Parker Hannifin's 2024 Investor Day meeting here in New York City. It's great to be back in New York and have a full room with us today. I'm Jeff Miller, Vice President of Investor Relations for Parker Hannifin. I'm sure we have many other folks joining us live on the webcast as well. A brief safety announcement: if there is a reason to evacuate the building, go to the back of the room, through the doors you came in through, through the foyer, and then there's two stairwells, A and B, in the hallway that'll take you to the lobby, and then outside. We are here today to share our long-term strategies designed to drive Parker's bright future, future financial performance, and shareholder value creation. It was only two weeks ago, we had an earnings call, increased guidance, and discussed some near-term trends. Our intent today is to focus on the long term, as you'll find with our materials coming up. I'd like to draw your attention to our forward-looking statement slide. We will be making forward-looking statements and non-GAAP financial measures today. They have been reconciled and are disclosed in the appendix of this presentation. Live video of this event is being webcast on our investor site and will be available for replay later. Today's presentation will be posted on our investor site as well at the conclusion of today's meeting. Today's presenters include Jenny Parmentier, our Chairman and Chief Executive Officer, Andy Ross, our Chief Operating Officer, and Todd Leombruno, our Executive Vice President and Chief Financial Officer. Our agenda: Jenny will cover transforming the company, how we're positioned for growth from secular trends. Andy will discuss our strategies around operational excellence, and Todd will walk us through financial performance. After that, we will take a short break. We'll move to a Q&A discussion after the break, and then for those here in the room, we will have a reception outside in the foyer to interact with Parker leadership. So with that, I'd love to welcome Jenny Parmentier to the stage. Thank you, Jenny. Thank you, Jeff. Good afternoon, and thank you for being here today. Thank you for your interest in Parker Hannifin. As Jeff said, it's great to be back here in New York. It's been since 2018 when we had an in-person investor meeting, and as you know, a lot has changed since then. We're excited to tell you about how we've been transforming the company, how we're going to continue to transform the company. But first, we would like to share with you a video with our team members and Win Strategy 3.0. When I think about a Win Strategy, I think about improvement. I think about safety. Win Strategy, to me, is a compilation of our values, of a purpose. It provides us direction on how we need to behave and what we need to achieve. But, but it goes above and beyond that. It also provides us tools and methods to achieve those. The Win Strategy starts with our people, our most important asset. We have a pretty diverse work environment here. It's a really great team to be a part of. We're like a family here. It's It's like everybody's looking out for everybody. Safety is number one priority, so if you see something, you tell something. That leads to quality, that leads to engagement. We empower our High Performance Teams to work across the pillars to achieve accelerated results for the business. We all want to go home whole and in one piece every day, so having safety in mind as one of the main pillars of the Win Strategy is really good for us. The biggest value I see with the Win Strategy is the increase in overall performance that we see throughout the business. The focus on continuous improvement through Parker Lean System and Kaizen has been transformational. It's driven lead time improvements, flow improvements, all resulting in operational improvements and efficiency gains across our business. Elements like Zero Defects or the Lean Enterprise help us to reduce the waste, to meet the customer expectations at the minimum cost. The benefits of our Zero Defects journey has been many. We've been able to reduce scrap, reduce customer issues- To the customers, oh, we provide the product on time, and the product is needed in the quantities that are needed. It has positioned us for future business growth. The High Performance Teams that have really helped us drive continuous improvement. It brings people from all different walks of life and career experience together, and you're able to solve complex problems with the use of all the people that are in that Kaizen, and so, that's a great way to bring people together and, and engage them. Parker's purpose is something that you can personally connect with. Enable engineering breakthroughs. that leads to a better tomorrow. It's good to know that what you do at Parker makes a difference. I take pride in seeing that smile on the customer's face when we deliver a solution that exceeds their expectations. Working for Parker for basically my entire career, it's hard to look back and just say any one thing that makes Parker great, 'cause to me, it's all a system. Whether that's, you know, safety being number one priority and then just continuous improvement, High Performance Teams, Lean systems, all of that's tied together. That just makes it a fun environment to work in. Aren't they fantastic? This is how it all happens. It's our people, it's our strategy, it's our culture, and it's our values and our transformed portfolio. So let's get started... These are the four key messages I want you to leave here with today. We are positioned for growth with our interconnected technologies and the secular trends. We have demonstrated with the Win Strategy 3.0, that we are compounding our performance. And operational excellence, years of building a continuous improvement culture, using our Lean tools, Kaizen, High Performance Teams, not only creates growth opportunities, but expands margins. And today, we are launching FY 29 targets. So what drives Parker? Before we get into each of today's key messages, I wanna give you an overview of who we are, why we win, and how we have been transforming the company. As we just saw in the video, safety, engagement, and ownership are the foundation of our culture. All of our team members take great pride in living up to our purpose. This delivers top quartile performance, and this is what allows us to be great generators and deployers of cash. So let's take a look at how our business is organized. We have been engineering customer success in the motion and control industry for over 100 years. The chart on the left side of the screen shows our businesses: Aerospace Systems, Diversified Industrial North America, and Diversified Industrial International. The chart on the right shows our four technology platforms: Aerospace Systems at 27%, Filtration and Engineered Materials at 31%, Flow and Process Control at 23%, and Motion Systems at 19%. The Win Strategy is our business system. We have a technology powerhouse of interconnected technologies. We have a global distribution network that is the envy of our competition, and we have a decentralized operating structure, 85 divisions run by general managers who are owners of the business. We have the number one position in the $145 billion motion and control industry, a growing space where we are continuing to gain share. This is how I'm gonna talk about the company. Outside of a few comments that I made on our earnings call a couple weeks ago, this is the first time we're looking at our markets this way. Six market verticals that represent greater than 90% of the company's revenue. Aerospace and Defense, In-Plant and Industrial Equipment, Transportation, Off-Highway, Energy and HVAC, and Refrigeration. Our interconnected technologies cut across these market verticals and provide solutions that no other competitor can do. Our growth is focused on faster-growing, longer cycle markets and the secular trends. In 2022, at the last investor meeting, we told you that Parker was going to act and feel like a different Parker, and now, just two years later, this is a different Parker. In FY 15, our revenue was $13 billion. We had an on-purpose plan to double the size of Filtration and Engineered Materials and Aerospace, and through strategic acquisitions and our growth enablers, we have done just that, going from $5 billion and 40% of our revenue in FY 15 to approximately $12 billion and 60% of our revenue today. Important to note out here that although Motion Systems and Flow and Process Control are a smaller percentage, they continue to grow, and they are a critical part of our interconnected technologies and a key driver to our margin expansion. So now I wanna talk about why we win. The Win Strategy, again, is our business system. We have a decentralized operating structure with 85 general managers, full P&L responsibility, acting like owners, close to the customer, using the Win Strategy to improve their business every day and solve customer problems. We have innovative products, 85% of them covered by intellectual property. Our application engineers have the technical expertise to apply our interconnected technologies with our customers and provide very efficient solutions. And our distribution network, as I already mentioned, the envy of the competition and the best in the world. These distributor partners are working with small to mid-size OEMs today on these secular trends, on these Mega CapEx projects, helping those customers. These partners are experts at applying our interconnected technologies. These interconnected technologies provide unmatched value. No competitor can offer the breadth of product that Parker can, whether it's aerospace, in-plant, industrial, and automation, transportation, or off-highway markets. Two-thirds of our revenue comes from customers that buy four or more technologies. This creates an extreme amount of customer collaboration and again, is a competitive advantage. In addition, two-thirds of our portfolio enables cLean technology. This allows us to help our customers meet their sustainable- sustainability targets. CLean technology is just one example of how we are living up to our purpose to enable engineering breakthroughs that lead to a better tomorrow. We are very proud of everything on this slide. We are on track to be carbon neutral by 2040. Every one of those 85 divisions established a baseline in FY 2019, identified projects, and have measured to them since. We have already achieved a 20% reduction to that baseline. We have 160 sites that are certified to ISO 14001. We have achieved a 45% safety incident reduction since FY 2019. As you saw in the video, our number one priority is keeping our team members safe. 93% of those team members participate in one or more High Performance Teams. In the past 10 years, we have donated approximately $70 million to the communities where we live and work. By the end of this fiscal year, our team members will have volunteered 13,000 hours in those same communities. I'm proud to say that we recently announced an expansion of that program, doubling the amount of hours that our team members can take off work to volunteer where they choose. We have continuous shareholder engagement, a diverse and experienced board. Our integrity, ethics, and compliance programs are robust, and we are very proud of our advanced cybersecurity programs that engage all team members at every level of the organization. So I've been referring to it a lot already, and in case you haven't seen it, this is the Win Strategy 3.0. This is our business system, our guide to operational excellence. We trust the process. It is a proven strategy, and as you've heard me say many times, I've used it and it works. So using FY 2019 pre-COVID as a baseline and our FY 2024 guide, here is the evidence of our people, our strategy, and our portfolio driving performance over the last five years. 7% revenue CAGR, 600 basis points of adjusted operating margin expansion, 14% adjusted EPS CAGR, and double the free cash flow, $1.5 billion-$3 billion. And now, just two years after setting FY 2027 targets, we are raising the bar again and launching FY 2029 targets. We remain committed to our organic growth of 4%-6% over the cycle, and we are increasing margin and cash flow targets. 27% adjusted operating margin, 200 basis points higher than the previous target. 28% adjusted EBITDA margin, 300 basis points higher than the previous target, and 17% free cash flow margin, 100 basis points higher than the previous target, and our continued commitment of 10% or more in adjusted EPS growth. We are very proud of what the teams have accomplished over the last several years, and we are confident in achieving these FY 2029 targets. So in summary of our transformation, our people, our portfolio, and our strategy drive performance. We have the leading position in the global motion and control industry, a powerhouse of interconnected technologies. We've been transforming the company, and we will continue to make it a more resilient, higher aftermarket, and higher margin profile business. And we just launched new targets for FY 2029. Now to our first key message for today: how we are positioned for growth from secular trends. At our last investor meeting in 2022, we highlighted the secular trends seen in the top four pictures of this slide. Mega CapEx is an additional secular trend that, as you know, is applicable to all. There's been a significant amount of announced industrial CapEx over the last several years. Depending on which tracker you look at, it's $hundreds of billions, or in some cases, over $1 trillion that has been announced for projects over the past two years. And those of you familiar with Parker have seen this slide before. The transformation of the portfolio from FY 2015 to FY 2019 shows how we have, and we will continue to intentionally and significantly expand longer cycle and secular trends in industrial aftermarket businesses. This mix is more resilient through the cycles and demonstrates a consistency of performance. As a reminder, this is the same slide I showed a few slides back. This is how we're gonna talk about the company. We are number one in the motion and control industry, and 90% of our revenue comes from these six market verticals. So let's take a closer look at how the secular trends are driving growth across these verticals. Across the top of the page are the six market verticals that I just mentioned on the previous page. For each market vertical, you see the current percent of sales, and now for the first time, our anticipated long-term growth percentages and the secular trends that are driving growth across these market verticals. Over the next several slides, I'm gonna show you examples and details of each of these secular trends. In each section, I will show you an animation of the key application tied to these trends. The animations aren't just to show you that the opportunities are real, but they're to demonstrate the interconnected technologies at play, how they complement one another, and how they're going to work for us for higher growth into the future. That's the real power behind this portfolio... So, first up is the cLean technology secular trend, which presents many attractive growth opportunities for Parker. On each of these lead-in secular trend slides, I'll orient you to the market verticals with the most activity for the trend and our interconnected technologies that support them. For cLean tech, our market verticals are off-highway, transportation, and energy. And our technologies that support them are engineered materials, filtration, fluid and gas handling, and process control. CLean technology solutions have and will continue to evolve over time. Our expertise in natural gas is a bridge to hydrogen. We have a large existing bill of material for natural gas applications, as you can see on the left side of this page. This pedigree gives us a running start and requires minimal R&D for hydrogen. Electrolyzers, refueling stations, fuel cells, and carbon capture are where we see Parker product being relevant for customer needs well into the future. Our first animation shows a hydrogen fuel cell truck that incorporates a range of Parker technologies, such as engineered materials, filtration, and flow and process control. Though the timing of scaling up is still pretty far out, we are working with our key transportation customers today to ensure we meet their development and testing needs. In this next animation, we are showcasing an electrolyzer, a crucial technology that will be used in the production of low-emission hydrogen. As the hydrogen infrastructure continues to develop, electrolyzers are envisioned to be the key factor in the production of hydrogen. Electrolyzers use electricity to split water into hydrogen and oxygen. Parker equipment is used in the fluid and gas handling, purification, and sealing of the process. So you bring these two animations together, and our existing technologies and deep application engineering expertise with minimal R&D investment are providing the solutions our customers need. We estimate this to be a $5 billion total addressable market through 2030, and we see double-digit revenue growth for the hydrogen market. So now let's take a look at electrification. At the last two investor meetings in 2020 and 2022, I spoke to you about the electrification secular trend. I was running the Motion Systems business then, so it was a big part of my job to make sure we didn't fall behind for electrification, especially in the case of our mobile customers. As a reminder, for Parker, our bill of material is 1.5-2x for electrified applications. The market verticals for this trend are aerospace, transportation, and off-highway, and our interconnected technologies are electromechanical, engineered materials, fluid and gas handling, and hydraulics. As you can see across the top of this page, the electrification opportunities are numerous across the market verticals. Current sales in this trend is about $2.5 billion. We have decades of electrification engineering and application expertise from our aerospace systems. This has given us a competitive advantage with our off-highway customers. With Meggitt, we acquired power conversion, sensors, and electric braking technology. With Lord, we acquired adhesives, thermal management, and shielding that is used in batteries and throughout hybrid and passenger vehicles. Electrification is a trend that is definitely real, and it's happening today. In this animation, you are seeing a fully electric wheel loader with a broad range of Parker products. This is a great example of how we brought aerospace and motion systems engineers together, brought their expertise together to collaborate with off-highway customers and provide them with the electric solutions they were looking for. We formed our Motion Technology Center over five years ago. We brought these engineers together because we wanted to accelerate the development of the product that these customers needed, and I'm happy to say that it has been very successful. The Motion Technology Center, along with the key operating divisions, have developed the suite of products that you see at the bottom of this page for our off-highway customers. Our Global Vehicle Motor is one of the most efficient and power-dense motors on the market. Our motor controller was developed to work specifically with our motors to create the safest and most efficient system. We see the FY-2029 addressable market at $800 million and a 20%+ market growth rate. And this is another example of where our bill of material doubles. In traditional off-highway equipment, our hydraulics have powered what we call the work function. That's the scoop or the implement doing the work. So with our Global Vehicle Motor, not only are we electrifying that work function, but in many cases, we are gaining the propel function, the actual drive of the piece of equipment. Off-highway is earlier in adoption than on-highway trucks, as I mentioned earlier, and Europe is definitely leading the way. It's important to note that all of our major OEMs, off-highway customers, have electric equipment, but hydraulics is not going away. In this next animation, you see an aerial lift truck. This truck is diesel-powered for the propel, the drive function, and electric-powered for the work, the lift function. This is a great example of our interconnected technologies all on one truck. And as we have shared with you before, we are truly energy agnostic. It does not matter if it is fossil fuel, hybrid, or electric, we benefit from all application. And in this example, our bill of material is double that of a fully diesel-powered vehicle. And like the off-highway wheel loader, a few slides back, this truck utilizes our Global Vehicle Motor to control and operate the lift. This motor is ideal for this application because of its package size and power density. This is what we call a power takeoff application, or a PTO, if any of you are familiar with any Parker acronyms. We are the market leader in a traditional diesel-powered power takeoff market. And as shown in this example, we are quickly becoming the leader in the ePTO, the electric power takeoff application. We estimate the FY 2029 addressable market at $1 billion and a 25% market growth rate. And again, 2 x the bill of material expansion versus an internal combustion. And our final electrification example is hybrid and electric passenger vehicles. Parker Lord technologies have been all over these vehicles since their inception. Our adhesives are used in battery packs to support production and reliability while they are in use. Our thermal management is used to protect components in demanding environments, and our thermal shielding capabilities are there to create safe electrical operation. We estimate the FY 2029 addressable market at $5 billion with low double-digit market growth rate. Again, 1.5-2 x the bill of material expansion versus internal combustion. I know there's been a lot of recent press on lower electric vehicle sales and production, and I would just comment that this is still very much a growing market. So now let's take a look at the digital trend. In-plant and industrial equipment is a key vertical market for this trend. And although not their own market verticals today, semiconductor and data center have significant potential and are driving a lot of quote activity today. Our interconnected technologies supporting this trend are climate control, engineered materials, fluid and gas handling, and process control. We see the digital secular trend accelerating growth in factory automation, semiconductor, and data centers. Starting with the factory, again, this is the second-largest market vertical for Parker. Our products and technologies enable the motion and control on all of the machinery equipment inside factories today. This includes machine tools, presses, die casting, testing, assembly lines. Our products are all over these factories. Increasing semiconductor demand requires more fabrication capacity, and data center cooling requirements are driving the need for advanced thermal management solutions. This animation is showing a semiconductor fabrication facility. This part of the digital trend is perhaps the most evident by the fact that there's a substantial amount of onshoring going on for semiconductor fabrication. This growth trend is a little bit different in its impact on Parker, as it's not a singular application for Parker technologies, but Parker benefits through various stages of development, and our technologies will be used heavily. So as seen in the animation and on this slide, our differentiated solutions are on tools and throughout semiconductor facilities. We currently have multiple Parker divisions providing products for semiconductor fabrication. The semiconductor industry is expected to more than double to $1 trillion by 2030. Digitalization and artificial intelligence are driving the need for more semiconductors and data center cooling. Parker will certainly benefit, and we will benefit, as I mentioned before, throughout the entire development. We're there when the job site is being prepared, we're there when the walls are going up, we're there when the machinery and the equipment is going into the building, and we will continue to benefit for years after through the aftermarket business. So once all these chips are produced and in use, we have the solutions to provide data center cooling. The heat load demand of today's chips is much higher, and traditional air cooling just doesn't work anymore. So our competitive advantage, our differentiator, is that we create packaged solutions for liquid cooling. The fluid going through the cold plate that is attached to the electronics that keeps it cool are Parker products: pumps, fluid conveyance, hoses, quick connects, and hydraulic systems. We estimate the FY 2029 total addressable market at $2 billion, and we are currently aligned with the industry leaders in this rapidly growing and developing industry. And our final trend, aerospace. Our interconnected technologies that support aerospace and defense are electromechanical, engineered materials, filtration, fluid and gas handling, pneumatics, and process control. Talk about the power of a portfolio positioned so well for today's growth. On the top chart, you see our well-balanced sales by market segment, and on the bottom chart, you see our sales by platform. Our competitive advantages are the reason for the double-digit growth today. Our diversified customer base and markets, our proprietary designs on premier programs, and our long life cycle with strong aftermarket, just to name a few. In the first of our aerospace animations, we're showing you a commercial airliner. Parker products and technologies are on every major aircraft flying today, and as you can see from this animation, almost all of our technologies are present on this modern-day aircraft. At a third of our business now, Parker is a significant partner in the aerospace and defense industry. Seven of our top 10 customers are aerospace. The acquisition of Meggitt has given us a much bigger seat at the table, and in many cases, we are one of top five suppliers with our major customers. Taking a deeper look at the commercial market landscape, air traffic has recovered to 2019 levels. Greater than GDP air traffic growth continues, and there is a demand for more efficient aircraft. As already mentioned, we have strong positions on the leading programs that you see across the bottom of this slide. We have a large install base that drives aftermarket growth, and we have more electric and low-carbon technologies for current and next-generation aircraft. One example would be our fuel nozzles that provide greater efficiency and lower emissions. We have a nice mix of 50% OEM and 50% aftermarket. We estimate 7% air traffic growth, calendar year 2023 through calendar year 2027, and 10%+ commercial aircraft deliveries growth for that same time period. We also see narrow body leading wide body. Our final animation is a defense aircraft. On this aircraft, we not only have legacy Parker technologies, but we also have products that we acquired through Lord, Meggitt, and Exotic Metals Forming, reinforcing the complementary nature of the technologies that we got with those acquisitions and the expanded value that we bring to our customers. Now, taking a closer look at the defense market landscape. We are in a time period of increased global defense spending and an aging defense aircraft fleet. We have strong positions on the leading programs that you see across the bottom of this page. 3 x the F-35 content of the previous generation aircraft and key technologies for the next generation aircraft. A nice mix of 60% OEM and 40% aftermarket. The Department of Defense budget is forecasted at low single digits for fiscal year 2023 through 2027. Parker growth is expected to be a little higher than that because of our public-private partnerships, fleet retrofits and upgrades, the F-35 aftermarket ramp later this decade, and the V-280 going into production sometime around 2030. We are very proud to be a key player for the military and the overall defense space. So the animations and the detail behind these secular trends and supporting materials show you how real and exciting this is. If you multiply this by our growth enablers, strategic positioning done at the division level by the general manager, close to the customer, solving their problems, market-driven innovation. Our Product Vitality Index is the measurement of the percent of sales that comes from new products. We are in the mid-20s now, and two years ago, we were at 20%. We have grown our international distribution 900 basis points to 44%, and we are not done. As Andy will show you in some upcoming slides, Simple by Design is not only a margin expansion tool, but it helps us work with the customer and give them exactly what they need and want. Finally, our annual cash incentive plan that is now out to almost all of our 60,000 employees with a simple formula of sales, earnings, and cash flow. We are in our second year of this now, and it is working great. You put those together, and you get the 4%-6% organic growth over the cycle. This is how Parker has been and will continue to grow differently than the past. Summarizing our growth from secular trends, we have a powerhouse of interconnected technologies. We are truly energy agnostic, and we can meet the changing needs of our customers. Our core technologies, as you saw in many examples, are applied across all our major market verticals. When you use the formula of the secular trends multiplied by our growth enablers, you get higher growth and a different Parker. I will now turn it over to Andy Ross, our President and Chief Operating Officer, to talk to you about operational excellence. ... Thank you, Jenny. Good afternoon, everybody. Again, I'm Andy Ross, and today I'll be speaking to you about what operational excellence means at Parker and how our teams work very hard every day to deliver it. So, obviously, you're familiar with the Win Strategy, highly effective toolset that our over 60,000 team members use every day in a myriad of different challenges. So really, it's up to our teams at a local level to choose which of these tools to apply, at what time, to make sure that we're making a difference for our customers. Today, I'll walk through some examples of the how within the Win Strategy, and towards the end of this section, I'm gonna show 4 division-level examples, which is a really granular look at how we've applied it and what the results have been. Additionally, it's important to note that while this strategy, certain toolset's over 20 years old, there's a lot of expertise behind every one of these initiatives. So, as our team members matriculate through their their journey at Parker, there's always somebody there to help and educate and talk about how do we use these tools to drive continuous improvement. So the first and most important pillar is engage people. And within that, the physical and psychological safety of our teams is paramount. So, the only way to really lead an organization over 60,000 team members, 40 countries plus, all over the world, is to really build a foundation of trust. So that's how we really work to to run the organization, is through that foundation. Ultimately, our team members have to trust us and, and we them, to deliver the kind of results that we do. Also, you know, it's incumbent upon us to continue to earn your trust every day as we work to execute our strategies. We've also got a strong culture of Kaizen, so we use that tool, and we'll talk about that, how we use it in our operations. Our high-performance team model is critical with respect to how our teams organize and solve problems. And then, ever since our founder, Arthur Parker, talked about being an entrepreneur and having an ownership culture, that's been paramount and bedrock to Parker since that time. And while there's irrefutable evidence that when people feel like we belong, matter, and make a difference, that we absolutely unlock discretionary effort and raise the level of engagement, and ultimately, that engagement is what allows our team members to deliver exceptional results and leads to a better, more resilient company. So Jenny touched on the result with regard to safety. So significant reduction in safety, and we made progress with respect to our engagement as well. Again, safety being the most important, we use several tools to help make sure that we're keeping our team members safe every day. We do things in our Kaizen, we do things with machine guarding, but by the time it makes it on this chart, that's a lagging indicator of a team member that was hurt. So we do a lot with tools to make sure that we're as predictive as we can be with respect to potential injuries and keep people safe and take action before it happens. With regard to engagement, we measure it formally with some frequency, and we make sure that we take those survey results. We share every result with every team member, and then locally, we talk about the things that are most important to that location so that we make sure that we're really well-aligned on what we can do to improve our operations. Ultimately, we also work very hard to link to our purpose because you know, the team members around the world care about what we do, care about our communities, our products, and how we impact the world around us. I talked the slide before about our high-performance model. So again, this really helps to fuel the culture at Parker, and it starts with a foundation of building trusting relationships. From there, we leverage strengths of team members. We work on the clarity of a certain project. We define a purpose and drive results. So with each of these High Performance Teams, and Jenny mentioned, well over 90% of our team members participate in one of these on an annual basis, there's a charter, so we know what the goal is. There's boundary conditions, there's roles and responsibilities, so there's a lot of accountability that's built through that process to make sure that we're driving the result. Again, this helps us to build a stronger, more resilient company. We've got a very mature Lean system at Parker, so we conduct Kaizens at all different levels of the company. So we typically will break into six or eight teams. Those teams will be focused on always... There's a safety component to it. We focus on quality improvements, lead time reduction, and the actions that we take make sure to deliver the results that we want with respect to growth, margin expansion, and cash flow. So, so you can see, we spent over 100, 450 weeks in Kaizen, just in the last year alone. We don't mandate, how many Kaizens to do. We let the teams use them as appropriate, but what we do expect is that every level of the organization participates, including the most senior management. I can tell you that Jenny, Todd, and I participate, in Kaizens along with our teams. Ultimately, what we want is for our team members all around the world to be highly skilled and educated problem solvers so that we can deal with issues, you know, at a local level before they become something more significant. After, the focus of the first pillar, engage people, we really turn our attention to make sure that we're delivering everything we can for our customers. It's all about the customer experience, and some of the tools that we deploy are around Zero Defects, demand capacity management, and digital operations. So, you know, all these tools work to improve the experience. I'll get into all of these to a certain degree in the coming slides. And that team on the picture are Parker team members in front of what we call a team improvement board. So that helps to set the priorities, understand the roles and responsibilities that each team member has, and helps us execute on a daily basis. The Zero-Defect strategy I touched on, really, it's about robust products, capable processes, driven by an engaged team. So it's really about designing the product right and making it right. So some of the things that we do is we execute failure mode effects analysis on parts. We identify the critical characteristics of those parts, and then our teams, both who are designing the product and making the product, work together to ensure that we've got capable processes that are repeatable, so that we can take care of our customers to the best of our ability and exceed their expectations. We use this example within the company to really help educate and understand at every level the importance of quality. So if you look at those 90 percentiles across the slide, and each of those blocks represent part of the manufacturing process of a metal component that goes into a motion systems assembly, you think, okay, 93% is the worst one on there, and that may not be that bad. But if you look at the rolled throughput yield or the cumulative impact, obviously, it, there's a lot of inefficiency in this value stream. So we work to make sure that we've got extremely high first-pass yields. We also use this example to make sure our team members think about who the customer is, not just the end user of the product, but the customer who's downstream. So in this case, the turning team would make sure they're working with the milling team to make certain that we're doing everything possible to provide a quality product all the way through the value chain. And then, this is a picture of Jenny and one of our team members, Scott, at the Parflex division. And again, Scott's really linking the importance of quality to our ability to expand capacity and to be able to grow our business through taking care of our customers through a great customer experience. It's also important to note that, again, you know, we manage by walking around at Parker. So, Jenny, Todd, and I, and the whole leadership teams spend a lot of time out in the field with our customers, our distributors, and at our facilities. Jenny spoke about how we're well-positioned for profitable growth and the secular trends. In this section, I'm gonna talk about some of the things that we do to drive financial performance of the company, some of the ways that we've been able to deliver the expanded margins that we're talking about, and it's really around supply chain excellence, simplification, Lean enterprise, and then some of the ways that we use artificial intelligence and robotic process automation. So demand and capacity tools. First and foremost, we learned over time that some of our teams had a challenge managing the inflow of orders and matching that up with our internal capacity. Our teams internally created a software that sits on top of our operating system that makes it crystal clear as to how the demand that's coming in, it matches up with our capacity. That does a couple things. One, obviously, we can manage the customer from a delivery standpoint and make sure that we're doing what's necessary, and then it highlights internal constraints so that we can work on those, should we need to invest in additional capacity. As far as artificial intelligence, we've been using it to forecast for years at high level, and we continue to kind of map that down to lower levels of the organization. It's just very simply, the cLeaner and more accurate the signal coming into the company, the better that we can set up our operations to serve the customer well. We use a lot of predictive analytics to make sure that we're fast and agile. And then, I'll talk about robotic process automation. And one tool that we use, and we've got dozens deployed across the company, is there's a really good tool in our transportation management system or TMS that we use, where traditionally our team members would have to manually go through and figure out what's the most optimal freight lane. How much are we paying right then for fuel? How do we make sure that we have the right amount of fuel charge? So there's a ton of data, and that you had to go and look up. And now, by deploying an RPA tool, that's done automatically. So the teams can use that and obviously spend their time in a more valuable manner. So, we often talk about the best and most resilient supply chain really helps to win, right? So some of the ways that we do this are Local for Local strategy, dual sourcing, sustainability, and cybersecurity. So Local for Local really simply means that we're in a region for a region, so that helps us to reduce costs, reduce complexity of the overall supply chain, and improve flexibility and speed. Dual sourcing, so we understand within the company, what percent of our product we really need to have redundant capacity within the supply chain, and we work to make sure that we've got that. Another tool that we've got, when there was the unfortunate tragic incident with the Baltimore bridge, we've got a tool that, within minutes, we were able to discern that we didn't have any product on that particular container ship. With all the exogenous shocks that happen in the world, that's really important for us, for our customers' sake, for the consistency of performance. Sustainability, Jenny touched on some of our initiatives there. Quite simply, you know, our customers have zero carbon emissions goals. We have them, and we flow that down to our supply base. We have exact measurements, so we know how each one of them is doing and that their commitments are being met. Then cybersecurity, there's a lot of, you know, bad actors out there who would love to disrupt companies and supply chains. And so, really, our customers, ourselves, and how we link digitally to our supply base is extremely important, both from a protection and protection and then a business continuity standpoint. So we work with them to make certain that that is taken care of.... We use a lot of simplification tools, many facets of our business, so, you know, you don't necessarily hear us come out with big bangs as far as restructuring, and that's because we really don't wait for a shock to take care of it. We work it every day, all the time. So we're constantly looking and scrutinizing at our footprint, and over time, we've obviously reduced the number of operating groups, we've consolidated divisions, and continue to work on our footprint. Our organizational design tools really just help to make sure that we link our strategic positioning, again, how we're gonna win, where we're gonna win, and what that looks like to an organization that's built to deliver it. So we use that tool consistently. Revenue complexity really the 80-20 principle, we look at the complexity within that revenue profile, and we work to make sure that while we take care of the customer, we leverage some of our channel partners to do it and simplify the overall revenue profile. Simple by Design, as you'll probably recall, this has been and will remain a major initiative within the company. So a significant amount of the product cost comes from the design and the material. And so we've got the Simple by Design tools that really focus on a forward-thinking approach that reduces the components that we use, and is designed to help maximize the flow on the manufacturing floor. So in the video, one of our team members was talking about that, just making sure it's designed right so we can flow it right on the shop floor. Digital leadership, it's another important aspect of our business. Jenny talked some about the front end and how we're working on the secular trend to grow our business. We do a lot of work with respect to, you know, digital experience for customers, products, operations, and productivity. So there's a lot of work that's been done and tools that have been developed, like e-configurators, digital CAD drawings, a lot of self-service tools on parker.com for our distributors, and we continue to evolve that. Within strategic positioning, we determine which products need connected, how they should be connected, how to monetize those things, and also how to protect them. Digital operations, I'll touch on some machine learning examples in a minute. But within what we term smart manufacturing, an example would be Day-by-the-Hour Boards. So a few of us were talking before the meeting, and what we were talking about is, on the shop floor at Parker, you know, you measure things every hour, and if something's off for an hour, you know, somebody's alerted to it, and we kinda marshal the right resources. So things never drift very far before we've got the discipline and the tools and the team to address what the issues are. We used to do this manually. It served us very well for a long time, but now we've started to incorporate digital, hour-by-the-hour boards or day-by-the-hour boards. And what that does is it just automatically takes information off the machine so that our team members can spend time, more time on problem-solving and analyzing the data than writing it down. So this has been highly effective. It's also given some of our shop floor leaders the ability to see things virtually and to help be able to drive the business forward. And then, with regard to digital productivity and application for artificial intelligence as it relates to the Simple by Design, you know, over the years, you could tend to build complexity into the product offering. So we use AI tools that scour a lot of information to look for light components and to be able to streamline that offering, and I'll show you examples of what that means at a division level. So again, artificial intelligence is obviously, you know, kind of front of mind, and it's a broad topic. I talked about we've used it for a long time to help from a forecasting standpoint. We've got machine learning that helps from a cybersecurity perspective and performs predictive analytics, and helps to identify different behaviors and stop things before they become an issue. Machine learning, I'll touch on in a minute. Then, you know, when it comes to generative AI, you know, we're constantly looking at what that means for us and how to deploy the right tools, and right now we're working on some content generation and advanced searches as far as generative AI. So we talk about automation. Really, where we focus automation is on the dull, dirty, and dangerous work, high labor content. If it's ergonomically challenging for our team members, you know, we obviously want to eliminate that. Our approach is really to work through the High Performance Teams, the Kaizens that we talked about. We never want to automate a bad process, so we always talk about Lean it out before you automate it. And then we partner with automation experts, who are really good at applying the right tool for the right issue, and you can see some of the improvements there, that we gLeaned from that. So it's about safety, customer experience, and productivity. And, Josh, who's our leader in Livingston, Tennessee, at one of our Engineering Materials factory, and I were standing there, and we're in front of an automation or automated vision, a piece of equipment. So, this used to be done by hand. It was manual, and that's, you know, highly laborious, somewhat ineffective, you know, and, what we did was to automate that process. So it's a high-speed machine that uses machine learning from AI to get smarter and build intelligence over time. So we can continue to speed this machine up, and it continues to improve its ability to identify different defects and become more productive. So I'm gonna show you a brief video here. This is really some of our Motion Systems team and the automation work that they've done. So you know, as you think about this, think about the impact that we've got on digital, both as a supplier and a customer, as well as some of the automation things that you're gonna see. So really good examples of electrification and digital on our own shop floors. Years ago, I thought it would be a huge challenge to even get robotics in, especially with a lot of these hand assembly processes. They're some of the most challenging things to automate. There's a huge waste of energy there, and all the energy that goes into building and putting together our componentry. For one, that causes some quality issues, but more importantly, we've got ergonomics issues there. You got operators using hammers and high force applications, things like that. We don't wanna do that. So then we went one step further. Okay, now, how do we automate? Now, with this focus on automation, we're looking for ways that we can assemble faster, more reliably, and with higher quality. This makes us more consistent, we got better results, and we also increase our productivity on the line. When we set a timeline, we're exceeding it, we're beating it. It's allowing us to drop that lead time back down to where we want it to be to meet our customers' expectations. We have all the brains in the house, and we can put stuff together and build the best product ever. We can go to Parker and say, "We have this great idea to improve this product. Let's make it happen." And knowing that someone's there to support it is huge. At the end of the day, we get new equipment that makes everybody's lives better here in this facility and better for our customers. Now, we wanna just look to the next one, and look to the next one, and just keep doing this throughout the plant and throughout the division. What we love is we love building the equipment, we love programming it, all the way from concept to completion. I'm really excited to be part of a company where we are constantly reinvesting in our business. It is enabling us to produce parts faster, so it meets our customers' expectations every time. Yeah, so we're really proud of the team and the work that they're able to accomplish. And some of what you saw there was actually manufacturing components for our Global Vehicle Motor, which is an important part of our electrification strategy. So again, over 60,000 team members, over 40 countries around the world. You know, people often ask: How do you make sure that you maximize alignment within an organization? So there's really a great tool called Strategy Deployment from Lean Manufacturing, and that just helps to make sure that at every level of the enterprise, people are very clear about what the goal is, and then the Win Strategy helps us to get there. So once a year, the senior leadership team analyzes the 3- to 5-year goals. We set the annual improvement priorities, and we work to cascade that throughout the organization. So whether you're running the company or you're running a plant in Nebraska or France, you know exactly what's expected. You've got the tools and the ability to deliver. So, you know, now that we walked through some of the pillars and some of the tools, I'm gonna give you 4 quick examples of the impact of the Win Strategy at a division level. And again, this is a pretty granular look at the company and one that we haven't typically shared. So we'll start with the Parker Lord business in North America. You know, at the time of acquisition, really strong from an innovation standpoint, really strong with the customer, not super efficient on the shop floor, and there was a fair amount of complexity. So we really employed a lot of the tools around safety, zero defect, Lean, and strategic positioning. And since the time of acquisition, you can see significant reduction in safety, and we typically see that in acquired companies where the desire's there, but maybe the toolset isn't to deliver, you know, some of the results. So big drop in recordables, big drop in return parts per million, so much happier customers. We were able to deliver 7% CAGR over that time, and you can see significant margin expansion since the time of acquisition. In Industrial International Division, so this happens to be a fluid conveyance division. We had a pretty challenging margin profile. Jenny mentioned when she was leading the Motion Systems Group, some of the work that we she did with the MTC, and this particular division was in the fluid conveyance space that I was responsible for at the time. We had a lot of complexity, challenging margins, and we really needed to reduce cost. So broke into High Performance Teams, used the Simple by Design tools that we talked about. We deployed a significant amount of automation, and then you can see we did some work in supply chain. So we had a significant reduction in the number of raw materials and SKUs, but it's important to note that it didn't hurt the product offering, so we're still able to cover all the range of applications that our customers needed. We just did it in a much more simple manner, and you can see the margin improvement that we were able to gain. This is an industrial air filtration business. Again, international business. Really had the need to drive safety. We weren't growing the way that we wanted to, even though we saw we had a lot of significant cLean tech, cLean technology opportunities. So we did a refresh on the strategic positioning, which, as Jenny talked about, we do at the division level. We leveraged our distribution channel, simplified the revenue complexity and profile, really drove best-in-class lead times through Kaizen... and you can see huge reduction in safety incidents, much better on-time delivery. We're able to kind of break out of the stagnant growth and grow 7.5% CAGR, and added 270 basis points to an already very profitable division. And then lastly, an aerospace systems division. This is an exciting one. It's part of Meggitt, and so obviously we haven't even come up on the two-year anniversary to Meggitt. What we found is just a tremendous culture, just great people, very congruent with the culture at Parker. A lot of SG&A opportunities, and really didn't have the strong operating rhythm that we've got. So when I talked about the Day-by-the-Hour earlier, again, we don't get off more than an hour before we do something and act, right? So we've got very, rigorous operating cadences around how we run the business. And the team was great about, really embracing and using the Win Strategy. So through Lean, through the decentralized model and, and really entrusting that team and helping them, that operating cadence and some pricing opportunities, again, you can see huge reduction in the number of safety incidents. The productivity was incredible, and a large part of that was on the shop floor, not just SG&A. Obviously, we're experiencing tremendous growth right now in the aerospace business, and 900 basis points from a run rate. So just incredible improvement from that division. So again, I'll leave you with, you know, we've got a terrific team at Parker. The Win Strategy is as comprehensive a tool set as you're gonna find. And a lot of times we talk about everybody likes to win, right? Teams like to win, but I can assure you that our team is always willing to do the work necessary to prepare to win, right? So we've got a terrific team, highly disciplined, highly dedicated, working together to make a difference and to make sure that we deliver our promising future for everybody. So with that, I'll turn it over to Todd. Thank you, Andy. That was fantastic. Hello, everyone. My name is Todd Leombruno. I am the Financial... Chief Financial Officer for Parker Hannifin. It is a pleasure to see so many familiar faces in the room and obviously some new ones as well. I couldn't be more proud to be able to talk about the financial performance that our team of over 60,000 team members around the world work tirelessly on to generate. You heard Jenny, and you heard Andy talk about how powerful the Win Strategy is. It gives me great confidence in those new FY 2029 targets that Jenny shared with everyone today. We have worked hard on transforming the company, on moving the company to be more levered towards longer cycle, higher margin, higher aftermarket businesses. We have never been more positioned better for growth, and we've never been more confident in our future. I love those examples that Andy used. It really shows how we leverage the Win Strategy to drive margins higher, to generate great returns, and to be strategic with our capital decisions. All of that has resulted in an unbelievable transformation to the company and a transformation of our financial profile. So let's take a look at what that means. Jenny showed that we are a different company. We certainly are a different Parker across virtually any metric you choose to look at. These two charts are how we have shifted the portfolio to be longer cycle, more aftermarket, more aerospace, more filtration, more higher, margin exposure. Jenny shared that we have now 60% of the portfolio that is levered towards filtration, engineering material, and aerospace businesses. If you look at the other side of the pie, our Motion Systems business and our Flow and Process Control businesses, these are critical to our success. They are key to our interconnected technology offering. They are vitally important to our distribution network, and you saw today how they are linked to the key trends of electrification, digitalization, and cLean tech. They are also market leaders in their space. All of these businesses have been part of our success, they've been part of our margin expansion, and they generate loads of cash. So let's look at what that has meant to the financial profile of the company. This is a 10-year look. So our market cap now is roughly over $70 billion. That is an increase of $56 billion. Enterprise value, almost $80 billion. That is increased by $66 billion. Our EBITDA multiple has expanded by 7x over this period, and the margin expansion has been fantastic. If you look at adjusted segment operating margins, we've increased that to 24.6. That is our FY 2024 guide. That is nearly 900 basis points of margin expansion. EBITDA expansion is even better, over 1,000 basis points. And if you look at earnings per share, we've added basically $17 of earnings per share to the company over this time period, growing at a 14% CAGR. I think you could agree this is a different Parker than Parker of old. So we've made progress since the last investor meeting. Just two years ago, we met, and we set targets for FY 2027. Our team has never been more aligned around creating value and driving margins higher. If you look at this, our sales have nearly reached $20 billion and have grown at a 12% CAGR over the last 2 years. Segment operating margins have expanded by 230 basis points. That is best-in-class over 2 years, 230 basis points of margin expansion. And our adjusted EPS has grown $6 over that time period at a CAGR of 15%. Jenny mentioned this earlier: we will generate over $3 billion of free cash flow this year. That is the first time in the 107-year history of the company that we will achieve $3 billion of cash flow. The free cash flow margin will be 15%, and we remain firmly committed to generating free cash flow conversion greater than 100% of our net income.... Free cash flow has grown at a CAGR of 17%. So no matter what period you look at, these metrics are not only improving, they are accelerating, and we are very proud of what we've done. It really has been an eventful two years. So we talk about the overarching elements of what drives the company. Jenny shared some of these: our focus on safety, engagement, and ownership, living up to our purpose, focusing on top quartile performance, and of course, being great generators and great deployers of cash. We love looking at our charts that go up into the right. It really feels good to talk about those charts, but we understand the importance of relative performance. We do that by measuring our performance against a set of peer companies that are leaders in the space. So we know that we have to perform better than those in our space, and we understand how important that is. If you look at these charts, from earnings per share growth and cash flow from operations growth over the last five years, we are in the top quartile performers in that space. We are proud of that, and we are driven to make sure that we continue that and drive performance in those areas even higher. In respect to sales, this is a totally different look from Parker of old. While we are not top quartile, we sit firmly in the second quartile on sales growth. And if you look at what we've talked about today, the portfolio has never been levered more towards growth. We have the right strategy, the right people, the right portfolio, and we're levered to the secular trends in a way that will help us grow differently than we ever have before. How do we do this? We do this using the Win Strategy. We've tried to explain that today. These are the components of how our team creates sustainable value, and it's not easy. It takes a lot of work from everyone around the company. We are committed to that 4%-6% organic growth over the cycle. The Win Strategy has proven itself to be a fantastic margin expander. We expect that to continue. We are committed to generating incrementals of 30%, no matter what margin profile the company is right now, and we continue to want to be strategic with M&A. But we have a disciplined process. I will talk a little bit about the last four acquisitions and what that has meant for the company, but we remain committed to growing the company through adding the right businesses. Businesses that are accretive to growth, accretive to margins, accretive to our, longer cycle nature, and have aftermarket exposure. We love our history of returning capital to our shareholders. We have a target to be greater than 30% of the last year, five-year average net income, and we have a long history on that. I'll share that with you. So this is the formula that we believe our team members around the world use every day to generate value for you, our shareholders. So that formula has worked. No matter what indices you compare us against, no matter what benchmark you want to measure us against, we have generated an unbelievable return for shareholders over the last 5 years. If you look at our total shareholder return, over 250%. The stock has appreciated over 225%, and we've added $50 billion of that market cap in just the last 5 years. It really has been an exciting time. Jenny mentioned this slightly. 2 years ago, in our Investor Day, we talked about wanting to establish our record of setting and achieving margin targets. We set these targets today, that Jenny released, that will be the fourth time in the last 10 years that we've set margin targets for the company. That first target, we achieved, way back in FY 2020. We achieved that target 1 year early. We set another target. We achieved that target two years early. Today, we are on the cusp of almost 25% segment operating margins, what will be three years early. Is anyone noticing a pattern here at all? Today, we set a new target for FY 2029 of 27% segment operating margins. That is an increase of 200 basis points from our prior target, and we are firmly committed to driving margins higher. So here's the targets again, in case you missed them earlier. We are recommitting to the 4%-6% organic growth. We are recommitting to the greater than 10% EPS CAGR. And of course, we are pushing operating margins, EBITDA margins, and free cash flow margins even higher. So people ask us all the time, "How have you been able to do this?" Right? Well, I'll tell you, it's not easy, and it doesn't just happen. It really takes our global team aligning around, believing in, and most importantly, executing on those tools of the Win Strategy that Andy just went through. You've heard them talk about how powerful it is. It really does work. While we just raised that, that target 200 basis points based on our FY 2024 guide, we expect to finish at 24.6. If you look at what that means, is that means 240 basis points of margin expansion over the next five years. And to no surprise, the largest bar of that margin improvement is gonna come from implementing and executing on the Win Strategy. All of those things that Andy talked about, all of those things that Jenny talked about, continuous improvement, Kaizen activities, Simple by Design, driving continuous improvement across our businesses has been very powerful. It's how we got here, and it's how we're gonna get to FY 2029. Of course, we're committed to the synergies that we announced from Meggitt. We are committing to that $300 million of synergies. We'll have achieved $200 million by the end of this fiscal year, FY 2024, and we expect to achieve another $100 million, $50 million in FY 2025 and $50 million in FY 2026. That'll complete our commitment on Meggitt, and of course, we're holding our team accountable for incrementals on volume growth that we see throughout FY 2027. That's how we're gonna do it. We're gonna do it just like we've done it in the past, and we're gonna do it again. All of that, I know there's a lot of models going on here. All of that, what that means is we are gonna continue to drive continued earnings per share growth. If you look at what that means, we are committing to generate over $35 of earnings per share by FY 2029. That is a $10 increase in earnings per share. These are the assumptions that go into our model: 4%-6% organic growth, 27% segment operating margins, 30% incrementals. The synergies that I just talked about, tax rate of 23%, shares remaining essentially the same, and the key item here is this does not include any additional capital allocation optionality, and I'll show you what that means to the company in a second. All of this performance, all of this margin enhancement, all of this growth, has been meaningful for our cash flow generation. Over the last five years, we've generated over $12 billion of free cash flow. We expect to take that a step change higher. We are gonna increase that by 50% over the next five years, and we will generate greater than $18 billion of free cash flow. That gives us lots of options. We're committing to 100% free cash flow conversion, and as you saw earlier, our free cash flow margin target is 17%. That's 100 basis points higher than our previous target of 16%. We are really committed to driving cash throughout the business. Parker is very proud to be one of five companies that have consistently increased our annual dividends paid. We have a 68-year record of increasing dividends paid, and we're not gonna let that record break. Not only have we increased the dividends paid, we've done it at an increasing rate. The CAGR on our dividend over the last 5 years has been 14%. Our goal remains to be greater than 30% of our trailing 5-year net income paid out as dividends, and what that means is our dividend today is roughly a little over $6. We see that increasing nearly 2x to greater than $11 per share over the next 5 years. That will be $6 billion of capital that we will return to shareholders. We are committed to that, and we're very proud of that record. So you've heard us talk a lot about acquisitions. They have been really meaningful. We could not generate these results without doing these acquisitions. People often ask us, "What's the strategic rationale? What do you think about when you're looking at acquisitions?" Well, I would tell you, each one has been very unique, and they've been very powerful. We've expanded our engineered materials business by a factor of two. We've doubled our filtration business, and we've doubled our aerospace business. The aftermarket exposure of the company, which was already strong, has never been stronger than it is today. We've added an unbelievable amount of technology, capabilities, and really, most importantly, great talent to the company. And that talent is not just working in these, in these acquisitions, it has already spread throughout the company. So it's been very, very, very powerful. These have been longer cycle, they've been margin accretive, they've been EPS accretive, and they've been cash accretive. We couldn't be happier with the performance of these transactions. I already mentioned it, we will achieve that $300 million on synergies from Meggitt. That will extend our track record of generating synergies from these transactions, and when you look at our EBITDA margin target, we just raised that to 28% in FY 2029. These acquisitions have been... or will be key in us achieving that 28% target. When you look at the Clarcor business, by FY 2029, we expect that business to be operating in high 20s EBITDA. When you look at Lord, Lord will be over 30, Exotic will be performing in the high 20s, and Meggitt, which we originally committed to getting to 30, we now foresee that being over 30 by FY 2029. These have been extremely powerful for the company. So over the last two years, we've been very deliberate talking about our deleveraging plans. The margin expansion, the cash flow generation of the company has never been greater. We've been very intentional on making sure we delever as fast as we possibly can. If you look at this, we achieved a leverage of 3.6 at the close of Meggitt, and what we are committing to is we're committing to a 2x leverage by the end of June. So just a little history. If you remember, when we did Clarcor, that was a $4 billion transaction. We returned to a 2x leverage. It took us 9 quarters. When we did Lord and Exotic, that was $6 billion combined as a transaction. It took us 8 quarters to return to 2x leverage. Now, with Meggitt, roughly a $9 billion transaction, the largest ever in the history of the company, we will return to 2x leverage faster than we ever did before. That will take 7 quarters to achieve that. It really has been powerful. Another pattern that I want you to keep in mind. I want you to also know that we are firmly committed to maintaining our strong investment-grade rating, and we commit to operating at a 2x leverage target over the cycle. It's really been great to see that. So people ask us all the time, "What do you think about when you're looking at acquisitions?" Clearly, we've been strategic with the portfolio, both on where we focus our investments and where we de-emphasize. Our acquisition playbook, I would tell you, is now a finely tuned process. We've talked about this a lot. We look at companies that have a great cultural fit. We look at companies that can help us improve our margin profile, companies that help us expand our aftermarket presence. What we do better than anyone else, in my mind, is we realize value by integrating better than anyone else, by having a clear synergy path better than anyone else, and really rapid deployment of the Win Strategy tools. And you can see that in our results. I don't want you to think we're gonna change our financial criteria. We're gonna remain disciplined. Every single one of these things has been unique and powerful, and we understand that we, the goal is not to add any company to the portfolio, it's to add the right companies to the portfolio. The pipeline is robust. We continue nurturing, we continue building, and we continue the relationships that have been so powerful to the acquisition pipeline over the last couple of years. One thing that a lot of people don't really understand is our Best Owner playbook. We challenge every business in that portfolio of ours, to earn its right to stay in that portfolio. And sometimes there are businesses that we find that might find value at a different owner. We remain really disciplined on this. We don't see anything major here. We continue to trim around the core, but if you haven't paid attention, we've quietly done 8 divestitures over the last few years. All of this adds up to unbelievable capital deployment options. What's exciting here is we are gonna return $6 billion of cash to our shareholders, through dividends over the next 5 years. We're gonna reinvest in the company greater than $2 billion, and we're gonna buy at least $1 billion of our shares back over the next five years. What is really compelling is the optionality that we have now. With the margin profile, with the performance of the company, we now, without going over any leverage limits that we've done in the past, we have between $20 billion and $26 billion of capital deployment that we can choose to deploy over the next five years. So I can assure you, this is gonna be an exciting five years. $35 greater EPS and over $35 billion of capital to deploy. I think you're gonna like what you see when we get together next. So in summary, from a financial performance standpoint, we have never been stronger than we are today. We are firmly focused on capturing that 4%-6% sales growth. The portfolio has never been levered better than it is today in respect to growth. I think we've proven our ability to expand margins, to operate more consistently than we ever have in the past, and we are gonna continue to drive margins and EPS ever higher. The cash flow profile of the company is powerful, and that gives us a lot of options, and we are committed to returning capital to our shareholders. So thank you for your attention. Thank you for your interest in Parker. With that, Jenny, I'm gonna hand it over to you for summary. Thank you, Todd. All right. So this would be. There's no better time than right now for me to thank my team and the army of people that it takes to put on a great event like this. So I wanna thank each and every person that was involved, and really appreciate the time that has been put into this. So again, key messages that I want you to leave here with today: We are positioned for growth with our interconnected technologies and the secular trends. Hopefully, it's really clear to you now why these technologies are important in our portfolio, and why they must remain in the portfolio. Andy gave you a lot of examples of how Win Strategy 3.0, all of our tools, have helped us compound performance, and why we will be able to reach those FY 2029 targets. Operational excellence, it is something that we have really driven throughout the organization. It's part of our culture, and the good news is, we're never done. We are never complacent. We are never sitting back saying: "Well, check, there's no more to do." We just keep doing it. And again, hopefully, you will see that these FY 2029 targets are well within our reach, and we are more committed than ever. And a final reminder on what drives Parker. It's our people. It's keeping them safe. It's the engagement that we earn by making sure that they feel like they belong, and that they matter, and that they can make a difference. That drives ownership. It's living up to our purpose. That's what drives that top quartile performance that Todd was talking about, and that's the reason that we will continue to be great generators and deployers of cash. Hopefully, you've seen that this is a different Parker. It's a better Parker, and we're gonna take Parker from better to best. Thank you for being here today. I'm gonna turn it over to Jeff, and he'll give you instructions for the rest of the event. Great. Thank you, Jenny. That was terrific. All right, this brings us to a short break as we prepare for our Q&A open discussion time. We will start Q&A promptly at 3:45 P.M. For those in the room, out in the foyer, we have refreshments available for you. So we'll see you soon. Thank you. ... If you could all find your seats, we're going to get started with the Q&A session very shortly. If you could all find your seats again, we'd appreciate it very much. Thank you. You ready, Dan? Okay, everybody, we are going to go ahead and start our Q&A open discussion. Right. We have Jenny, Andy, and Todd here to do Q&A with you all. When you ask a question, please announce your name and your firm name as well. And we do have a full room, so please limit to one question. Yen, Chantelle, and Aidan from our team will be our mic runners, so they'll do our best to get to you. Let's go ahead and get started. Why don't we take one from the right middle there, Aidan? Hi, thanks, everybody. Joe Ritchie, Goldman Sachs. Hi, Joe. Welcome. Todd, I mean, you set yourself up for this, right? Your little, your patterns of Right. on margins four years ahead, you're talking 27% segment margin by 2025 then? ... Well, listen, we're really proud, we're really proud of the track record that we've been able to do. By no means do I intend to send the message that we're gonna achieve that 27% margin next year. But if you look at it, we're gonna expand margins 240 basis points over the next five years. That is unbelievably powerful, and I would tell you, our team is really proud of what we've been able to do, and we've never been more committed to be able to drive that, that bit closer. Okay, so here's my real question. Yes. So, Jenny, yeah, you talk about this, I mean, really great performance over the last five years, and if you think about the last five years, it's just been incredibly volatile, right? Mm-hmm. We've had a pandemic, we've had wars, we've had hyperinflation, supply chain problems, all of that. And along the way, you guys were able to grow earnings at a 14% clip. When you start looking ahead, there's many reasons to be excited, particularly here in the U.S., with all the investment that's happening. Mm-hmm. The short question is, why wouldn't the next five years be better than the last five? There's no reason why it couldn't be better than the last five. You know, obviously, everything that we talked about today with, you know, how we're positioned for growth with the secular trends and our transformed portfolio, we're very positive about the next five years. We believe in the teams, we believe in our ability to continue to expand margins. And you know, what we launched today, we're committed to. So I think, you know, these targets are what they are today based on what we see, but we're never, like I said, in the closing, we're never done, right? When we set these targets, these four targets over the last 10 years, we didn't set them with thinking, "Oh, that's easy, we can get there and beat them." We set them with a commitment to hit them and to just double down on the win strategy and get there. So, we would never say things couldn't be better, but this is what we see right now, and we're committed to it. All right, we'll take the next question here from the second row, please. I'd rather take Scott's question. I've got a couple, maybe they're deal-related questions, Jenny. First, you made a little bit of a point at the beginning that you're showing us the businesses in six different slices, a little bit different. Yep. You know, HVAC jumped out a little bit at me. That could have been, that could have been another, and you could have said five slices. So I'm wondering if there's, you know, some particular ambition you have in HVAC as part question one A for me, and I've got a B. Oh, you want, you want me to answer it, and you're gonna, you're gonna go to B? Yeah. Yeah. Okay. I wouldn't mind, you know- No, there's no hidden meaning there. It's just a good business for us. We like the business, and we see that it's going to follow some of these secular trends, but no hidden meaning. Is there, like, kind of a served market, you know, opportunity you see there that's kinda stands out in your view, maybe the liquid cooling stuff or...? Well, I mean, the liquid cooling, a lot of those technologies would fall under flow and process control and, some motion systems. Obviously, air conditioning will still be necessary in data centers. There's just gonna be need for more of that direct cooling that comes from liquid cooling. You know, we just- we see that the air conditioning and refrigeration market is a good one. We think that, you know, although right now it's, you know, a negative, it's gonna be a positive into the future, and we, we see growth there. Then I was just wondering on, actually kind of a couple things. On the 4 deals that you've already done, right, the targets are pretty much in line with where you're saying the total company is gonna be in 2029. I wonder if they're on pace right now in 2024, or does any one of them, you know, have some catching up to do to be where you want it to be relative to those targets? They're all, they're all on pace, right? They're all working to get to those targets. Every division within those acquisitions and that sit in the operating groups, they know what their targets are. And as we pointed out a couple of times, every division, every business is expected to perform, so they're all on pace to get there. Yep. All right, we'll take the next one on the front here. Mm-hmm. Just following up on Jeff's question. You know, when you think about future M&A, would you expect it to be within those six key verticals, or is that not a key criteria? Yes, we would expect it to be in there. Now, obviously, I've said many times, we like all the technologies, and we think that these technologies together are gonna—what makes us grow differently. So, we would expect those to fall inside of those six market verticals. When you think about your margin targets for fiscal year 2029, would you expect gross margins to rise somewhat proportionally with those targets? We would expect gross margin to increase. Okay. Thank you. You know what, Scott? I would just add to that. We're agnostic of where the cost comes out on the P&L. We are frugal across that P&L. When you look at just the makeup of it, the vast majority of the cost is in cost of sales, so we'd expect that to generate to higher improvement in gross margin. All right, let's switch sides to the front row, the other side, Aidan, thanks. Roshan Talakaji. Thank you. Thanks very much. Maybe a question around, M&A. So the, the margins are obviously moving from sort of mid-20s to high 20s, a very high level now. Does that change the type of target that you look at? I suppose the risk would be that it means you're more likely to buy higher growth businesses, perhaps than in the past, because you're wary of diluting margins when a lower margin business is brought into the portfolio. You know, how does that kind of affect how you're thinking about maybe how the types of deal in future will change versus the past? And then when we look at the end markets themselves, the six that you broke out, should we assume that the ones that are sort of mid to high single digit CAGRs get a disproportionate share of M&A capital, or not necessarily, the whole suite is open to deals? ... Well, first of all, as we, you know, as we commented a couple of times, it has to be the right deal. It has to have all of that financial criteria that Todd went over, right? We want it to be accretive to margin. We have to see the path with synergies. So if it's accretive to margin with synergies, and we can see the path that Todd outlined in those other four deals that we've done, then it's a good deal for us. But it has to be accretive to EPS. We have to see cash flow. We have to see that it's gonna follow the secular trends. So, you know, some of our base legacy business and those technologies that aren't Aerospace and Engineered Materials and Filtration, hopefully, you saw today how important they are to supporting the secular trends. So I wouldn't say that M&A is out of the question for those, but it has to hit that criteria. We'll take our next question from the second aisle here, off the, on the right side, please. Yeah. Thanks, Andy. Jamie Cook from Truist Securities. Sorry, Jenny, another question around M&A. Mm-hmm. you know, as you think about your eight interconnected technologies, can any of this product portfolio be enhanced, you know, with software? I know some of your multi-industry peers talk about getting more into the software business. And then, I guess, the other area that some of your peers are in are sort of healthcare. So I'm wondering if that's, if any of your eight connected technologies could be applied more to healthcare, and if that's an opportunity for you in terms of diversification. So we're not looking to be a software subscription company, okay? We do have some of that business. We also have some business in medical and healthcare. But we're really looking for the products that enable those secular trends and that enable us to grow faster, some of the things that we highlighted today. So while we do have software capabilities, it's not who we're looking to be. Okay. Take the next one from, left side, second row, please. Hi, thanks. Can you unpack the 4%-6% a little bit? When we think about the 7%, you talked about 2019 to now, think about kind of the price and volume, you know, how you're thinking about the 4%-6% and how that price-volume dynamic shifts. What kind of industrial production environment do you need for the 4-6? And then related to that and the verticals you outlined, where do you have the best visibility? I think aero has the highest growth profile you're looking at, but is that also the best visibility on growth that you have? Well, the 4%-6% is over the cycle, right? And obviously, aerospace has been growing double digits, right? And we just came off of a couple of years of double-digit growth in the industrial space. But as you've heard us talk about recently, you know, with where we've been the last four to six quarters, we expect to see things turn in the future, and that will be part of achieving that 4%-6%. So we think that industrial will pick up, and we'll get some of that 4-6 from there. But as we highlighted today, too, we see, you know, longer-term high single-digit growth for aerospace. So it all comes together. And that's really kind of the power of the portfolio right now. It's more resilient to those cycles than it's been in the past, and, that's really why we feel comfortable saying 4%-6%. All right, next question. We'll take next to you there, Chantelle. And just as a reminder, if you could, state your name and firm, please. Hi, Nathan Jones, Stifel. I guess I'll ask the other side of the deals. Todd, you talked about divesting 8 businesses or so over the last 7 years. Can you talk about, you know, what are the criteria that get the businesses into that bucket? What makes it so that Parker's not the best owners of those businesses? Yeah, it's a great question, Nathan. You know, like I said, we challenge every one of those businesses to make sure they have to earn their right to remain in the portfolio. And if you look at a thousand basis points of EBITDA improvement over the last 10 years, they have to be contributing to that improvement. And if they're not, if they're not a core technology, if they're not critical to our distribution network, those are the businesses that we have found that might find better value somewhere else. So that's. It's really as simple as that. Okay, next question in the back there. Hey, it's Joe Giordano from TD Cowen. Yeah, just to follow on Nathan's question there, how optimized do you think you are on the divestiture side? I know, I know when you laid out the various growths by end markets, there were a couple that were in, like, the low single digits. Just curious how that four to six, like, how much can you potentially lever that up just by subtraction? Yeah. I think what we were really trying to highlight there is that we have been looking at the portfolio, but I wanna stress that there's no major pieces of the business that we are looking to divest. These would be smaller pieces that allow more focus on all of the growth areas that Andy and Jenny talked about today, and we're gonna make sure that anything that we do is margin accretive to the company. So, it was just a really a way to signal the fact that we have been active on that, and we will continue to be. Okay, next question in the back right, please. Thanks for spotting me, Jeff. Good eyesight. ... so Nigel Coe from Wolfe Research. So obviously, aero is a great end market right now, but I don't think you wanna be an aero company necessarily. So is there an effective cap on, like, one-third portfolio contribution from aerospace, or would you be happy for that aero mix to go higher? And then maybe, Todd, just touch on leverage. You know, higher margins, higher free cash flow margins means that you should be maybe carrying a bit more balanced leverage over the cycle. So just how do you think about leverage? ... through the next five years? Yeah. I guess I'll start, Jenn, if you have something to add, just jump right in. Right. We have no stated target that we're trying to get aerospace and defense to be a part of the portfolio. We really like that business. As Jenny said, we see it growing high single digits for the foreseeable future. What we really like about that business is it's all of the technologies that we have across the portfolio. They just happen to be on things that leave the ground, right? So, when you look at that, that has really been powerful. When you look at Lord, if everyone remembers, Lord was a third industrial, a third automotive, a third aerospace. Exotic, obviously, 100% aerospace, and Meggitt, roughly, you know, over 85% aerospace. So that has been really a powerful addition to the portfolio. Right now, aerospace is booming, right? It has been growing at double-digit growth for the last two years. We continue to find synergy opportunities from Meggitt and from Exotic, and the team really is working unbelievably well, and it's helping to post those numbers that you're seeing every quarter. In respect to leverage, you know, what I like about our position on leverage today is we've never been bigger, we've never generated more cash, we've never been able to delever as fast as we possibly can, and when you look at what that capacity is, it doesn't necessarily mean that we have to push the leverage to as high as we've been in order to do any one of those last four deals that we did. So there's a lot of optionality when it comes to using our balance sheet. What we've found is that when we do it through a disciplined manner, it generates returns that are unmatched. All right, next question here in the front on the left side. Andrew. Hi, how are you? Andrew Obin, Bank of America. Just a question, another question, M&A. You know, your pace of M&A has been: do a large deal, lever up, delever two times, do another large deals, rinse, repeat. Yeah. You know, as you're sort of doing more and more of these, is there a thought to maybe do more bolt-ons and sort of have a more, you know, sort of similar to somebody like AMETEK, where, you know, there's a more consistent cadence, but maybe smaller deals? Is there a consideration to go to that model? There's a consideration for deals of multiple sizes. So, as Todd mentioned in his presentation, the pipeline is really robust. You know, the day we closed on Meggitt, we were still working our acquisition pipeline and keeping our cadence to reviewing it as a team and keeping those relationships strong. So, there are smaller deals and there are bigger deals. We just have to make sure, again, and I know it sounds like I'm just repeating, but we really are serious about it being the right deal, and being able to hit that financial criteria and deliver the returns and be accretive. Another big piece, and I think Andy hit on this when he was going through division examples, is culture matters. It matters a lot when you do a deal, and we were very fortunate that with all four of those deals that Todd talked about, we were joining together with teams, you know, who wanted to win, who wanted to be part of a bigger company and who wanted to win. So, I like to remind everybody that part of being in the right business is not always the size, but it's the financial criteria, and culture is very important. Yeah, no, I don't believe you were the high bidder on any of the deals you've done recently. But just a follow-up question, and just to follow up on a previous question, just maybe that's a different way of asking it: Are you embedding, for this forecast, are you embedding more pricing than in the previous forecast, similar or less? Just... You know, pricing is like we've said many times, you know, a strong muscle that we've built over the years, and now we're back to more of a normal pricing environment. The last, you know, the last 3-4 years were just extraordinary. You know, we have the tools to do what needs to be done to make sure that we maintain margin neutrality, but it's normal pricing that's baked in. Okay. Next question in the back there. Thanks. Thanks. Nicole Deblase from Deutsche Bank. A couple quick ones. I guess first on Meggitt. A little surprised about why you guys didn't raise the three-year target. Things are obviously going really well there, so how you think through the thought process of potential upside, or sorry, four-year target when all is said and done? And then I guess the one question that hasn't been asked on deals is deal size, and how do you guys think about, you know, there aren't a lot of companies that are willing to say, "Hey, we can do these big deals. We've proven that, and we're willing to do big deals going forward." How do you think about what's in the pipeline from a size perspective and what you guys want to do? Thank you. So I'll, I'll start, and if Todd or Andy want to add anything about synergies, I'll let them. So it could be small bolt-ons, it could be a big deal. It has to be the right deal, and it has to be at the right time. I mean, obviously, we're getting close to a position where, as Andrew said, you know, we have a history of levering up and getting down to around two and doing a deal. But it, it really has to meet all that criteria. So we're not, we're not hung up on it has to be as big as Meggitt or bigger, since each one of the last four we've done has gotten bigger. That's not, you know, that's not a pattern that we are asking you to take note of. But we wanna make sure that it will help us meet our FY 2029 targets, even though it's not baked in, that it won't be dilutive to that, and, and that we can see what comes next, that'll help us be part of what comes next and part of the secular trends and Mega CapEx projects. So, multiple, multiple things we could do there, different size deals we could do there. Yeah, Nicole, I would just add, you know, when it comes to synergies, we I think we've proven ourselves on being able to generate synergies from the models. We are committed to getting that $300 million from Meggitt. And we've talked a lot about this. What gets difficult is, you know, we are integrating these businesses into existing businesses across Parker Hannifin. Over a longer period of time, it gets harder to track what is a synergy or what is just win strategy performance. So that's really what our thinking was. We know that Meggitt is gonna continue to improve along with all those other acquisitions, along with all of our core business. That's why we kinda called out for the first time that we expect them to be over 30%- Mm-hmm. EBITDA when you look out to FY 2029. So rest assured, every one of these transactions has been an unbelievable success within itself. But it does get hard the further you get away from integration date or close date to really identify what's a synergy versus just what's great business improvement. I'll take the next question. Also in the back there. Cliff Ransom, Ransom Research. Todd, I think you and I know each other- Yes, we do. Less well than, after all my years at Parker, but I'm gonna quibble with your comment that this is the new Parker. Yeah. I will suggest this is the same Parker we identified in 1998. You've just been doing it for a long time. We have. We have, for sure. So I'm always interested in how you apply the win strategy and what I call Lean thinking to the financial world. Yeah. Have you done anything that you're really proud of? Have you gone to, you know, we all know that GAAP is the enemy of Lean. Yeah. Have you gone to plain English, you know, P&Ls and balance sheets? Cliff, that is How are you innovating in finance? Yeah, that is a great question, and we've worked on this for years, right? We've been doing Lean now for, gosh, what seems like three decades, right? It's been a long time. And what we knew early on was, and you said it, GAAP accounting is sometimes the enemy of Lean, and what we wanted to do is we wanted to make sure we didn't slow down our operations. So we are huge fans of segmenting our businesses. We talked about those 85 businesses. There are hundreds of value streams and product lines and business units within those businesses. Each one of those has their own P&L. They run off of the Day-by-the-Hour Boards that Andy and Jenny talked about. We look at them in real term P&Ls, real English P&Ls, if you will. That has been an enormous part of having those 60,000 team members around the world understand what their daily actions, how they translate to an income statement. So I think that's probably the biggest thing that we've been most proud of when it comes to making sure we're not doing silly things because of financial practices. Yeah, I'd just add, and you've been to several of our divisions in the office, too, from an enterprise standpoint, every discipline, whether it be supply chain, finance and accounting, you know, has their value stream map, has how they're—what they're doing to work to reduce lead time and improve productivity. So certainly spent more time focused on the shop floor today, but Lean is something that we talk about across the entire enterprise, and it's an expectation that we're driving that improvement in every function. Thank you. All right, we'll take our next question from the second row up here. Thank you. It's Jeff Sprague at Vertical Research. Just back to resegmentation. These slices that we saw today, is that something we're gonna see with continuity, or it goes up on a screen once a year as part of a pitch like this? And then, also just wondering on, you know, if we just think about kinda the forward look on deals and how quickly you've been able to kind of bring things around, you know, into Win and the like. Obviously, Lean never stops, right? So 100-year-old divisions are still working on it, but is there a way to think about how long it takes to get an acquired company to, I don't know, 80% of where it should be, or 90%? Just how, how would we get our kinda head around that, that sort of metric? I'll answer your vertical question, and I'll let Andy talk to you about that. So, no, this isn't just something we're gonna flash on the screen. We see it as a simpler way to talk about our business while covering 90% of our revenue. So, I had a little teaser on it at the last earnings call. I don't know how many people noticed, but this is the way I'm gonna talk about the business from now on. Yeah, I would say as far as the timing, Jeff, there's not a set time, but every one, it's faster. And so, as we've made these larger acquisitions, we've learned from everyone about how to construct the integration team, the different areas that they should focus on, you know, the appropriate amount of time to get things done. And so, if you could see kind of the work behind the scenes on Meggitt and what it's taken, you know, the teams have, like, every fan blade that's, you know, been mapped out. And, so every time we do it, I would say, you know, we get smarter, we get more efficient, and we can expect, things to go, quicker in general, you know, certainly with the things that we can control. One of the keys to our success, and Todd hit on it a little bit about our integration playbook, is that we really do put our top up-and-coming talent in these on these integration teams. People we believe that they've been identified as high talent and we believe could sit in these chairs, right? There's no better way to get immersed quickly and all the tools, and when you're on those teams, you're lucky enough to get to sit with us every couple weeks and tell us what's going on. So it's really, I think, speaks very well to our succession planning, but also to just our commitment to talent development. That's why, as what Andy said, with each one, it just keeps getting better because we just have great team members that are making these integrations happen. All right, we'll take our next question from the right side, third row back, please. Thanks, Jeff. Stephen Volkmann with Jefferies. I'm curious also about the new disclosure relative to end markets. Can you just comment sort of qualitatively, is there any significant margin differential as you look through those different segments? No. I mean, all these businesses are expected to perform, right? And for us to get to our previous target, and you know, where we're knocking on the door now, we couldn't do that if we had one market or one area that was underperforming. So the expectation is the same for all. And again, not only do we like these markets, but we like how our technologies fit inside of these markets. Okay. And, and for the 29 targets that we're gonna hit in 2025, I guess, is there any significant difference among the three current reported segments, Todd, in terms of the margin? No, it's the beauty of the win strategy, right? It is agnostic to what your business is on how that drives margin, even higher. You know, the one thing that I would say is obviously aerospace. You see that, clearly in the results that, we publish every quarter. Aerospace right now is performing unbelievably well. The growth is double digits, the mix is unbelievably favorable. Exactly. So, you know, in the world we're in today, with industrial being down slightly and aerospace being up significantly, there's, you can see the spread on that a little bit, but over the long term, we don't expect that to be the way it stays. All right, we'll come back to the front row up here, please. All right, it's Scott again. I don't think we've ever asked this question, but what is the compensation matrix for the 85 general managers? They have a combination of long-term incentive and short-term incentive plans. Is it on EBITDA growth, or is it based on a number of other metrics? It's long-term incentives, so they are part of the ACIP plan. Okay. They are also part of the long-term incentive plan. Okay. And where does innovation fit within those 85 different P&Ls? Do they own their own innovation? Absolutely. Okay. Absolutely. Now, they'll work with other divisions, and they'll work across groups to make sure that they can meet the customer's demands. And as you've seen with some of what we showed today, they have to work together for that to provide the right solution. But absolutely, they own innovation. They all have division engineering managers. Okay. Would you expect R&D and CapEx to grow with sales, or do you get operating leverage off of those numbers, too? We don't expect it to grow very much. We get the leverage off of those as well. Okay. Thank you. Next question, let's take from the right side in the middle there. Hi there. Joe Ritchie, Goldman. So going back to this, like, level of investment that's happening in the U.S. right now, everyone's talking about mega projects, project size is getting bigger. You have all these integrated technologies. I'm just curious, is your selling process changing to any degree to go after that opportunity? I would say not materially, no. So, our teams do and are structured in a way we've got really good line of sight as to where the investments are happening, and so we like to talk about the fact from the time that something gets announced, and they start digging dirt, you know, frankly, we start winning. Some of the relationships are a little bit different. Some of the things flow through some of our distribution channel partners, and some are more on a direct basis, depending on the technology and maybe the level of business. But it's really the same process that we generally go through, yeah. We're really able to leverage, you know, with our, with our key OEMs and our big customers, we have global account managers. So, that really helps us ensure that alignment when different divisions have to be pulled together to satisfy a customer need. And, we see that working very well into the future with supporting the secular trends. Next question. We'll take second row up here. Hi, it's Joe O'Dea, Wells Fargo. Can you talk about the win pipeline, how that works, to what degree that's sort of a fluid, cultural part of the organization? People see something that has an opportunity to be done better, and they do it, versus you've got a system that's identifying- Mm-hmm. All of the win projects that are going on, it's more of a formal planning process. Just overall how that works. And then separately, any perspective on kind of mega projects, just to gain an appreciation for kind of, you know, what this year looks like, what the pipeline looks like, to try to understand, like, we can anticipate an industrial recovery coming next year, but is there gonna be a visible contribution on top of that, based on what you see in the mega project pipeline? So I'll talk a little bit about that, and then I'll let Andy talk about the win strategy pipeline of margin expansion and how we win. So, you know, I've had a couple examples that I've talked about with distributors that I've spent time with over the last 6-9 months, and, you know, they've been giving us examples about how they're quoting business on preparing job sites. They're quoting business on retooling and refurbishing factories. So not all of these Mega CapEx projects are brand new factories that are being stood up. A lot of them are, you know, capital investment and refurbishing that just hasn't been done for the last decade. So we hear a lot of that from our distributors that, you know, really add a lot of value. You know, on some of these, admittedly, it's early days, and we've been saying that for a few months now. But again, when you look at what's been announced, there's been some delays, there's been some pull-aheads. You know, there's a lot out there. And from what I showed today, I mean, we are very confident that we're gonna participate, and in some cases, we're directly quoting for some of these customers. It's not going through distribution. But it's, you know, really too early for me to say that it's gonna be a certain amount over, you know, what happens in the industrial space, you know, when we return to more of a stocking than a destocking. But again, very confident about it. Just with the quote activity and all of the talk that's out there. Yeah. As far as the win, the pipeline and how we look at it, Todd used a word in his presentation about the segmentation. So I remember when I first came to Parker in 1998, one of the leaders said, "You know, we really try to be great segmenters and problem solvers so that, you know, drift doesn't happen for very long," like I talked about with the day-by-the-hour example. So, obviously, it's a portfolio. Not everybody's at the average, but what we do is we sit down, and we set targets annually to say, "Hey, look, based on the performance of the business, based on how it's operating from an efficiency standpoint and what we believe we can gain from all the different elements, whether it be Simple by Design, strategic pricing, Lean, if there's, you know, reorganization that needs to happen," and we set the target. And then, you know, our group presidents, who are operating officers, you know, they meet weekly with their leadership teams to make sure that we're measuring progress. I meet with them monthly, as do Jenny and Todd, and then, again, if we're not meeting the expectation, you know, we don't wait. You know, we focus on what we can control, but we jump in and try to help and try to drive it. So every division's got a different target. And when we pull tools from the Win Strategy, there's a lot on there. You can't pull equally all the time, so it's really up to us to prioritize which tool to use to the degree we need to to win. And we just make sure we've got that constant operating rhythm so that complacency never enters the room when it comes to how we perform. All right, we'll take our next question from the back of the room. Cliff Ransom, Ransom Research. We all know that most M&A activity destroys shareholder value, and you guys have built very strong skill sets. I can remember some real headaches with Clarcor, but you fixed them all. Yeah. Can you talk a little bit about what some of the negative surprises that you found at Meggitt and how you fixed them? I can't tell you that there were any negative surprises, and there were just a lot of really positive findings. You know, it took us over a year to close Meggitt, and unlike previous acquisitions, we really didn't get to do a lot of work before closing in diligence. But what we did get to do during that time was build relationships with the Meggitt team members. And so once we closed, and we were able to really look at all the detail and really identify exactly where that path to synergies was, we were very surprised and very happy with what we could accomplish in a short period of time. Mm-hmm. You know, people have often asked me, you know, "Do you have another Meggitt in the pipeline?" And, I wish I did. Between the culture, the, the growth trajectory, just, the overall complementary technologies, just a fantastic acquisition all the way around. Mm-hmm. We really mean it when we say we couldn't be happier with it. No negatives. Yeah. The one thing I would add, Jenny, and, Cliff, you'll appreciate this, is, you know, this was a company- Mm-hmm ... that was used to reporting two times a year. Yeah. In Parker Hannifin, we report every week internally. So it's no joke. We run this every week. Every one of those businesses is telling us what they've done and what they expect to do that month. So what it does is it gives you multiple opportunities to take action, right? And I think for me, that's been the biggest positive surprise. Mm-hmm. I don't know if I'd call it a negative surprise. Yeah. But we've put these businesses in divisions that look and feel like Parker businesses, and they are part of our weekly reporting cadence now, and that change has been extremely powerful. Eye-opening to them as well. Mm-hmm. ... Yeah, I would, I would just pile on again, the eagerness of the teams to deploy tools, and absolutely comfortable with the operating rhythm and really gravitated towards the decentralized nature of, "Hey, look, you know, we know what to do. We know how to do it locally," and, appreciative of the support, to get it done, so. Take our next question from the back right, please. It's Joe from TD Cowen again. Just on the normalized cyclical growth, the 4-6, I know that's, like, a really hard thing to figure out over a cycle and all those kind of things, but if I was to compare that today, your 4-6 for the next five years versus 4-6 that you thought five years ago, I think you'd probably agree that five years ago, a lot of these megatrends that we're talking about didn't really exist. So maybe, like, is it easier for you to do that now? Is it almost like a- ... a less ambitious target, given what's happening in the world versus five years ago, and maybe we should be thinking about you on the higher end of that range versus maybe five years ago? I don't maybe that's a little too in the weeds, but just seems like you'll be able to get that easier now. I'll let Todd add in, but I- Yeah. I don't think it's a slam dunk, if that's what you're asking. Yeah. But I think it's achievable with what we see out there. The last five years have been, you know, extraordinary for many different reasons. So, you know, it's hard to. It would have been hard to forecast that back then, right? But I definitely think that it's within our reach, but I don't think it's a slam dunk. Yeah. You know, Joe, I would just add, you know, obviously, the last five years, to Jenny's point, have been unbelievable. I think what history has taught us is that the next five years are going to have their fair share of crazy items that are going to be outside of our control. What we like about our forecast today is that aerospace, we expect to be strong over that five-year period, right? Now, we don't see anything that will change that, but there might be something that crops up, and we'll react to that. And then, I mentioned it on the industrial side of the business, you know, we feel as if we're ending, coming close to ending the period of six quarters of negative- Exactly ... order, comparison. So that's a, that's a positive. And then I think we did a good job today talking about really what those secular trends mean, and, we've never felt more positive about that. So, we, we remain committed to that 4-6 number. It's not going to be easy, but that's, that's the target, and that's what we've, aligned the team around. I think our next question in the second row up front here. If you get sick of us, you can just stop. But... No. No, no, not at all. Just a couple. First, Todd, the $20-26 billion in your, you know, capital deployment, is that at steady leverage 2x? I haven't done that math. Yeah, what we've done is we used 3.5, if everyone's curious about that. We used 3.5, and we kinda did exactly what we've done over the last transactions. It's not a constant 3.5 by any stretch- Yeah ... but it's, it's us achieving 2%. Mm-hmm. Potentially having something happen and then, levering that back down to two. So that's how we kind of came up with that number. Got it. And the flip side of that, at what point do you get uncomfortable with the deleverage if the deals don't materialize, and we're hitting share repurchase more aggressively, potentially? Well, I mean, I think we've proven that, being active with the balance sheet is a good thing for the company, it's a good thing for shareholders. I would tell you we're not afraid of going below two by any stretch of the imagination. That's not a floor by any stretch of the imagination. It really depends on what the pipeline looks like and what the options are that we have to make a decision on. But we'll be active. This next one isn't particularly my style, but I'm just going to save the sell side for being blamed of, you know, malpractice. Now that you've said you report weekly- Yeah. ... you know, you did give some con- Internally, we report weekly, internally. Right. So you're sitting here knowing how, what mid-May looks like at this point. And any, any additional color on near-term trends, finding the cyclical bottom, anything you'd like to add? You know, I think Jeff tried to touch on that earlier. We just had the earnings call, I think it was two weeks ago. Mm-hmm. It's been a pretty busy two weeks. We are confident in the guide that we gave you two weeks ago. I think our next question over there. Thanks. Nathan, Nathan Jones at Stifel. I'd be interested in getting a little more color on the Simple by Design initiative. I think that 2018 Analyst Day might have been the first time Tom Williams started talking about- Mm-hmm ...... Simple by Design. Yeah. I think he was talking about 10 years to get through the portfolio at that time. Mm-hmm. Mm-hmm. Maybe you could just comment on, you know, how that's contributed to margin expansion, where you are in the process, and how much juice is left in that initiative for you? Thanks. Sure. Again, I think, we used a baseball analogy about, you know, what inning are we in? We're probably in the sixth inning, I guess, I would say. And while we don't disclose, you know, the margin accretion, overall, every division has a priority list of Simple by Design, based on the opportunity of their particular product line. And typically, when we deploy that tool, we see a minimum of 10, and usually more like 15 or 20% improvement in the cost of goods sold. So that'll continue to help, you know, be a contributor to the margin expansion going forward. And again, that never ends. And the better we get with some of the AI tools and the continued focus, we just expect it to be a positive contributor going forward. Any final questions from the audience? All right. Well, thank you all so much for attending Parker Hannifin's 2024 Investor Meeting here in New York today. We greatly appreciate you investing your time to be with us here today. And, for those here in person, as this concludes the formal event, we will proceed to the foyer for a reception with management. Please give us a few minutes for management to exit to the foyer. Thank you. Thank you. Thank you, everyone. Thanks, everyone.