Steve Tusa

Lead times continue improving across product lines and factories. BMS growth was high single digits with accelerating pipeline. New VP of operations driving aspirational targets.

$15M headwind from periodic product liability reserve adjustments, not recurring. North America margin expected slightly better in second half. Service acceleration is key.

Weidemanis sees no structural ceiling on margins vs peers. Opportunities exist in both product margins and field operations through digital tools and lean.

Deferred to ongoing strategy review. Acknowledged different franchises may play different roles. Will share conclusions at appropriate time.

Clear confirmation that both orders and revenue are accelerating in data center. Some Q1 orders were pull-forward from customers seeking certainty.

Oliver explained tougher H2 comps, need for more tariff clarity on end markets, and APAC recovery still early. Conservatism appears deliberate.

Marc quantified data center at about 10% of revenue, growing faster than the portfolio with double-digit sequential growth.

Marc attributed the softer Q1 to timing of large decarbonization and data center projects plus service seasonality; growth is lumpy quarter to quarter.

CEO confirmed no change in value tier trade-down or RNC rationalization dynamics versus Q3. These headwinds continue into 2026 but were not separately highlighted on the updated tailwind slide.

CFO said FIFO change creates some Q1 absorption timing and Q4 2026-to-2027 variations but is net neutral for full-year 2026. The natural timing differences between FIFO and LIFO will create quarterly variations.

CEO confirmed all OEMs maintained A2L and tariff pricing discipline. Competitive skirmishes are between contractor and consumer, not OEM and channel. Only exception is low-margin RNC business that Lennox is choosing to walk away from.

CFO said Q3 was absorption-neutral as higher early-quarter production was offset by ramp-down. Q4 will see under-absorption impact. Guided to factory costs at 15-20% of COGS as a framework for estimating the Q4 hit.

CFO clarified product cost and other inflation combined ran about $80 million in the first half, implying roughly $180 million for the full year. Pricing was booked midway through the quarter with 454B mix shifting more toward quarter-end.

CEO explained no production shortage exists. The issue is retail service canisters for aftermarket use. Honeywell's 40% price increase doesn't directly impact Lennox due to existing contracts.

CEO confirmed prebuy was all in Q4 but clarified Q3 had temporary share gains from competitor stockouts. Share gains slowed in Q4 as competitors launched 454B aggressively.

Christian explained incentive compensation payout from FY25 (vs zero payouts last year) and working capital being a slight use of cash vs source last year. Tracking in line with expectations.

Christian noted broad-based strength across all Software and Control categories: Logix, software (Plex especially), AWESOME open compute platforms, and networking. Blake added software ARR higher than company average, particularly Plex.

Blake confirmed book-to-bill around 1 with product orders right on top of shipments.

Christian confirmed tariff-based price exactly offset tariff costs, not using tariffs to expand margins. Same expectation for FY26.

Christian noted modest inflation offset by cost reduction and margin expansion actions, expected to continue as an opportunity in FY26.

Blake expects significantly larger capacity-related orders in FY26 vs FY25 but hasn't calendarized first vs second half. Tariff clarity, tax bill in place, and bonus depreciation for SMBs should help accelerate release of big orders.

Christian raised full-year price guidance from 1-2% to 2%+, with a decent portion in Q4. Part of bump is tariff-based. Declined to give FY2026 specifics but expressed confidence in continued realization beyond tariff-based pricing.

Declined to give specific multiplier. Suggested correlating CapEx as percent of sales (moving from 2-3% to 3-4%) with growth trajectory. Capacity expansion happens in many meaningful steps rather than big jumps.

Confirmed $3-3.5M per megawatt framework still applies. Technology evolution and complexity trajectory favorable from TAM standpoint but premature to revise upward. Deferred to investor day for detailed update.

Long-term model assumes 30-35% incrementals. Low 30s reaches 25% by 2029, upper end gets there sooner. Tariffs were the most significant 2025 headwind and not anticipated to recur in 2026.

Confirmed encouraging exit trajectory and reiterated long-term margin objectives are correct, but stopped short of providing specific 2026 margin guidance.

Declined to quantify exact China exposure but pointed to slide five disclosure. On market share, cited technology leadership, NVIDIA partnership, service capabilities, and global scale as differentiators.

Denied disconnect, pointing to tough 60% comps from first half of 2024. Noted customer CapEx includes silicon costs beyond data center infrastructure.

CFO reframed by noting Q1 as a percentage of full-year guide is actually higher than 2024, with 19% organic growth and 31% AOP increase.

Krishnan confirmed Q1 orders expected to sustain Q4 momentum. Full-year core incrementals expected at 45-50% range. Q1 comparison tough due to 265% leverage in prior year.

MRO bookings consistent throughout quarter. Some timing variations on capital bookings but overall mid-single-digit exit rate consistent with expectations.

MRO at 62% of sales remains robust. Life sciences, power, and LNG are the three standout growth areas with no arrest in momentum.

Baughman explained the $0.04 benefit was from prior-year balance sheet translation losses not recurring, not P&L translation.

Krishnan attributed margin strength to positive price, net material deflation, favorable mix from strong AspenTech, and cost reductions.

Baughman confirmed $150M backlog growth was year-over-year ex-T&M. T&M backlog ended at $400 million.

Paulo signaled fewer acquisitions in 2026, maturing footprint, but deferred formal guidance to February, cautioning some ramp inefficiencies will persist.

Paulo confirmed ~$200M sequential growth (5-6%) from new capacity online plus Q3 carryover (less than 1 day of sales) against easiest 2024 comp of 9%.

Paulo confirmed 6 of ~12 capacity projects with construction done and ramping in H2, with another 6 adding to top line in 2026 and beyond.

Olivier confirmed total Electrical orders turned positive on TTM basis, with EA up 2% from prior quarter's -4%.

Paulo acknowledged difficulty in pinpointing order timing but pointed to 60% negotiation pipeline growth as confidence indicator.

Paulo explained multi-year forecast visibility with hard commitments from customers, shipping aligned to construction phases.

Mid-single-digit total cost inflation anticipated for 2026 based on year-end exit rates with some further January creep in copper, aluminum, and steel. Similar level to 2025 which was managed effectively. Price and productivity actions sized to address.

Management emphasized strong start but declined to be precise on percentage, suggesting it's not necessarily higher than typical seasonal share. Focus on Q4 exit rate for seasonal baseline.

Aclara refocused on public power with smaller, less lumpy projects and stronger MRO base. On T&D crowding out distribution: management sees growth across all three markets with strong positions in each. If T&D takes share, it extends the distribution investment cycle.

Q3 pricing in line with full-year 3-point range, reasonably balanced between Utility and Electrical segments.

Deferred detailed 2026 margin guidance to January call. Long-term framework implies incrementals below harvesting levels, suggesting continued investment. Price/cost productivity managed to net neutral or better.

Positive pricing across both segments at more than a point in Q4. Q1 2025 expected to contribute similar low-20% of full-year EPS with slightly below full-year organic growth.

Judy confirmed very slight sequential improvement but cautioned against expecting step-function change. Multiyear competitor contracts make recovery slow. Day-to-day, customer-by-customer effort required.

Cristina guided Q4 Service at ~6% (not 7%) because mod will be 10% vs 14% in Q3 due to China bond project calendarization (last year very concentrated in Q4 with 100%+ growth, this year more level-loaded).

Judy provided full backlog picture: Americas up 5%, APAC double-digit, EMEA fine. China NE backlog will be down entering 2026 but mod and service backlogs will be up. Ex-China backlog up 8%.

Cristina noted China NE price down 6% in Q1 (improving from -10% last year), sequentially only 2pts down. Strategy remains price-cost neutral for China NE in 2025.

Judy confirmed repair timing entirely responsible for lower service growth. Refocused on service excellence to drive improved retention. Repair backlog up 5% with revenue conversion expected to step up every quarter.

Judy partially deflected the specific math but acknowledged the magnitude. Noted traditional China business was 2/3 backlog entering year and 1/3 book-and-ship, which didn't materialize in Q3-Q4. Visibility described as similar to prior year.

Gitlin confirmed Q4 movement down ~30%. Goris detailed 2026: total company price ~1 point, ~$60M commodity headwind (copper/steel/aluminum) net of blocking, ~50% blocked for full year, spread evenly across quarters. Resi price in low single-digit range. Price increase of 5-6% announced effective March.

Goris guided Q4 resi down ~15% (volume -23%, offset by price/mix). Gitlin added light commercial flattish in Q4 (easiest comp, was down 10%+ last year). LC showing encouraging recent trends: field inventory down, orders up, small business spending resuming.

Goris identified three businesses in CSE: VCS, commercial HVAC (~$1B+ with improving margins), and Carrier legacy RLC (~$700-800M at low single-digit margins). Targeting mid-teens overall in next couple years.

Gitlin confirmed Q2 2024 base EPS of $0.73 after restatements, noting Bloomberg still showed $0.75. Historical financials included in disclosed schedules.

Gitlin confirmed no material 454B hiccups. One supplier imports ingredients from China, potential pass-through not material. Canister shortage affecting channel expected to resolve in Q2.

Kemp noted convergence of semi and PCB roadmaps in advanced packaging benefits DuPont's positioning across both ends of the spectrum.

Kemp framed the environment as mixed: AI/advanced driving all growth, lagging-edge stabilizing, consumer weak but showing green shoots.

Kemp quantified >70% of China sales as spec'd-in (50% multinational + 25-30% semi with process-of-record), showing high switching costs.

Franzen acknowledged ~$20M prebuy but attributed it primarily to new fab start-ups rather than tariffs, providing transparent quantification.

Franzen confirmed the $13M gain was pre-flagged in Q3 guidance, demonstrating transparency and no surprise one-time items.

Jason declined to provide intra-quarter booking data, saying they don't receive that granularity.

Neil explained Department of Education funding maintained at 2024 levels via continuing resolution, just administration changing (block grants to states). No slowdown or panic at customer level.

Neil said one portfolio company was on the AI threat watch list in 2024 but was cleared after analysis. Small AI startups exist but customers want vendor consolidation, benefiting incumbents.

Jason attributed strong Q4 cash flow to record renewal season and DSO improvements at Deltek, Aderant, and Strata. Noted new bond coupon payments in 2025 as a timing offset.

Todd pushed back, noting every Q4 number is an all-time record. Q4 remains the strongest quarter of the year as usual. No specific concerns about Q4. Jenny agreed, no concern.

Jenny clarified data center is only a small part of construction optimism, they're seeing actual increases in construction equipment demand more broadly.

Andrew explained more buy-sell business was booked before the European launch, reducing the new transaction model tailwind but meaning underlying billings growth is stronger than headline.

Barua argued AI is net positive for PTC because customers must first modernize PLM/data infrastructure before deploying AI. Drives demand for Windchill, Codebeamer, Creo upgrades.