customer engagement index, and using marketing as an effective tool to go back to the dealers and confirm the value proposition and take any course corrective actions that we need to take. This would not be, we would not be going in after a football stadium. We would be not doing TV advertisement. Our primary channel will remain online or direct to dealer.