Mig Dobre

Explained CapEx ran ~2% historically and is now 2.5% with capacity already added; credited Kaizen/lean output gains for keeping needs below peers, no step-up beyond the guide.

Jennifer addressed both directly: Middle East has very small direct revenue and no material demand impact. On tariffs, teams are managing with no expected earnings impact, citing 25+ years of price-cost discipline.

Jennifer denied any pricing lag. Lower incrementals driven by stronger OEM growth in off-highway and transportation, plus weather-related disruptions in North America. Still achieved Q3 record margin for North America.

Jenny explained international orders are choppy with one-time long-cycle orders not repeating. EMEA flat to slightly positive with slow industrial recovery. Asia positive low single digit. Mining recovery in EMEA noted.

Todd explained seasonal sales split of 48/52 first/second half means Q4 is always the strongest. Q1 has compensation timing headwinds. Every Q1 guide number would still be a Q1 record.

Jenny confirmed positive industrial growth expected in FY2026. Provided color on order drivers: NA positive 2nd consecutive quarter, international accelerated on energy/power gen, aero backlog grew to $7.3B.

Jenny outlined three mitigation buckets: pricing actions, supply chain actions, and Win Strategy cost reductions. Expressed confidence in full mitigation.

Jenny highlighted Parker's local-for-local model built over the past decade, supply chain leadership tools, and no need for major realignment.

Jenny said no mix concerns within industrial verticals. Todd added distribution has a more positive margin profile but nothing out of line with normal periods.

Dobre asked how Power & Energy aftermarket/services will scale; Creed said the growing installed base creates major services opportunities, mostly beyond 2030.

Joe noted the RI segment now includes rail (not apples-to-apples to 2012). Slightly negative Q1 pricing was due to timing of older order deliveries. Autonomy and technology investment has outsized margin impact given RI's smaller relative size. Expects margins to improve through the year.

Creed highlighted order strength across all three segments not just P&E. CI had one of best order quarters ever from returning seasonal patterns and merchandising program success. RI had best order quarter since 2021 driven by heavy construction in North America and copper mining in South America. For long-dated P&E orders frame agreements have inflationary indices and non-frame agreements have escalators beyond twelve months.

Creed said CI outperformance due to strategy and merchandising programs. Heading into 2026 with great dealer inventory position and momentum. Pricing follows normal annual process with each segment in different position. E&T much different than CI competitively. Tariff mitigation limited to no-regrets actions so far with longer-term supply chain changes requiring investment and certainty. Confident will manage tariffs over time but taking measured approach.

Creed said too uncertain to call anything permanent with many levers available and all options on table. Too early to discuss 2026 given how much changed in one quarter. Framed outlook positively noting great operational performance momentum and raised top-line outlook building into next year. Bonfield reiterated focus on profitable growth and growing absolute OPACC dollars with volume versus price tradeoffs to be managed.

Bonfield said normally CI sees Q1 benefit from dealer inventory builds of about $1 billion last two years but expects significantly less in Q1 2025. Underlying sales to users broadly same first half to second half and down slightly for full year. Price impacts first half with about $300 million per quarter in CI. Q4 will see favorable volume offset as dealer inventory change normalizes.

Michael said PLS running above normal 50bps maintenance rate due to Specialty repositioning. Welding and Food Equipment are near 0 PLS. Can't manage PLS from corporate, it's integral to 80/20 front-to-back.

Chris said incrementals driven by portfolio quality and business model execution, not just PLS. Organic growth and margins go hand in hand at 35-40%+ incrementals. Path to 30% by 2030 is through operating leverage, not cost cuts.

Chris acknowledged a brief freeze in one segment shipping to China from US during peak tariff angst. Has since freed up with mitigation plans now in place. Over 90% produce-where-we-sell mitigates direct impact.

Michael said capital allocation is optimized: internal investment first, attractive dividend, ~$1.5B buybacks. M&A remains selectively aggressive. Chris cited MTS as model acquisition.

Asked via associate Peter Kalo; management said it is too early to tell whether the 2028 EU CAP change pulls demand forward or delays it.

Josh Beal clarified the $1.2B is unchanged ongoing tariff expense, with the $272M refund netting it to ~$900M this year. Acknowledged rising inflation but noted more favorable comps in back half. Brent added pricing is also more favorable in H2.

Matt said it is both, URI's scale and tools give a premium, but industry-wide supply-demand is also driving higher time utilization.