Q1 2025 Rockwell Automation Inc Earnings Call

Part of it.

Later in the call we will open up the lines for questions. If you have a question at that time. Please press star one.

Speaker Change: At this time I would like to turn the call over to John Zillmer head of Investor Relations and market strategy Michelle <unk>. Please go ahead.

Yeah.

Speaker Change: Thank you Julien good morning, and thank you for joining us for Rockwell automation first quarter fiscal 2025 earnings release Conference call with me today is Blake move up our chairman and CEO and Christian Rosie our CFO.

Speaker Change: Our results were released earlier this morning, and the press we've been charts have been posted to our website.

Speaker Change: Both the press release and charts include in our call today will reference non-GAAP measures.

Speaker Change: Both the press it was and charts include reconciliations of these non-GAAP measures.

Speaker Change: A webcast of this call will be available on our website for replay for the next 30 days.

Speaker Change: Convenience a transcript of prepared remarks will also be available on our website at the conclusion of today's call.

Speaker Change: Before we get started I need to remind you that our comments will include statements related to the expected future results of our company and are therefore forward looking statements.

Both the press release and charts include in our call today will reference non-GAAP measures.

Both the Presto and charts include reconciliations of these non-GAAP measures.

Speaker Change: Our actual results may differ materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all of our SEC filings.

A webcast of this call will be available on our website for replay for the next 30 days.

For your convenience a task of prepared remarks will also be available on our website at the conclusion of today's call.

Speaker Change: With that I'll hand, it over to Blake. Thanks.

Blake: Thanks, Hi, Donna and good morning, everyone. Thank you for joining us today I'll make a couple of general comments before we turn to our first quarter results I'm pleased with the early benefits of our renewed focus on operational excellence and cost discipline as we create a solid foundation for market beating.

Before we get started I need to remind you that our comments will include statements related to the expected future results of our company and are therefore forward looking statements.

Actual results may differ materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all of our SEC filings.

Speaker Change: Growth in performance continue.

With that I'll hand, it over to Blake. Thanks.

Speaker Change: Continuing benefits from cost reductions in SG&A, we took last year, we'll be joined with benefits from reduced cost of direct and indirect purchases manufacturing efficiency and additional price actions overall.

Blake: Thanks, Hi, Jana and good morning, everyone. Thank you for joining us today I'll make a couple of general comments before we turn to our first quarter results I'm pleased with the early benefits of our renewed focus on operational excellence and cost discipline as we create a solid foundation for market beating.

Speaker Change: Overall, our plan to achieve $250 million worth of productivity benefits versus last year is intact. Despite additional temporary headwinds such as the negative impact of currency.

Growth and performance.

Blake: Continuing benefits from cost reductions in SG&A, we took last year, we'll be joined with benefits from reduced cost of direct and indirect purchases manufacturing efficiency and additional price actions.

Speaker Change: Additionally, we are confident that we are dealing with the recently announced tariffs in a way that mitigates the impact and maximizes our position as a large U S manufacturer Rubin.

Blake: Overall, our plan to achieve $250 million worth of.

Speaker Change: We've been working on various scenarios since before the election.

Blake: Activity benefits versus last year is intact, despite additional temporary headwinds such as the negative impact of currency.

Speaker Change: Undoubtedly there will be near term disruptions and volatility in the global supply chain, both for us and our customers, but we continue to believe Rockwell as a net beneficiary of policies that increased U S manufacturing Christian will cover some of the actions. We're taking later in his section.

Blake: Additionally, we are confident that we are dealing with the recently announced tariffs in a way that mitigates the impact and maximize our position as a large U S manufacturer.

Blake: We've been working on various scenarios since before the election.

Speaker Change: In terms of demand we are encouraged by better than expected order performance in the quarter. We had mid single digit sequential growth overall with sequential growth across all regions and business segments orders exceeded shipments in the quarter, giving us some additional backlog for the balance of the year.

Blake: Undoubtedly there will be near term disruptions and volatility in the global supply chain, both for us and our customers, but we continue to believe Rockwell as a net beneficiary of policies that increased U S manufacturing Christian will cover some of the actions. We're taking later in his section.

Speaker Change: While there is still macroeconomic and policy uncertainty weighing on customers' Capex plans Rockwell won multimillion dollar strategic orders across multiple key industries in the quarter, especially in the U S. Our home market.

Blake: In terms of demand we are encouraged by better than expected order performance in the quarter. We had mid single digit sequential growth overall with sequential growth across all regions and business segments orders exceeded shipments in the quarter, giving us some additional backlog for the balance of the year.

Speaker Change: Let's now turn to our Q1 results on slide three.

Speaker Change: Our Q1 orders grew 10% versus prior year.

Blake: While there is still macroeconomic and policy uncertainty weighing on customers' Capex plans Rockwell won multimillion dollar strategic orders across multiple key industries in the quarter, especially in the U S. Our home market.

Speaker Change: And as I said, we're up mid single digits sequentially.

Speaker Change: Saw particularly strong orders for logic controllers Nio.

Speaker Change: We believe our order outperformance reflects true underlying demand based on the broad geographic outperformance.

Blake: Let's now turn to our Q1 results on slide three.

<unk> mix of hardware software and solutions orders and the fact that distributor and machine builder inventories continued to reduce.

Blake: Our Q1 orders grew 10% versus prior year.

Blake: And as I said, we're up mid single digits sequentially.

Blake: We saw particularly strong orders for logics controllers Nio.

Speaker Change: As customers are waiting for more certainty in the macroeconomic and U S policy environment. They are balancing their automation spend between increasing operational efficiency and making longer term capital investments. Our Q1 order outperformance includes a number of large customer projects that are slated.

Blake: We believe our order outperformance reflects true underlying demand based on the broad geographic outperformance.

Blake: Balanced mix of hardware software and solutions orders and the fact that distributor and machine builder inventories continued to reduce.

Speaker Change: To convert to sales over the coming quarters our.

Blake: As customers are waiting for more certainty in the macroeconomic and U S policy environment. They are balancing their automation spend between increasing operational efficiency and making longer term capital investments. Our Q1 order outperformance includes a number of large customer projects that are slated to convert.

Speaker Change: Q1 reported sales declined about eight 5% year over year with slightly better than expected organic sales being offset by about one point of headwind from negative currency translation.

Speaker Change: Remember our sales in the first half of fiscal 'twenty four we're still supported by a sizable product backlog, creating a difficult year over year comparison for us in fiscal 'twenty five weeks.

Blake: <unk> to sales over the coming quarters.

Blake: Our Q1 reported sales declined about eight 5% year over year with slightly better than expected organic sales being offset by about a point of headwind from negative currency translation.

Speaker Change: We expect to return to year over year sales growth in the back half of the year.

Speaker Change: Organic sales in our intelligent devices segment were down 12% versus prior year.

Blake: Remember our sales in the first half of fiscal 'twenty four we're still supported by a sizable product backlog, creating a difficult year over year comparison for us in fiscal 'twenty five weeks.

Speaker Change: In line with our expectations, both cubic and clear path. Our recent acquisitions in this segment saw double digit year over year growth in sales.

Speaker Change: We continue to grow our pipeline of multiyear projects here with significant wins across our key industries and global customers I'll touch on some of these wins in a few minutes.

Blake: We expect to return to year over year sales growth in the back half of the year.

Blake: Organic sales in our intelligent devices segment were down 12% versus prior year.

Speaker Change: Software and control organic sales declined about 12% year over year, but were above our expectations logics exceeded our expectations. This quarter with both orders and sales up double digits versus prior quarter logic orders have recovered sequentially during the last six months.

Blake: In line with our expectations, both cubic and clear path. Our recent acquisitions in this segment saw double digit year over year growth in sales.

Blake: We continue to grow our pipeline of multi year projects here with significant wins across our key industries and global customers I'll touch on some of these wins in a few minutes.

Speaker Change: Some of our newer offerings, we talked about at our Investor Day in November continued to set us apart and help get new customers.

Blake: Software and control organic sales declined about 12% year over year, but were above our expectations logics exceeded our expectations. This quarter with both orders and sales up double digits versus prior quarter logic orders have recovered sequentially during the last six months.

Speaker Change: One of these competitive wins in the quarter was with converged <unk> automation solutions, a leading global machine builder, who is partnering with Rockwell to help a German end user build their first U S Greenfield plant.

Blake: Some of our newer offerings, we talked about at our Investor Day in November continued to set us apart and help get new customers.

Speaker Change: Customer chose our cloud enabled optics platform for its hardware agnostic nature and its ability to seamlessly extract in aggregate data from various devices on the plant floor Cigna.

Blake: One of these competitive wins in the quarter was with converged <unk> automation solutions, a leading global machine builder, who is partnering with Rockwell to help a German end user build their first use greenfield plant.

Speaker Change: Significantly, reducing the time risk and cost to integrate solutions for multiple vendors.

Speaker Change: Lifecycle services organic sales were up 5% year over year.

Blake: The customer chose our cloud enabled optics platform for its hardware agnostic nature and its ability to seamlessly extract in aggregate data from various devices on a plant floor significantly reducing the time risk and cost to integrate solutions for multiple vendors.

Speaker Change: Book to Bill in this segment was 105 led by strong orders in our solutions business and tied to some of the larger multiyear project wins I mentioned earlier.

Speaker Change: We also saw good growth in recurring services with strategic wins across automotive tire and food and beverage.

Blake: Lifecycle services organic sales were up 5% year over year book.

Speaker Change: Total <unk> for the company grew 11% in the quarter led by strong growth in our software offerings.

Blake: Book to Bill in this segment was 105 led by strong orders in our solutions business and tied to some of the larger multiyear project wins I've mentioned earlier.

Speaker Change: One of our notable wins here this quarter was with Morocco.

Speaker Change: Dairy factories powered by renewable geothermal energy and that's one of the lowest manufacturing carbon footprints in the industry are cloud native Plex software was chosen to help maraca enhance their product traceability improve quality and reduce cost.

Blake: We also saw good growth in recurring services with strategic wins across automotive tire and food and beverage.

Blake: Total IRR for the company grew 11% in the quarter led by strong growth in our software offerings.

Blake: One of our notable wins here this quarter was with Morocco.

Speaker Change: Segment margin was over 17% in the quarter and adjusted EPS was $1 83.

Blake: Dairy factories powered by renewable geothermal energy and it's one of the lowest manufacturing carbon footprints in the industry are cloud native Plex software was chosen to help maraca enhance their product traceability improve quality and reduce cost.

Speaker Change: Both well above our expectations as we continue to execute on our cost down and longer term margin expansion projects.

Speaker Change: As we reiterated at our Investor day, a few months ago, we are committed to delivering $250 million.

Speaker Change: And year over year benefits from these actions in fiscal 'twenty five.

Blake: Segment.

Blake: Margin was over 17% in the quarter and adjusted EPS was $1 83.

Speaker Change: In addition to the structural productivity, we're deploying temporary cost measures to help mitigate the unfavorable currency impact on our earnings Christian will cover this in more detail later.

Blake: Both well above our expectations as we continue to execute on our cost down and longer term margin expansion projects as.

Blake: As we reiterated at our Investor day, a few months ago, we are committed to delivering $250 million.

Speaker Change: Turning to slide four to review key highlights of our Q1 industry segment performance.

Blake: And year over year benefits from these actions in fiscal 'twenty five.

Speaker Change: Consistent with our overall sales results in the quarter, our performance by industry reflects difficult year over year comparisons with Q1 of last year still benefiting from a large product backlog.

Blake: In addition to the structural productivity, we're deploying temporary cost measures to help mitigate the unfavorable currency impact on our earnings Christian will cover this in more detail later.

Speaker Change: Our discrete sales were down mid single digits year over year with declines in auto and semi partially offset by strong growth in E Commerce and warehouse automation.

Blake: Turning to slide four to review key highlights of our Q1 industry segment performance.

Speaker Change: Within discrete automotive and semiconductor sales continued to be impacted by delays as customers focus on driving operational efficiencies and profitability amidst increasing uncertainty from trade in policy changes in the upcoming months.

Blake: Consistent with our overall sales results in the quarter, our performance by industry reflects difficult year over year comparisons with Q1 of last year still benefiting from a large product backlog our discrete sales were down mid single digits year over year with declines in auto and semi partially offset by strong growth in e-commerce.

E Commerce in warehouse automation sales grew over 30% versus prior year and were above our expectations. We.

Blake: And warehouse automation.

Blake: Within discrete automotive and semiconductor sales continued to be impacted by delays as customers focus on driving operational efficiencies and profitability amidst increasing uncertainty from trade in policy changes in the upcoming months.

Speaker Change: We saw a significant uptick of customer activity this quarter, especially in North America, and Europe, our strong position with leading machine builders and systems integrators.

Speaker Change: In this space is helping us gain additional share of wallet with key end users both in the traditional e-commerce space and global logistics sector with.

Blake: E Commerce in warehouse automation sales grew over 30% versus prior year and were above our expectations. We.

Speaker Change: With a common theme of facility modernization and optimization recent new product introductions have also enhanced our competitiveness in this vertical given.

Blake: We saw a significant uptick of customer activity this quarter, especially in North America, and Europe, our strong position with leading machine builders and systems integrators.

Speaker Change: Given the acceleration in customer investments, we now expect e-commerce and warehouse automation to grow high single digits year over year in fiscal 'twenty five.

Blake: In this space is helping us gain additional share of wallet with key end users both in the traditional e-commerce space and global logistics sector with a common theme of facility modernization and optimization <unk>.

Speaker Change: Moving to hybrid sales in this industry segment was slightly above our expectations led by better performance in food and beverage and home and personal care verticals and.

Blake: <unk> new product introductions have also enhanced our competitiveness in this vertical given the acceleration in customer investments, we now expect e-commerce and warehouse automation to grow high single digits year over year in fiscal 'twenty five.

Speaker Change: In food and beverage our customers continue to prioritize spend on digital services and modernization programs over large capacity investments.

Speaker Change: We expect modest improvement in this vertical as we go through the year.

Moving to hybrid sales in this industry segment was slightly above our expectations led by better performance in food and beverage and home and personal care verticals and.

Speaker Change: In life Sciences, we saw a number of strategic wins in the quarter showcasing the breadth and differentiation of our offerings to serve this market.

Blake: In food and beverage our customers continue to prioritize spend on digital services and modernization programs over large capacity investments.

In addition to follow on orders for GOP, one related investments, we secured a large competitive win with our factory talk Mes software, helping one of the largest European life Sciences companies standardize their global facilities on our platform to increase tech transfer speed and reduce cost.

Blake: We expect modest improvement in this vertical as we go through the year.

Blake: In life Sciences, we saw a number of strategic wins in the quarter showcasing the breadth and differentiation of our offerings to serve this market.

Cost.

Another important win this quarter was with Thermo Fisher, our auto autonomous mobile robots were selected to help address thermals workforce challenges by optimizing their warehouses to autos AI enabled pack determination and movement flexibility and freeing up labor to focus.

Blake: In addition to follow on orders for GOP, one related investments, we secured a large competitive win with our factory talk Mes software, helping one of the largest European life Sciences companies standardize their global facilities on our platform to increase tech transfer speed and reduce cost.

Speaker Change: On more value added tasks.

Blake: Cost.

Blake: Another important win this quarter was with Thermo Fisher, our auto autonomous mobile robots were selected to help address their most workforce challenges by optimizing their warehouses through autos AI enabled path determination and movement flexibility and freeing up labor to focus.

Speaker Change: Turning to process industries.

Speaker Change: Sales in these verticals were down high single digits year over year.

Speaker Change: On difficult prior year comps.

Speaker Change: Especially within our energy market, where oil and gas grew over 25% in Q1 of last year.

Speaker Change: While the new administration support for more oil production in North America should benefit our customers in the long run.

Blake: On more value added tasks.

Turning to process industries.

Speaker Change: We see a mixed reaction from our energy customers near term as they continue to prioritize capital discipline.

Blake: Sales in these verticals were down high single digits year over year.

Blake: On difficult prior year comps.

Speaker Change: And operational efficiency over adding more production in the U S.

Blake: Especially within our energy market, where oil and gas grew over 25% in Q1 of last year.

Speaker Change: This quarter Rockwell and epic industrial.

Blake: While the new administration support for more oil production in North America should benefit our customers in the long run.

Speaker Change: A leading EPC company in the energy and chemical space, which shows in by one of the world's largest oil and gas producers to help achieve this year's this end users goal of net zero emissions by 2050.

Blake: We see a mixed reaction from our energy customers near term as they continue to prioritize capital discipline.

Blake: And operational efficiency, we are adding more production in the U S.

Speaker Change: Another important process win was in our mining vertical Vale selected Rockwell to help increase production and reduce water consumption at their new processing plant in Brazil, our winning combination of integrated hardware software and services is the reason Vale chose Rockwell as a single partner Dana.

Blake: This quarter Rockwell and epic industrial a leading EPC company in the energy and chemical space, which shows in by one of the world's largest oil and gas producers to help achieve this year's this end users goal of net zero emissions by 2050.

Speaker Change: Great end to end solutions for this greenfield.

Blake: Another important process win was in our mining vertical Vale selected Rockwell to help increase production and reduce water consumption at their new processing plant in Brazil, our winning combination of integrated hardware software and services is the reason Vale chose Rockwell as a single partner to integrate <unk>.

Let's turn to slide five in our Q1 organic regional sales as you can see the Americas continued downpour outperform other regions for us this quarter.

Speaker Change: EMEA sales were down 14%, we continue to see weakness across most of the region, particularly in Germany, and France with some early signs of stabilization at Italian machine builders.

Blake: End to end solutions for this greenfield.

Blake: Let's turn to slide five in our Q1 organic regional sales as you can see the Americas continued downpour outperform other regions for us this quarter EMEA.

Asia Pacific sales declined 9% led by a double digit year over year decline in China, while the automation market in the region is expected to stabilize later in 2025.

Blake: EMEA sales were down 14%, we continue to see weakness across most of the region, particularly in Germany, and France with some early signs of stabilization at Italian machine builders.

Speaker Change: We expect Asia Pacific to be our weakest region in fiscal 'twenty five.

Speaker Change: Let's now move to slide six to review our fiscal 2025 outlook.

Blake: Asia Pacific sales declined 9% led by a double digit year over year decline in China.

Speaker Change: We continue to expect a gradual sequential sales improvement as we move through this fiscal year.

Speaker Change: We're keeping our organic sales growth range of positive 2% to negative 4%, but we are updating our reported sales midpoint to $8 1 billion.

Blake: While the automation market in the region is expected to stabilize later in 2025.

Blake: We expect Asia Pacific to be our weakest region in fiscal 'twenty five.

Speaker Change: Reflecting one five points of negative contribution from currency translation.

Blake: Let's now move to slide six to review our fiscal 2025 outlook.

Blake: We continue to expect a gradual sequential sales improvement as we move through this fiscal year, we're keeping our organic sales growth range of positive 2% to negative 4%, but we are updating our reported sales midpoint to $8 1 billion.

Speaker Change: Christian will cover FX in the calendar <unk> of our guidance in more detail later on the call.

Annual recurring revenue is projected to grow by 10% this year.

Speaker Change: As I mentioned earlier, we are taking additional cost measures to all.

Speaker Change: Offset the negative impact of currency headwinds on our bottom line.

Blake: Reflecting one five points of negative contribution from currency translation.

Speaker Change: Which means we continue to expect segment margin in the 19% range and are reaffirming our adjusted EPS of $9 20 at the midpoint we.

Blake: Christian will cover FX in the calendar <unk> of our guidance in more detail later on the call.

Blake: Annual recurring revenue is projected to grow by 10% this year.

Speaker Change: We expect free cash flow conversion of 100% in fiscal year 'twenty five.

As I mentioned earlier, we are taking additional cost measures to offset the negative impact of currency headwinds on our bottom line.

Speaker Change: Now I'll turn it over to Christian to provide more detail on our Q1 and financial outlook for fiscal 'twenty five Christian.

Blake: Which means we continue to expect segment margin in the 19% range and are reaffirming our adjusted EPS of $9 20 at the midpoint we.

Christian Rosie: Thank you Blake and good morning, everyone I'll start on slide seven first quarter key financial information.

Christian Rosie: First quarter reported sales were down about eight 5% versus prior year. The impact of acquisitions was negligible and currency had a negative impact of 90 basis points in the quarter.

Blake: We expect free cash flow conversion of 100% in fiscal year 'twenty five.

Blake: I'll now turn it over to Christian to provide more detail on our Q1 and financial outlook for fiscal 'twenty five Christian.

Christian Rosie: About one point of our organic growth came from price and price cost was favorable.

Christian Rosie: Segment operating margin was 17, 1% compared to 17, 3% a year ago with lower sales volume, mostly offset by the benefits of cost from cost reduction and margin expansion actions Blake mentioned earlier.

Christian: Thank you Blake and good morning, everyone I'll start on slide seven first quarter key financial information.

Christian: First quarter reported sales were down about eight 5% versus prior year. The impact of acquisitions was negligible and currency had a negative impact of 90 basis points in the quarter.

Christian Rosie: The EPS of $1 83.

Christian Rosie: It was above our expectations, primarily due to the beat on segment operating margins will get into more detail. When we discuss the EPS perusing the cost reduction actions I would like to take a moment to commend the team for outstanding performance in the first quarter was about strong execution and good cost controls.

By one point of our organic growth came from price and price cost was favorable <unk>.

Christian: Segment operating margin was 17, 1% compared to 17, 3% a year ago with lower sales volume, mostly offset by the benefits of cost from cost reduction and margin expansion actions Blake mentioned earlier.

Christian Rosie: The adjusted effective tax rate for the first quarter was $17, 5% below the prior year rate of 17, 9%.

Christian: Adjusted EPS was $1 83.

Christian: It was above our expectations, primarily due to the beat on segment operating margins will get into more detail. When we discuss the EPS bridge on the cost reduction actions I would like to take a moment to commend the team for outstanding performance in the first quarter. It was about strong execution and good cost controls.

Christian Rosie: <unk> on track to achieve a 17% ETR for fiscal 2025.

Christian Rosie: Free cash flow of $293 million was $328 million higher than prior year free cash flow conversion was 140% in the first quarter of this year reflective of continued working capital management by the team as well as zero incentive payout in fiscal 2024 performance. This is in contrast, with the first quarter of last year, where we had our <unk>.

Christian: The adjusted effective tax rate for the first quarter was $17, 5% below the prior year rate of 17, 9% we remain on track to achieve a 17% ETR for fiscal 2025.

Christian Rosie: Cash bonus payout for 2023 performance.

Christian: Free cash flow of $293 million was $328 million higher than prior year free cash flow conversion was 140% in the first quarter of this year reflective of continued working capital management by the team as well as zero incentive payouts on fiscal 2024 performance. This is in contrast, with the first quarter of last year, where we had our cash.

Christian Rosie: Two additional items not shown on the slide we repurchased approximately 400000 shares in the quarter at a cost of $99 million.

And December 31, we had approximately $1 $2 billion remaining under our repurchase authorization.

Christian Rosie: Return on invested capital was 14, 5% from the first quarter of fiscal 2023, five and 400 basis points lower than the prior year, primarily driven by lower pretax income.

Christian: Cash bonus payout for 2023 performance.

Christian: Two additional items not shown on the slide we repurchased approximately 400000 shares in the quarter at a cost of $99 million in.

Christian Rosie: Slide eight provides a sales and margin performance overview for our three operating segments.

Christian: On December 31, we had approximately $1 $2 billion remaining under our repurchase authorizations.

Christian Rosie: Intelligent devices margin of 14, 9% decreased by 130 basis points year over year purely focusing on decremental conversion segment had decrementals in the 20th year over year in the first quarter, which reflects strong execution on cost out programs against the double digit organic sales decline.

Christian: Return on invested capital was 14, 5% for the first quarter of fiscal 2012, 2025, and 400 basis points lower than the prior year, primarily driven by lower pretax income.

Christian: Slide eight provides a sales and margin performance overview for our three operating segments Intel.

Christian Rosie: Software and control margin of 25, 1% was flat with the prior year. This segment typically has very high decrementals with strong execution on our cost out programs and good price cost performance kept our year over year decremental margins in the twenties performing above our expectations.

Christian: Intelligent devices margin of 14, 9% decreased by 130 basis points year over year purely focusing on decremental conversion segment had decrementals on the 20th year over year in the first quarter, which reflects strong execution on cost out programs against the double digit organic sales decline.

Christian Rosie: It's important to note that R&D spend in this segment was in the low teens as a percentage of sales, reflecting our continued focus on new product introductions and long term growth and differentiation.

Christian: Software and control margin of 25, 1% was flat with the prior year. This segment typically has very high decrementals, but strong execution on our cost out programs and good price cost performance kept our year over year decremental margins in the twenties performing above our expectations.

Christian Rosie: Lifecycle services margin of 12, 5% decreased 190 basis points year over year and was slightly below our expectations, mostly driven by Cynthia shipments.

Christian Rosie: Incrementals were solid year over year, reflecting low single digit volume growth and strong execution on our cost out programs.

Christian: It's important to note that R&D spend in this segment was in the low teens as a percentage of sales, reflecting our continued focus on new product introductions and long term growth and differentiation.

Speaker Change: Before moving onto EPS, it's expandable on orders and demand as Blake mentioned orders came in better than expected, surpassing $2 billion in the first quarter and book to Bill was greater than one which hasn't been the case for the last seven quarters.

Christian: Lifecycle services margin of 12, 5% decreased 190 basis points year over year and was slightly below our expectations, mostly driven by Cynthia shipments.

Speaker Change: This is a good sign but didn't materially change the calendars nation of our outlook. The outperformance was largely from project orders scheduled to ship later in the year.

Christian: Incrementals were solid year over year, reflecting the low single digit volume growth and strong execution on our cost out programs.

Speaker Change: Another favorable data point in the first quarter, new demand placed on our distributors slowing through at close to 100% in terms of new orders on Rockwell matching historical levels, giving us further evidence that the destocking cycle is mostly behind us.

Christian: Before moving on to EPS, it's expandable on orders and demand as Blake mentioned orders came in better than expected, surpassing 2 billion in the first quarter and book to Bill was greater than one which hasnt been the case for the last seven quarters.

Christian: This is a good sign but didn't materially change the calendar relation of our outlook. The outperformance was largely from project orders scheduled to ship later in the year.

Speaker Change: The next slide nine provides the adjusted EPS walk from Q1 fiscal 2024 to Q1 fiscal 2025.

Christian: Another favorable data point in the first quarter, new demands placed on our distributors is flowing through at close to 100% in terms of new orders on Rockwell matching historical levels, giving us further evidence that the destocking cycle is mostly behind us.

Speaker Change: Core performance was down 55 on an 8% organic sales decrease.

Speaker Change: Sales declines were primarily in our higher margin products in both intelligent devices and software and control which impacts flow through.

Speaker Change: Importantly, the organization took some temporary cost measures in Q1, which helped US help keep the core decremental flow through on the high single digit sales decline to this level.

Christian: The next slide nine provides the adjusted EPS walk from Q1 fiscal 2024 to Q1 fiscal 2025.

Speaker Change: Cost reduction and margin expansion actions, which reflect more structural productivity provided about $70 million of benefit in the quarter slightly above our expectations and we're at 50 tailwind.

Christian: Core performance was down 55 on an 8% organic sales decrease those.

Christian: These declines were primarily in our higher margin products in both intelligent devices and software and control which impacts flow through.

Speaker Change: Compensation, which reflects merit and incentive compensation.

Christian: Importantly, the organization took some temporary cost measures in Q1, which helps us help keep the core decremental flow through on the high single digit sales decline to this level.

Speaker Change: With a <unk> 20 headwind this year over year Delta reflects merit increases that came into effect at the beginning of the fiscal year as well as higher incentive comp versus prior year.

Christian: Cost reduction and margin expansion actions, which reflect more structural productivity provided about $70 million of benefit in the quarter slightly above our expectations and we're at 50 tailwind.

Speaker Change: Recall that our full year 2025 guide was for compensation and inflation to be about $190 million headwind compared to fiscal 2025.

Speaker Change: With $160 million of.

Christian: Compensation, which reflects merit and incentive compensation.

Speaker Change: Of that coming from compensation the.

Christian: With a <unk> 20 headwind this year over year Delta reflects merit increases that came into effect at the beginning of fiscal year as well as higher incentive comp versus prior year.

Speaker Change: The inflation impact is captured inside of core in this bridge, we expect compensation to be about 90 headwind for the remaining three quarters of the year spread about equally.

Christian: Recall that our full year 2025 guide was for compensation and inflation to be about $190 million headwind compared to fiscal 2025.

Speaker Change: All other items resulted in a 4% net benefit.

Speaker Change: Moving on to the next slide 10 to discuss our updated guidance for the full year fiscal 2025.

Christian: With $160 million of that coming from compensation the.

Speaker Change: Our thesis for the year remains largely largely impact with a couple of changes.

Christian: The inflation impact is captured inside of core in this bridge, we expect compensation to be about 90% of headwind for the remaining three quarters of the year spread about equally.

Speaker Change: We expect organic sales in a range from negative 4% to positive 2%, while our initial guide for reported revenue for fiscal 2025 did not anticipate any significant impacts from currency. The recent strengthening of the dollar requires a modification in our guide at current rates, we expect currency headwind to be about one five points, which takes our <unk>.

Christian: All other items resulted in a 4% net benefit.

Christian: Moving on to the next slide 10 to discuss our updated guidance for the full year fiscal 2025, our thesis for the year remains largely largely intact with a couple of changes.

Speaker Change: <unk> reported sales down to slightly below $8 $1 billion at the midpoint, we expect price to contribute about a point of growth for the year. This excludes any tariff related price actions.

Christian: We expect organic sales in a range from negative 4% to positive 2%, while our initial guide for reported revenue for fiscal 2025 did not anticipate any significant impacts from currency. The recent strengthening of the dollar requires a modification in our guide at current rates, we expect currency headwind to be about one five points, which takes our.

Speaker Change: At the midpoint of our reported sales guidance, which is now negative two 5%. Our current expectations are for intelligent devices sales to be down mid single digits and software and control and lifecycle services to be approximately flat year over year.

Christian: Guidance on a reported sales down to slightly below $8 1 billion at the midpoint, we expect price to contribute about a point of growth for the year. This excludes any tariff related price actions.

Speaker Change: From margin standpoint, we expect ITD margin to be down year over year on lower sales software and control margins to expand year over year on flat sales and we expect lifecycle services margin to be flat to slightly down year over year.

Christian: At the midpoint of our reported sales guidance, which is now negative two 5%. Our current expectations are for intelligent devices sales to be down mid single digits and software and control and lifecycle services to be approximately flat year over year.

Speaker Change: Our adjusted EPS range is unchanged at $8 60 to $9 80.

Speaker Change: With a $9 20 midpoint.

Christian: From margin standpoint, we expect ITD margin to be down year over year on lower sales software and control margins to expand year over year on flat sales and we expect lifecycle services margin to be flat to slightly down year over year.

Speaker Change: Comparable calendars nation. The dollar strengthening late in the first quarter has continued into the second quarter and as a sequential headwind of less than one.

Speaker Change: Our expectations for reported sales to grow low to mid single digits sequentially from Q1 to Q2. After Q2, we're expecting gradual sequential sales growth through the remainder of the year.

Christian: Our adjusted EPS range is unchanged at $8 60 to $9 80.

Christian: With a $9 20 midpoint.

Speaker Change: On a year over year basis, and one five points of sales headwind from FX is expected to result in a 35% headwind on EPS, which is split evenly through the remaining three quarters of the year.

Christian: Talked about calendar <unk>.

Christian: The dollar strengthening late in the first quarter has continued into the second quarter and as a sequential headwind of less than one minute.

Speaker Change: As Blake said earlier, we're taking additional temporary measures on spending to offset this impact the team performed well and spending control in the first quarter, we're going to hold those rains types. We can continue to drive towards that adjusted EPS midpoint of $9 20.

Christian: Our expectations for reported sales grow low to mid single digit sequentially from Q1 to Q2. After Q2, we're expecting gradual sequential sales growth through the remainder of the year.

Christian: On a year over year basis to one five points of sales headwind from FX is expected to result in a 35 point headwind on EPS, which is split evenly through the remaining three quarters of the year as.

Speaker Change: Specific to Q2, we expect segment operating margins to expand about 100 basis points sequentially on the incremental sales volume, resulting EPS up those sales and margin expectations would be in the neighborhood of $2 per share.

Christian: As Blake said earlier, we're taking additional temporary measures on spending to offset this impact the team performed well and spending control in the first quarter, we're going to hold those range types. We can continue to drive towards that adjusted EPS midpoint of $9 20.

Speaker Change: A few additional comments on fiscal 2025 guidance for your models.

Speaker Change: Corporate and other expense is expected to be around $145 million net interest expense for fiscal 2025 is expected to be about $140 million. We're assuming average diluted shares outstanding of $113 4 million shares with about $300 million of share repurchases targeted during the year.

Christian: Specific to Q2, we expect segment operating margins to expand about 100 basis points sequentially on the incremental sales volume, resulting EPS of those sales and margin expectations would be in the neighborhood of $2 per share.

Christian: A few additional comments on fiscal 2025 guidance for your models corporate and other expense is expected to be around $145 million net interest expense for fiscal 2025 is expected to be about $140 million. We're assuming average diluted shares outstanding of $113 4 million shares with about $300 million of share.

Speaker Change: Moving away from this slide I'd like to expand on a couple of topics first focusing on cost reduction and margin expansion activities, which gave us a benefit of approximately <unk> 50 of EPS in the first quarter for the full year, we continue to expect a benefit of $250 million or about $1 85.

Speaker Change: <unk> 85 per share.

As discussed at our Investor Day in November there are hundreds of projects supporting these initiatives and while each one individually may only be a couple of basis points or 10 basis points of yield when put together an annualized are giving us a yield in the one hundreds of basis points, the timing and magnitude continues to fluctuate as we execute against these plans the first quarter was a good one.

Christian: <unk> targeted during the year.

Christian: Moving away from the slides I'd like to expand on a couple of topics first focusing on cost reduction and margin expansion activities, which gave us a benefit of approximately 50 of EPS in the first quarter for the full year, we continue to expect a benefit of $250 million or about $1 85 per.

Speaker Change: And we track slightly ahead of our goal for the quarter. The primary driver of the outperformance was manufacturing efficiencies and effective sourcing.

Christian: <unk> 85 per share.

Christian: As discussed at our Investor Day in November there are hundreds of projects supporting these initiatives and while each one individually may only be a couple of basis points or 10 basis points of yield when put together an annualized are giving us a yield in the one hundreds of basis points, the timing and magnitude continues to fluctuate as we execute against these plans the first quarter was a good one.

Speaker Change: There's a lot of year left in front of us and a great deal of work to be done, but I would like to thank the team for their efforts.

Speaker Change: While you May see this initiative with cost out.

Speaker Change: That's what we're tracking and reporting to our investors. It's important to note that the ultimate goal of productivity is to drive revenue through competitiveness and speed. These actions are setting us up for long term growth of both sales and earnings.

Christian: And we track slightly ahead of our goal for the quarter. The primary driver of the outperformance was manufacturing efficiencies and effective sourcing there's a lot of year left in front of us and a great deal of work to be done, but I'd like to thank the team for their efforts.

Speaker Change: To that end I want to follow up on some other operational excellence topics from our Investor day.

Christian: Sure.

Speaker Change: The Rockwell operating model continues to develop as we build the foundation to sustain our long our cost out initiatives as well as drive merchant expansion for the long term.

Christian: While you May see this initiative as cost out because that's what we're tracking and reporting to our investors. It's important to note that the ultimate goal of productivity is to drive revenue through competitiveness and speed. These actions are setting us up for long term growth of both sales and earnings.

Speaker Change: During the first quarter, we had another 1300 Rockwell employees complete yellow belt training. In addition, we rationalized over 21000, Skus as we seek to simplify our operations and improve customer experience.

Christian: To that end I want to follow up on some other operational excellence topics from our Investor day the.

Speaker Change: Our product resiliency index continues to improve as we steadily reduced single points of failure in our operations.

Christian: The Rockwell operating model continues to develop as we build the foundation to sustain our long our cost out initiatives as well as drive margin expansion for the long term.

Speaker Change: Although the initial efforts arose from the supply chain prices as we enter into an era of changing tariffs and trade. This resiliency enables us to respond to dynamic conditions.

Christian: During the first quarter, we had another 1300 Rockwell employees complete yellow belt training. In addition, we rationalized over 21000, Skus as we seek to simplify our operations and improve customer experience.

Speaker Change: Moving on I'd like to go into some depth around our around the potential tariff impact to our business, including our short term actions as well as longer term thoughts.

Christian: Our product resiliency index continues to improve as we steadily reduced single points of failure in our operations. While those initial efforts arose from the supply chain prices as we enter into an era of changing tariffs and trade. This resiliency enables us to respond to dynamic conditions move.

Speaker Change: As Blake mentioned earlier, the Rockwell team has taken initial steps in response to new tariffs.

Speaker Change: We plan for a number of scenarios and remain ready to adapt quickly our priorities are a combination of maintaining profitability and utilizing resiliency in our operations and supply chain to mitigate impacts under a variety of scenarios.

Christian: Moving on I'd like to go into some depth around our around the potential tariff impact to our business, including our short term actions as well as longer term thoughts.

Speaker Change: I want to size our exposure. So you have context cost of finished goods imported from Mexico, Canada and China in total were less than 10% of our U S revenue in fiscal 2024.

Christian: As Blake mentioned earlier, the Rockwell team has taken initial steps in response to new tariffs.

Christian: We had planned for a number of scenarios and remain ready to adapt quickly our priorities are a combination of maintaining profitability and utilizing resiliency in our operations and supply chain to mitigate impacts under a variety of scenarios.

Speaker Change: Separately in fiscal 2024 are direct imports into the United States from Mexico, both from third parties as well as from our own manufacturing facilities were approximately $350 million.

Christian: I want to size our exposure. So you have context cost of finished goods imported from Mexico, Canada and China in total we're less than 10% of our U S revenue in fiscal 2024.

Speaker Change: <unk> from Canada, and China were each approximately $100 million.

Speaker Change: Our tariff mitigating mitigation plan is multifaceted for the near term this will be primarily through price and we've implemented price changes from the additional China tariffs that were enacted on February four.

Christian: Early in fiscal 2024 are direct imports into the United States from Mexico, both from third parties as well as from our own manufacturing facilities were approximately $350 million in.

Speaker Change: We have made and will continue to make changes to manufacturing location.

Speaker Change: Patients, where theres an attractive ROI.

Christian: Imports from Canada, and China were each approximately $100 million.

Speaker Change: Canada, and Mexico tariffs, if they happen in March or sometime in the future will impact both standard products as well as a portion of our configured to order sales.

Christian: Our tariff mitigating mitigation plan is multifaceted for the near term this will be primarily through price and we've implemented price changes from the additional China tariffs that were enacted on February 4th.

Speaker Change: We will enact price increases on impacted products and also intend to reprice, our backlog to reflect our new price lists.

Speaker Change: These actions are disruptive for our customers of course, and there will likely be some noise in the near term we are working hard to minimize that disruption and ensure continued levels of customer service with that said due to our immediate actions and substantial U S manufacturing footprint. We do not expect these tariffs to have a material impact on our profitability for the full year.

Christian: We have made and will continue to make changes to manufacturing location locations, where theres an attractive ROI.

Christian: Canada, and Mexico tariffs, if they happen in March or sometime in the future will impact both standard products as well as a portion of our configured to order sales.

Christian: We will enact price increases on impacted products and also intend to reprice, our backlog to reflect our new price lists.

Speaker Change: Beyond pricing, we have a number of projects that are in flight to mitigate tariff costs through alternative sourcing and movement of production locations, we will be leveraging the resiliency that's been built into our operations and supply chain, including moving some production in response to tariffs.

Christian: These actions are disruptive for our customers of course, and there will likely be some noise in the near term we are working hard to minimize that disruption and ensure continued levels of customer service with that said due to our immediate actions and substantial U S manufacturing footprint. We do not expect these tariffs to have a material impact on our profitability for the full year.

Speaker Change: For example, we have some products that are produced in Mexico and destined for the U S.

Speaker Change: The similar production that occurs in the U S that are destinations outside the United States. We're swapping those out moving the production for non U S customers outside the U S. <unk> to create capacity to manufacturing production for U S customers inside the U S. It's a small portion of our overall tariff impacted operations.

Christian: Beyond pricing, we have a number of projects that are in flight to mitigate tariff costs through alternative sourcing and movement of production locations, we will be leveraging the resiliency that's been built into our operations and supply chain, including moving some production in response to tariffs for.

Christian: For example, we have some products that are produced in Mexico and destined for the U S. But similar production that occurs in the U S where the destination is outside the United States. We're swapping those out moving the production for non U S customers outside the U S nor to create capacity to manufacturing production for U S customers inside the U S. It's a small portion of our overall tariff.

Speaker Change: Good example of quick moves we can make.

Speaker Change: As Blake mentioned at our Investor Day, our operations team has done a good job of keeping infrastructure in place for second shifts sometimes third shift in locations that have been challenged with lower volume in the last 12 months that.

Speaker Change: That creates an opportunity to move production into the U S to avoid tariffs with a limited time lag.

Speaker Change: As you know we're in a very dynamic environment. So we will continue to leverage our agile supply chain and take additional steps as necessary.

Impacted operations, but a good example of quick moves we can make.

Christian: As Blake mentioned at our Investor Day, our operations team has done a good job of keeping the infrastructure in place for second shifts sometimes third shift in locations that have been challenged with lower volume in the last 12 months.

Speaker Change: With that I'll turn it back over to Blake for some closing remarks before we start Q&A. Thanks Christian.

Blake: As I mentioned, we're seeing some encouraging new project activity across multiple end markets. Many of these involve U S user sites, but they involve multiple points of influence around the world and we're doing a good job of coordinating this global effort.

That creates an opportunity to move production into the U S to avoid tariffs with a limited time lag.

Christian: As you know we're in a very dynamic environment. So we will continue to leverage our agile supply chain and take additional steps as necessary.

Christian: I'll turn it back over to Blake for some closing remarks before we start Q&A. Thanks Christian as I mentioned, we're seeing some encouraging new project activity across multiple end markets. Many of these involve U S user sites, but they involve multiple points of influence around the world and we're doing a good job of.

Blake: We expect the impact of so called Mega projects to be meaningful in the next few years.

Blake: We continue to track new legislation and executive orders as they are announced.

Blake: With our large U S manufacturing footprint and strong market position, we're confident that we can respond quickly to these changes I am pleased with the progress our teams are making toward our long term productivity and margin expansion targets and I am confident we are making the right investments to drive sustained growth and profit.

Christian: Coordinating this global effort.

Christian: We expect the impact of so called Mega projects to be meaningful in the next few years.

Christian: We continue to track new legislation and executive orders as they are announced.

Blake: Ability.

The framework for superior growth and performance through the cycle that we outlined over a year ago is intact and we are working that plan.

Christian: With our large U S manufacturing footprint and strong market position, we're confident that we can respond quickly to these changes.

Christian: I'm pleased with the progress our teams are making toward our long term productivity and margin expansion targets.

Blake: I am also taking a moment to thank our employees and partners for their dedication and hard work I am proud to have such a strong team to help us navigate through this dynamic period.

Christian: I'm confident we're making the right investments to drive sustained growth and profitability.

Blake: Nobody is better positioned than Rockwell and our partners to help American manufacturers create the future of industrial operations.

Christian: Framework for superior growth and performance through the cycle that we outlined over a year ago is intact and we are working that plan.

John Zillmer: John will now begin the Q&A session.

Christian: I am also taking a moment to thank our employees and partners for their dedication and hard work.

John Zillmer: Thanks Blake.

Blake: I'd like to get to as many of you as possible. So please limit yourself to one question and a quick follow up Julianne, let's take our first question.

Proud to have such a strong team to help us navigate through this dynamic period.

Blake: Certainly as a reminder to ask a question. Please press star followed by one on your telephone keypad.

Christian: Nobody is better positioned than Rockwell and our partners to help American manufacturers create the future of industrial operations.

Speaker Change: Our first question comes from Scott Davis from Melius Research. Please go ahead. Your line is open.

John: John will now begin the Q&A session.

Blake: Hey, good morning, guys Blake Christianize Yana.

John: Thanks Blake.

John: Like to get to as many of you as possible. So please limit yourself to one question and a quick follow up.

Speaker Change: Good morning.

Speaker Change: Hey, I want to start with this SKU rationalization thing because it's kind of relatively new ish for you guys from 'twenty one it sounds like a lot of I know you sell a lot of stops so maybe it's not but.

Julianne: Julianne, let's take our first question.

Julianne: Certainly as a reminder to ask a question. Please press star followed by one on your telephone keypad.

Julianne: Our first question comes from Scott Davis from Melius Research. Please go ahead. Your line is open.

Speaker Change: In context of it sounds like a lot but.

Speaker Change: Other puts and takes on how that impacts 2025, meaning I would've expected, maybe some top line impact.

Scott Davis: Hey, good morning, guys like Krishna genre.

Speaker Change: Good morning.

Speaker Change: But perhaps.

Julianne: Okay.

Speaker Change: Hey, I wanted to start with this SKU rationalization thing because it's kind of relatively new ish for you guys in 'twenty one it sounds like a lot of I know you sell a lot of stops so maybe it's not but.

Speaker Change: An offsetting impact on positive impact on margins is that is there any way to kind of drill down into that a little bit yes.

Speaker Change: Yes, sure Scott I'll start and if Bob wants to jump in afterwards, certainly but.

Julianne: In context, it sounds like a lot but.

Speaker Change: From the SKU rationalization.

Julianne: Are there puts and takes on how that impacts 2025, meaning I would've expected, maybe some top line impact.

Speaker Change: Really honest here that this hasn't been done in the history of Rockwell So.

Speaker Change: Really we're starting with the low hanging fruits that 'twenty 1000, really reflects a lot of no sales and low sales skus. So from an impact perspective within the year you should be thinking about it as a.

But perhaps.

Julianne: An offsetting impact on positive impact on margins is that is there any way to kind of drill down into that a little bit yes.

Julianne: Yes, sure Scott I'll start with Blake wants to jump in afterwards, certainly but.

Speaker Change: Any impact at all or no significance of impact, it's really again trying to help us streamline those operations.

Julianne: The SKU rationalization.

Speaker Change: As we get farther along in the process and we've got another 39000 that we're looking at right now.

Julianne: Really honest here that this hasn't been done in the history of Rockwell So.

Julianne: Really we're starting with a low hanging fruits that 'twenty 1000, really reflects a lot of no sales and low sales skus. So from an impact perspective within the year you should be thinking about it as.

Speaker Change: We'll continue to have a little bit more of an adjustment, but again don't expect that to have a material impact.

Speaker Change: And this is think of this is.

Speaker Change: Part of the spectrum of activities as we go in and take a little bit closer look to those.

Julianne: Any any impact at all or no significance of impact, it's really again trying to help us streamline those operations.

Speaker Change: Total SKU portfolio.

Julianne: As we get farther along in the process and we've got another 39000 that we're looking at right now.

Speaker Change: Christian mentioned you have those that are easy to reduce from <unk>.

Julianne: That will continue to have a little bit more of an adjustment, but again don't expect that to have a material impact.

Speaker Change: Bills of material and then you look at what are the items that we might want to keep but we can do something with price on beyond just the general price increases that we do so we're working through that in a methodical way I expect this activity to continue on an ongoing basis, but the early results as you.

Julianne: Yes, and this is think of this as part of a spectrum of activities as we go in and take a little bit closer look to those.

Julianne: Total SKU portfolio.

Christian: As Christian mentioned you have.

Christian: Those that are easy to reduce from <unk>.

Speaker Change: Center are significant because when you can reduce those catalog items then it reduces the ability for those items to attract cost in some way as they move through the manufacturing footprint.

Christian: Bills of material and then you look at what are the items that we might want to keep but we can do something with price on beyond just the general price increases that we do so we're working through that in a methodical way I expect this activity to continue on an ongoing basis, but the early results.

Speaker Change: Yes that makes sense.

Speaker Change: Hey, guys. This is this was a more I think upbeat and positive call than you've had in a few quarters.

Christian: <unk> center are significant because when you can reduce those catalog items then it reduces the ability for those items to attract cost in some way as they move through the manufacturing footprint.

Speaker Change: Orders, obviously supportive of that.

Speaker Change: Of.

Speaker Change: A lot of progress you've made on the margin side for Sharon incremental or decremental, certainly way better than you had in the past, but when you think about the guidance for 2025.

Christian: Yes that makes sense.

Speaker Change: On just organic growth.

Speaker Change: Hey, guys. This is this was a more I think upbeat and positive call than you've had in a few quarters.

Speaker Change: Considering the orders that you had in the commentary.

Speaker Change: I would expect that there's a little bit of a positive bias to that guidance is at.

Christian: Orders, obviously supportive of that and a lot of.

Christian: A lot of progress you've made on the margin side for Sharon incremental or decremental, certainly way better than you had in the past, but when you think about the guidance for 2025.

Speaker Change: Is that fair to say would you characterize it as still being just a little bit conservative and appropriately. So I suppose given the state of affairs in the world but.

Speaker Change: It appears that got out of that.

Speaker Change: Conservative would you characterize that.

Christian: On just organic growth.

Christian: Considering the orders that you had in the commentary.

Scott Davis: Scott There is no question, we had a good start to the year as we've been saying.

Christian: I would expect there's a little bit of a positive bias to that guidance is that.

Scott Davis: We expected a gradual sequential growth through the year, we over performed a little bit in orders. So we're happy to see that early in the year.

Christian: Is that is that fair to say would you characterize it as still being just a little bit conservative and appropriately. So I suppose given the state of affairs in the world but.

Scott Davis: But it's still.

Scott Davis: Keeps our thesis intact, we needed to see growth, which started off with growth and we expect to see that continue through the year.

Christian: It appears a bit.

Christian: Conservative would you characterize that.

Scott Davis: Scott There is no question, we had a good start to the year as we've been saying.

Speaker Change: Okay Fair enough best of luck guys. Thank you.

Scott Davis: Expected gradual sequential growth through the year, we over performed a little bit in orders. So we're happy to see that early in the year.

Scott Davis: Yes. Thanks.

Speaker Change: Our next question comes from Andy Kaplowitz from Citigroup. Please go ahead. Your line is open.

Andy Kaplowitz: Good morning, everyone nice quarter.

Scott Davis: But it's still.

Speaker Change: Hey, Andy.

Scott Davis: Keeps our thesis intact, we needed to see growth, which started off with growth and we expect to see that continue through the year.

Speaker Change: Blinker question orders up mid single digits sequentially. I know you had flat expectations can you give us more client in terms of what you think happened in the quarter. It seems based on Christian's comments that maybe lack of destock was slightly better than expectations and you did mentioned Blake the improvement in E. Commerce, you sound, a little better on hybrid markets in food and beverage and life Sciences, how much.

Speaker Change: Okay Fair enough best of luck guys. Thank you.

Scott Davis: Yes. Thanks.

Speaker Change: Our next question comes from Andy Kaplowitz from Citigroup. Please go ahead. Your line is open.

Andy Kaplowitz: Good morning, everyone nice quarter.

Speaker Change: That improvement is actually markets getting better versus your improved product offering and did the positive order trends you saw in fiscal Q1 continue in January.

Speaker Change: Hey, Andy.

Speaker Change: Thank you Christian orders up mid single digits sequentially. I know you had flat expectations can you give us more color in terms of what you think happened in liquidity. It seems based on Christian's comments, then maybe lack of destock was slightly better than expectations and you did mentioned Blake the improvement in E. Commerce, you sound, a little better on hybrid markets in food and beverage and life Sciences, how much.

Yes, I think I think that the performance in Q1.

Speaker Change: And then January which does support the outlook for Q2 and the balance of the year does represent some improvement in the underlying markets as Christian said, we saw the orders the new demands placed on our distributors pretty much right on top of the new demand that we're seeing which is.

Speaker Change: That improvement is actually markets getting better versus your improved product offering and did the positive order trends you saw in fiscal Q1 continue in January.

Speaker Change: Yes, I think I think that the performance in Q1.

Speaker Change: Indicates that the.

Speaker Change: And then January which does support the outlook for Q2 and the balance of the year does represent some improvement in the underlying markets as Christian said, we saw the orders the new demands placed on our distributors pretty much right on top of the new demand that we're seeing which is.

Speaker Change: Destock is it's pretty much done in most parts of our market with the possible exception of China.

Speaker Change: It's broad based are importantly.

Speaker Change: It was manifested in the hybrid space.

Speaker Change: Food and beverage and home and personal care, we mentioned that we saw some green shoots in Italian machine builders, which is mainly packaging for life sciences, including beverage.

Speaker Change: The case that the.

Speaker Change: Destock is it's pretty much done in most parts of our market with the possible exception of China.

Speaker Change: It's broad based are importantly.

Speaker Change: Within the discrete space automotive is still a challenge, but as we mentioned e-commerce.

Speaker Change: It was manifested in the hybrid space.

Speaker Change: Food and beverage and home and personal care, we mentioned that we saw some green shoots in Italian machine builders, which is mainly packaging for life sciences, and food and beverage.

Speaker Change: Warehouse automation is quite strong that includes a few areas that includes e-commerce as.

Speaker Change: New fulfillment centers are being built it includes the modest exposure, we have to data centers, but that modest modest exposure is growing really fast and then its parcel handling companies that are looking to complement scares people with technology.

Speaker Change: Within the discrete space automotive is still challenge, but as we mentioned E Commerce warehouse automation.

Speaker Change: Is quite strong that includes a few areas that includes e-commerce as.

And we're seeing some really good project activity.

Speaker Change: New fulfillment centers are being built it includes the modest exposure, we have to data centers, but that modest modest exposure is growing really fast and then its parcel handling companies that are looking to complement scares people with technology.

Speaker Change: In parcel handling companies and this is also where we mentioned new product introductions are on machine portfolio factory talked optics for operator interface and edge data management.

Speaker Change: <unk> <unk>.

Speaker Change: Mobile robots all of those are playing a role in not only winning on their own merit, but for precisely the reason that we acquired these companies they're pulling through larger solutions as customers are confident that we have the breadth to be able to meet their needs and I'll finish by saying process.

Speaker Change: And we're seeing some really good project activity.

Speaker Change: In parcel handling companies and this is also where we mentioned new product introductions are on machine portfolio factory talked optics for operator interface and edge data management.

Speaker Change: We're not seeing a weakening in the oil and gas.

Speaker Change: <unk> mobile robots all of those are playing a role there not only winning on their own merit, but for precisely the reason that we acquired these companies. They are pulling through larger solutions as customers are confident that we have the breadth to be able to to meet their needs and I'll finish by.

Speaker Change: More of the performing <unk> was based on a very strong comps or difficult comps in the first quarter of last year, when oil and gas was up 25%.

Speaker Change: But we continue to expect energy contributed positive growth in.

Speaker Change: In the year and then mining within the process industry is also.

Speaker Change: <unk> process, we're not seeing a weakening in the oil and gas.

Speaker Change: More of the performance there was based on a very strong comps or difficult comps in the first quarter of last year, when oil and gas was up 25%.

Speaker Change: Source of optimism.

Speaker Change: Very helpful. Blake, and then Christian and cost reduction and margin expansion actions as you said with 50 in Q1, 185% expected for the year I think Christian at the Investor Day, you mentioned the cost actions from a combined overall cost at present, we're going to continue to ramp and twenty-five evolves and you mentioned slightly more positive impact in your mountain sourcing and Matt.

Speaker Change: But we continue to expect energy to contribute positive growth.

Speaker Change: In the year and then mining within the process industry is also.

Speaker Change: Source of optimism.

Speaker Change: New factory in Q1, so you actually see a little more benefit than 185, I know, it's early but how would you respond to that.

Speaker Change: Very helpful. Blake, and then Christian and cost reduction and margin expansion actions. As you said, we're at 50 in Q1, 185% expected for the year I think Christian at the Investor Day, you mentioned the cost actions from a combined overall cost at present, we're going to continue to ramp as 25 evolves and you mentioned slightly more positive impact than you modeled and sourcing and manufacture.

Speaker Change: India, it's really more about the timing of those so we did certainly it again.

Speaker Change: We've underscored the timing and magnitude is always going to be a little bit tougher.

Speaker Change: Tough for us to gauge and so some of it did come through a little bit earlier in the year in the first quarter than what we had expected.

Speaker Change: In Q1, so could you actually see a little more benefit than 185, I know, it's early but how would you respond to that.

Speaker Change: Didn't see anything in there, though that would say that we would be changing that number.

Speaker Change: And so from a from the perspective of the overall program. The size of the program is still the same and keep in mind that this program really started in the second half of last year. So as we're coming up against those comparable as we get into second half of this year.

Andy It's it's really more about the timing of those hubs. So we did certainly it again I think we've understood the timing and magnitude is always going to be a little bit tough.

Speaker Change: Tough for us to gauge and so some of it did come through a little bit earlier in the year in the first quarter than what we'd expected didn't it didn't see anything in there, though that would say that we would be changing that number.

Speaker Change: We're going to be building on that base with them. We have to we have to make progress against the cost of that were already in place from the prior year.

Speaker Change: I appreciate the color.

And so from the perspective of the overall program the size of the program is still the same and keep in mind that this program really started in the second half of last year. So as we're coming up against those comparable as we get into the second half of this year.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Chris Snyder from Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: Thank you I wanted to just kind of follow up on some of that commentary around orders here improving into December quarter. Do you think that there was any positive impact of moving past the election, we heard from a lot of companies in late summer and the fall that there was maybe some freezing ahead of the election. So do you think that had any impact whether.

Speaker Change: We're going to be building on that base, but we have to we.

Speaker Change: We have to make progress against the cost outs that were already in place from the prior year.

Speaker Change: I appreciate the color.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Chris Snyder from Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: It's some of these projects moving forward or distributors or integrators willing to hold a little bit more product.

Chris Snyder: Thank you I wanted to just kind of follow up on some of that commentary around orders here improving into December quarter. Do you think that there was any positive impact of moving past the election, we heard from a lot of companies in late summer and the fall that there was maybe some freezing ahead of the election. So do you think that had any impact whether.

Speaker Change: Given improved expectations.

Speaker Change: I think theres a little bit.

Speaker Change: <unk>.

Speaker Change: That I think as we've talked to customers really around the world, but especially here in our home market. There is a general optimism now that being said there is obviously.

Chris Snyder: Some of these projects moving forward or.

Chris Snyder: Distributors are integrator, just willing to hold a little bit more product.

Speaker Change: Remaining volatility which.

Chris Snyder: Given improved expectations.

Speaker Change: Offsetting a bit of that but the general mood out there.

Chris Snyder: I think theres a little bit.

Speaker Change: As evidenced by PMI in the U S. Finally, getting above 50 for the first time in a long time.

Chris Snyder: Of that I think as we've talked to customers really around the world, but especially here in our home market. There is a general optimization now that being said there is obviously.

Speaker Change: Is that there's a general optimism that these companies can't wait to get on with their plans for increasing efficiency are transforming their operations and at some point.

Chris Snyder: Our remaining volatility which.

Chris Snyder: That's a bit of that but the general mood out there.

Speaker Change: They were all concerned about waiting too long.

Chris Snyder: As evidenced by PMI in the U S. Finally, getting above 50 for the first time in a long time.

Speaker Change: And losing share to companies that have moved more assertively. So I think we did see a little bit of that as evidenced by the broad based project activity that we mentioned in the first quarter.

Chris Snyder: Is that there's a general optimism that these companies can't wait to get on with their plans for increasing efficiency are transforming their operations and at some point.

Speaker Change: Okay.

I appreciate that and then for my follow up maybe one for Christian So software and control margins. Obviously is a real standout this quarter up year on year, despite double digit revenue decline I.

Chris Snyder: All concerned about waiting too long.

Chris Snyder: And losing share to companies that that move more assertively. So I think we did see a little bit of that as evidenced by the broad based project activity that we mentioned in the first quarter.

Speaker Change: I guess, what should we expect the rest of the year there for margins because it seems like revenue should continue to build sequentially as the year goes on and I would think with that those volumes lift up margin for the segment as the year goes on thank you.

Speaker Change: Thank you I appreciate that and then for my follow up maybe one for Christian So software and control margins. Obviously is a real standout this quarter up year on year, despite double digit revenue decline.

Speaker Change: Yeah sure Chris So yeah as year goes on again, we talked about favorable mix in Bali, specifically mentioned logic.

Speaker Change: I guess, what should we expect the rest of the year there for margins because it seems like revenue should continue to build sequentially as the year goes on and I would think with that those volumes lift up margin for the segment as the year goes on thank you.

Speaker Change: <unk> being a nice contributors in the quarter.

Speaker Change: As we talked about for the for the full year, we are expecting that that business year over year is going to be in that flat range, which should get some expanded margin. So.

Really nice start to the year, but from an overall margin perspective again, we're just looking for that to continue to progress.

Speaker Change: Yes, sure Chris So yeah as the year goes on again, we talked about favorable mix in fleets, specifically mentioned logic.

Speaker Change: During the course of the year.

Speaker Change: <unk> being a nice contributors in the quarter.

Speaker Change: Thank you.

Speaker Change: <unk>.

Speaker Change: Our next question comes from Julian Mitchell from Barclays. Please go ahead. Your line is open.

Speaker Change: As we talked about for the for the full year, we are expecting that that business year over year is going to be in that flat range, which should get some expanded margins. So.

Julian Mitchell: Yes, hi, good morning.

Speaker Change: Maybe.

Speaker Change: Nice start to the year, but from an overall margin perspective again, we're just looking for that to continue to progress.

Speaker Change: My first question is just around trying to understand again, sorry to go back to the oil it is.

Speaker Change: During the course of the year.

Speaker Change: Year on year is up double digits, but also a very depressed base a year ago. So maybe if we think about the book to bill it's a bit easier I think maybe that was about 1.7.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Julian Mitchell from Barclays. Please go ahead. Your line is open.

Julian Mitchell: Yes, hi, good morning.

Speaker Change: Maybe.

Speaker Change: First quarter.

Speaker Change: My first question is just around trying to understand again, sorry to go back to the well it is.

Speaker Change: I imagine it's always about one early in the year below one second half of the year.

Speaker Change: Is there any sort of historical context, you can put around that book to bill kind of what is typically in the first quarter.

Speaker Change: Year on year is up double digits, but also a very depressed base a year ago. So maybe if we think about the book to bill it's a bit easier I think maybe that was about 1.7 in <unk>.

Speaker Change: Companywide any way you can sort of flesh that out and how we should think about that book to bill moving out the balance of the year.

Speaker Change: The first quarter.

Speaker Change: I imagine it's always above one early in the year below what second half of the year.

Julian Mitchell: Yes Julien.

Speaker Change: Don't know that we have is.

Speaker Change: Reliable a correlation in orders at the beginning of the year as we do with which you mentioned and that is at the end of the year certainly Q4.

Speaker Change: So is there any sort of historical context, you can put around that book to bill kind of what is typically in the first quarter.

Speaker Change: Companywide any way you can sort of flesh that out and how we should think about that book to bill moving out of the balance of the year.

Speaker Change: You can typically count on higher shipments, particularly in our configured to order and lifecycle services business, we did see orders a little bit better than expectations in the first quarter, we mentioned.

Julian Mitchell: Yes Julien.

Julian Mitchell: I don't know that we have is.

Julian Mitchell: Reliable a correlation in orders at the beginning of the year as we do with which you mentioned and that is at the end of the year certainly Q4.

Speaker Change: Mid single digit growth overall products were actually a little bit better than that in terms of sequential growth and products in terms of orders probably are affected by calendar realization the least.

Julian Mitchell: You can typically count on higher shipments, particularly in our configured to order and lifecycle services business, we did see orders a little bit better than expectations in the first quarter, we mentioned.

Speaker Change: Unless unless it has to do with holidays typically occurring in one one quarter or the other so to be sure. The performance was a little bit better than expected in the first quarter and then as we mentioned January performance was consistent with our outlook for Q2.

Julian Mitchell: Mid single digit growth overall products were actually a little bit better than that in terms of sequential growth in products in terms of orders probably are affected by calendar realization the least.

Speaker Change: And the rest of the year.

Julian Mitchell: Unless unless it has to do with holidays typically occurring in one one quarter or the other so to be sure. The performance was a little bit better than expected in the first quarter and then as we mentioned January performance was consistent with our outlook for Q2.

Speaker Change: Thanks, very much and then just to understand the.

Speaker Change: Differences between sort of intelligent devices and software and controls it looks like an intelligent devices, maybe the channel loyal partners are a bit further behind in the destocking levels logic in software and control.

Julian Mitchell: And the rest of the year.

Speaker Change: We are firmly in the sort of early stage of an upturn.

Thanks, very much and then just to understand the.

Speaker Change: I just wondered if that's a fair.

Julian Mitchell: Differences between sort of intelligent devices versus software and controls. So it looks like an intelligent devices, maybe the channel loyal partners are a bit further behind in the destocking levels logics in software and control.

Speaker Change: Characterization.

Speaker Change: What a typical operating leverage we should expect from logics and our sales were comparable.

Speaker Change: Yes, I think you can also look at the performance of logics is being impacted by that.

Speaker Change: Reduction of any excess inventory in our machine builders, obviously logic.

Julian Mitchell: Firmly in the sort of early stage of an upturn.

Julian Mitchell: I just wondered if that's a fair.

Julian Mitchell: Characterization and what sort of typical operating leverage we should expect from logics and our sales recovery.

Speaker Change: Foundational to the solutions that our machine builders around the world use.

Speaker Change: It was recovering to be sure from a from a low base at the very beginning of last year now intelligent devices.

Julian Mitchell: Yes, I think you can also look at the performance of logics is being impacted by.

Julian Mitchell: Reduction of any excess inventory in our machine builders, obviously logics.

Speaker Change: Is a broader set of skus relatively them software and control hardware.

Julian Mitchell: We as foundational to the solutions that our machine builders around the world use.

Speaker Change: It has to be said intelligent devices does have a lot of exposure to automotives, which as we've mentioned.

Julian Mitchell: And it was recovering to be sure from a from a low base at the very beginning of last year now.

Speaker Change: Hasn't really hit that same growth curve.

Speaker Change: But some of the industries have so that's a little bit of additional color for you on but the relative performance between those two sets of hardware maybe I'll just add one other thing around the configure to order a portion of the business and intelligent devices typically starts the first quarter, but seasonally low as well yes.

Speaker Change: Telegent devices.

As a broader set of skus relatively been software and control hardware.

Speaker Change: It has to be said intelligent devices does have a lot of exposure to automotives, which as we've mentioned.

Speaker Change: It hasn't really hit that same growth curve.

Speaker Change: Right.

Speaker Change: But some of the industries have so that's a little bit of additional color for you on the relative performance between those two sets of hardware maybe I'll just add one other thing around the configure to order a portion of the business intelligent devices typically starts the first quarter, which seasonally low as well yes.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Joe O'dea from Wells Fargo. Please go ahead. Your line is open.

Speaker Change: Hi, good morning, Thanks for taking my questions.

Speaker Change: Good morning.

Speaker Change: <unk>.

Speaker Change: The cost out in the $250 million and I think a little more than half of that on the Cogs side can you just talk about the status of actions there with respect to I think a year that's framed as Cogs really kicking in some of the contribution of cost savings in the back half of the year.

Speaker Change: Right.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from Joe O'dea from Wells Fargo. Please go ahead. Your line is open.

Joe O'dea: Hi, good morning, Thanks for taking my questions.

Speaker Change: Good morning.

Speaker Change: But of that 130, <unk> any sense of how much has been actions.

Speaker Change: The cost out and the $250 million and I think a little more than half of that on the Cogs side can you just talk about the <unk>.

Speaker Change: How much will be action.

Speaker Change: The time, you start the first half or the second half of the year.

Speaker Change: Thomas of actions there with respect to I think a year, that's framed as Cogs really kicking in some of the contribution of cost savings in the back half of the year.

Speaker Change: Yeah, Joe a lot of that is already in flight and.

Speaker Change: Certainly some of that and that the timing of those coming in already in the first quarter and again that will continue to ramp as the year goes on the Delta that we saw from those activities.

Speaker Change: But of that 130, <unk> any sense of how much has been actions.

Speaker Change: In the first quarter really did come from manufacturing efficiencies and sourcing so really areas that are going to impact Cogs and that was a pretty broad range everything from freeing up some additional capacity, which reduced some over time at a couple of our facilities.

Speaker Change: How much will be action.

Speaker Change: The time you start the first half.

Speaker Change: Second half of the year.

Speaker Change: Yeah, Joe a lot of that is already in flight and.

Speaker Change: Certainly some of that and the timing of those coming in.

Speaker Change: Already in the first quarter and again that will continue to ramp as the year goes on the Delta that we saw from those activities.

Speaker Change: That also actually those facilities had some better improvements in quality, which reduced material expense.

Speaker Change: We also implemented barcode scanning and and at a number of facilities during the season really good.

Speaker Change: In the first quarter.

Speaker Change: Did come from manufacturing efficiency and sourcing so really areas that are going to impact Cogs and that was a pretty broad range everything from freeing up some additional capacity, which reduced from over time at a couple of our facilities, but also actually those facilities had some better improvements in quality, which reduce material expense.

Speaker Change: The wins in that regard logistics, given the pace of outperformance in the quarter.

Speaker Change: I would also say on the materials side and these are smaller dollar items as far as the Delta impact.

Speaker Change: Again important things like metal fab raws stamping all of which contributed.

Speaker Change: We also implemented barcode scanning.

Speaker Change: Facilities, starting to see some really good early wins in that regard logistics gave us a touch of outperformance in the quarter and then I would also say on the materials side and these are smaller dollar items as far as the delta impact, but again important so things like metal fab raws stamping.

Speaker Change: A few hundred thousand dollars each to that that outperformance that you saw in the first quarter. So momentum is building, it's going well, we're pretty happy with it so far and again youre going to see more of that that helps in the second half.

Speaker Change: And then just wanted to circle back on <unk>.

Speaker Change: Channel inventories pretty encouraging a view that at this point in time a lot of that is sorted out I think previously maybe some timing expectations that it would take until second quarter, maybe even drift into third quarter. So, perhaps that's starting out a little faster than anticipated.

Speaker Change: All of which contributed.

Speaker Change: A few hundred thousand dollars each to that that outperformance that we saw in the first quarter. So momentum is building, it's going well, we're pretty happy with it so far and again youre going to see more of that that helps in the second half.

Speaker Change: Regionally.

Speaker Change: And then just wanted to circle back on channel.

Speaker Change: If you talk about kind of North America, I'd say Europe in particular, because it seemed like that was still.

Speaker Change: Channel inventories pretty encouraging a view that at this point in time a lot of that is sorted out I think previously maybe some timing expectations that it would take until second quarter may be even drift into third quarter, so perhaps that sorting out a little faster than anticipated, but just regionally.

Speaker Change: And inventory overhang up until recently and then it sounds like maybe China is the only the only area left.

Speaker Change: I would say still have some drag effect, but just any any regional color on what <unk> seen there over the past couple of months.

Speaker Change: Yes, I think you characterized the shape of it bigger.

Speaker Change: If you talk about kind of North America, I'd say Europe in particular, because it seemed like that was still.

Speaker Change: Biggest factor in North America would be distribution, because so much of our business goes through distributors and that's that's mostly done at this point in Europe.

Speaker Change: And inventory overhang.

Speaker Change: Until recently and then it sounds like maybe China is the only the only area left that you would say still have some drag effect, but just any any regional color on what <unk> seen there over the past couple of months.

Speaker Change: Inventory at the Big machine builders is an important factor and the relatively high sequential growth in orders that we saw in Europe, We think is indicative.

Speaker Change: Yes, I think you characterized the shape of it biggest.

Speaker Change: Biggest factor in North America would be distribution, because so much of our business goes through distributors and that's that's mostly done at this point in Europe.

Speaker Change: Of that.

Speaker Change: Playing out Jud and normalizing there and as you said, China my take into.

Speaker Change: Inventory at the Big machine builders is an important factor and the relatively high sequential growth in orders that we saw in Europe. We think is indicative of that.

Speaker Change: End of Q2, Q3, but it's a small part of our business as China's total revenue is now a little bit less than 5% of our of our total revenue.

Speaker Change: Great. Thank you.

Speaker Change: Yep. Thanks.

Speaker Change: Playing out Jud and normalizing there and as you said China might take into.

Speaker Change: Our next question comes from Steve Tusa from Jpmorgan. Please go ahead. Your line is open.

Speaker Change: End of Q2, Q3, but it's a small part of our business as China's total revenue is now a little bit less than 5% of our of our total revenue.

Speaker Change: Hi, This is Jason on for Steve Thanks for taking my question.

Speaker Change: Just a little bit more on the first half the second half ramp.

Speaker Change: Still the first half.

Speaker Change: Seasonality still seems a little weaker than his.

Speaker Change: Great. Thank you.

Speaker Change: Yep. Thanks.

Speaker Change: Start of course seasonality and you mentioned before.

Speaker Change: Our next question comes from Steve Tusa from Jpmorgan. Please go ahead. Your line is open.

Speaker Change: Some orders during this quarter that are some big orders that are expected to ship and towards the end of the year.

Speaker Change: Hi, This is Sydney circa telco on for Steve. Thanks for taking my question.

Speaker Change: Just a little bit more on the first half the second half ramp.

Speaker Change: If you could provide some any more color on what's going to support the first half the second half ramp that would be great.

It's still the first half.

Speaker Change: Seasonality still seems a little weaker than that.

Speaker Change: Yes.

Thanks for your question.

Speaker Change: <unk>.

Speaker Change: Historical seasonality and you mentioned before.

Speaker Change: D C. As we as we entered the year an expectation for gradual sequential improvement.

Speaker Change: You booked some orders during this quarter that are some big orders that are expected to ship and towards the end of the year.

Speaker Change: Through the year and actually the year started from an order standpoint, a little bit better than expected, which reduces that ramp from first half to second half.

Speaker Change: If you could provide some any more color on what's going to support the first half the second half ramp up that would be great.

Speaker Change: Yes.

Speaker Change: Thanks for your question.

Speaker Change: <unk>.

Speaker Change: Do see as we as we entered the year an expectation for gradual sequential improvement.

Okay. Thank you and then on the second quarter.

Speaker Change: Yes.

Speaker Change: Through the year and actually the year started from an order standpoint, a little bit better than expected, which reduces that ramp from first half to second half.

Speaker Change: I want to do similar decremental margins to the first quarter. It looks like there's some upside to the $2 in EPS that you mentioned, but.

Speaker Change: Is there any reason you can't do similar decrementals in the first quarter.

Speaker Change: Yes, so obviously.

Speaker Change: Okay. Thank you and then on the second quarter.

Speaker Change: We don't go into that level of detail on our guide we are expecting sequentially that we're going to see margin expansion in segment operating margins going from 17%, 18% kind of number which again is consistent with our ramp that we talked about for the full year guide at the outset of our guide.

Speaker Change: Thank you.

Speaker Change: To do similar decremental margins to the first quarter it looks like there's some upside to the $2 in EPS that you mentioned, but.

Speaker Change: Is there any reason you can't do similar decrementals in the first quarter.

Speaker Change: On last quarter's call, but also just reiterating that.

Speaker Change: Yes, so obviously.

Speaker Change: This call as well so.

Speaker Change: We don't go into that level of detail on our guide we are expecting sequentially. They were going to see margin expansion in segment operating margins growing from 17%, 18% kind of number which again is consistent with our ramp that we talked about for the full year guidance at the outset of our guide.

Speaker Change: No.

Speaker Change: The modeling year over year, we'll leave that up to you to take a look at that.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from Noah Kaye from Oppenheimer. Please go ahead. Your line is open.

Speaker Change: On last quarter's call, but also just reiterating that in this call as well so.

Andre: Hi, there this is andre.

Speaker Change: Sure.

Speaker Change: Could you give us some more color on the drivers of margin upside in the quarter and what the contribution.

Speaker Change: Yes.

Speaker Change: As far as the modeling year over year I'll leave that up to you to take a look at that.

Speaker Change: Okay. Thank you.

Speaker Change: Was between mix versus cost action.

Our next question comes from Noah Kaye from Oppenheimer. Please go ahead. Your line is open.

Speaker Change: And how much factored into our reiterated segment.

Margin guidance and the EPS outlook.

Speaker Change: And then this is Andre Adams on for Noah.

Speaker Change: Given the FX headwind.

Speaker Change: Yeah sure let me just.

Andre Adams: Could you give us some more color on the drivers of margin upside in the quarter and what the contribution.

Speaker Change: Ill go go after this and let me know if I answered the question properly, but really I believe your question was around just generally the outperformance versus where our original thesis was for the quarter, if we break that out.

Andre Adams: Was between mix versus cost action.

Andre Adams: How Mick.

Andre Adams: Into the reiterated segment.

Speaker Change: There were kind of three primary drivers behind it to you. The first portion was is that we did have a favorable mix.

Andre Adams: Margin guidance and the EPS outlook.

Andre Adams: Given the FX headwinds.

Speaker Change: Yeah sure let me just.

Speaker Change: Is the software and control business performed better than what we had expected.

Andre Adams: Ill go go after this and let me know if I.

Can see lifecycle business, which was a little bit below our expectations.

Andre Adams: I answered the question properly, but really your I believe your question was around just generally the outperformance versus where our original thesis was for the quarter, if we break that out.

Speaker Change: So a favorable mix as the first site and the second one was that.

Blake: As Blake discussed and I also discussed we had these.

Andre Adams: There were kind of three primary drivers behind it the year of the first portion was that we did have a favorable mix that is the software and control business performed better than what we had expected against the lifecycle business, which was a little bit below our expectations.

Speaker Change: Temporary cost measures.

Speaker Change: The organization performed really well against.

Speaker Change: You'll see that inside of our core net in that bridge schedule and then the last one was that we do.

Speaker Change: We also had.

Speaker Change: A better performance on our cost reduction and margin expansion activities that was expected to be more equal throughout the year chemical leading up to that $250 million for the full year, we had a little bit of outperformance. There. So all three of those were about equal as far as helping us to perform in the first quarter.

Andre Adams: So a favorable mix as the first item. The second one was that as Blake discussed and I also discussed we had these temp.

Andre Adams: Temporary cost measures.

Andre Adams: The organization performed really well against Youll see that inside of our core net in that bridge schedule and then the last one was that we.

Yeah.

We also had a.

Speaker Change: Okay, great. Thanks.

Andre Adams: A better performance on our cost reduction and margin expansion activities that was expected to be more equal throughout the year, leading up to that $250 million for the full year, we had a little bit of outperformance. There. So all three of those are about equal as far as the helping us to perform in the first quarter.

Speaker Change: That's the follow up.

Project.

Speaker Change: <unk> seen as a tailwind for fiscal 'twenty can you talk about any impact.

Speaker Change: Funding pods for.

Speaker Change: IRI.

Speaker Change: Hey.

Speaker Change: Months program office.

Speaker Change: Funding.

Andre Adams: Yeah.

Speaker Change: On the magnitude of that tailwind.

Andre Adams: Yeah.

Andre Adams: Okay, great. Thank you.

Speaker Change: Sure, we do continue to see Mega projects as a tailwind.

Andre Adams: Just as a follow up.

Andre Adams: Think of a project.

Andre Adams: Theme.

Andre Adams: For fiscal 25 can you talk about any impact.

Speaker Change: Both.

Speaker Change: In terms of year over year, and as a as a <unk>.

Andre Adams: Funding pods for.

Speaker Change: Nice contributor to our growth.

Andre Adams: IRI.

Andre Adams: Hey.

Loans program office.

Speaker Change: This year as well as for the next few years. So this is multi year its multi industry and as we've talked to companies for instance in energy about any impact that the change.

Andre Adams: On the magnitude of that tailwind.

Andre Adams: Sure, we do continue to see Mega projects as a tailwind.

Andre Adams: Both in terms of year over year and as a as a.

Change in administration is having on their plants. They are continuing on with the with those projects. So.

Andre Adams: A nice contributor to our growth.

Andre Adams: This year as well as for the next few years. So this is multi year its multi industry and as we've talked to companies for instance in energy about any impact that the change.

Speaker Change: We.

Speaker Change: Highlighted a project by a major oil and gas company on.

Speaker Change: Our sustainability project this quarter and we're tracking a lot of those through.

Andre Adams: Change in administration is having on their plants they are continuing on.

Speaker Change: Through this year and into <unk> into the next years in fact renewables in terms of new project introductions continues to be a <unk>.

Andre Adams: With those projects so.

We.

Andre Adams: Highlighted a project by a major oil and gas company on.

Speaker Change: Major contributors to the new announcements. So these projects are going to have to stand on their own merits, we're going to have to have a good ROI.

Andre Adams: Our sustainability project this quarter and we're tracking a lot of those through.

Speaker Change: But we think theres a lot of those out there whether it's direct air capture.

Andre Adams: Through this year and into <unk> into the next years in fact renewables in terms of New project introductions continues to be a major contributor to the new announcements. So these projects are going to have to stand on their own merit, they're going to have to have a good ROI.

Speaker Change: Carbon capture and sequestration.

Speaker Change: And so on and that obviously in terms of traditional.

Speaker Change: Development of energy resources that continues to be a big part of our business with energy overall about 15% of our total of our total revenue.

Andre Adams: But we think theres a lot of those out there whether it's direct air capture car.

Speaker Change: Okay.

Andre Adams: Carbon capture and sequestration.

Speaker Change: Okay.

Speaker Change: Great. Thank you so much.

Andre Adams: And so on and then obviously in terms of traditional.

Speaker Change: Our next question comes from Jeff Sprague from vertical research. Please go ahead. Your line is open.

Andre Adams: Development of energy resources that continues to be a big part of our business with energy overall about 15% of our total of our total revenue.

Jeff Sprague: Hey, Thank you good morning, everyone.

Speaker Change: Just wanted to come back.

Speaker Change: Blake just wanted to come back to order sorry, It's I guess, it's for the umpteenth time on this call but.

Speaker Change: I just wanted to be clear on the $2 billion plus number that was given.

Speaker Change: Great. Thank you so much.

Speaker Change: Our next question comes from Jeff Sprague from vertical research. Please go ahead. Your line is open.

Speaker Change: Not quite get there based on the year over year and sequential changes you've talked about maybe my base is a little bit off but is that a reported number and organic number maybe it could be a little bit more precise on that if there is anything else to add.

Speaker Change: Hey, Thank you good morning, everyone.

Speaker Change: And just wanted to come back.

Speaker Change: Morning, Blake just wanted to come back to order sorry, It's I guess, it's for the umpteenth time on this call but.

Jeff Sprague: Yes, Jeff so that is a.

Speaker Change: I just wanted to be clear on the $2 billion plus number that was given.

Speaker Change: That's a reported number.

Speaker Change: And.

Speaker Change: Don't quite get there based on the year over year and sequential changes you talked about maybe my base is a little bit off but is that a reported number and organic number maybe it could be a little bit more precise on that if there's anything else to add.

Speaker Change: I'm not sure exactly what the.

Speaker Change: What the number is that youre looking at from the prior year, but we are being consistent with the metric and how we've.

Speaker Change: How we've thought about it historically again, knowing that we didn't always and we have always given the exact number on orders. It was really more of the I think a lot of folks are getting that order number based on the delta and what happened.

Speaker Change: Yes, Jeff So that is a that's a reported number.

Speaker Change: And.

Speaker Change: Backlog versus shipments but.

Speaker Change: I'm not sure exactly what the.

Speaker Change: Again, we thought it was notable that we were back over to Bill and he wanted to call that out yes.

Speaker Change: What the number is you are looking at from the prior year, but we are being consistent with the metric and how we've how we've thought about it historically again, knowing that we didn't always and we haven't always given the exact number on orders. It was really more of the I think a lot of folks are getting that order number based on the delta from what happened with backlog versus shipments but.

Speaker Change: Yes, that's what I'm doing to the implied orders based on backlog and revenue changes, but fine I'll play with that and then also just wanted to.

Speaker Change: Come back to kind of the cost reductions it looks like your corporate expense actually.

Speaker Change: You raised the corporate expense for the year, if I have that correctly.

Speaker Change: Again, we thought it was notable that we were back over $2 billion, we wanted to call that out.

Speaker Change: What is going on in that line item.

Speaker Change: Yeah. So corporate expense, obviously has a number of <unk>.

Speaker Change: So that's what I'm doing to the implied orders based on backlog and revenue changes, but fine I'll play with that and then also just wanted to.

Speaker Change: Smaller items that move around from quarter to quarter and throughout the year, probably the biggest change in the Delta on we did take that number up for the full year is really around some of the execution costs on some of the kind of margin expansion and cost reduction activities, we're going to take those on the corporate side. So that's the reason why that number went up slightly.

Speaker Change: Come back to kind of the cost reductions it looks like your corporate expense actually you raised the corporate expense for the year, if I have that correctly.

Speaker Change: What is going on in that line item.

Speaker Change: Yes, so corporate expense, obviously has a number of.

Speaker Change: And maybe just one other quick one I think you said you expect Asia Pacific to be the weakest region for the year, even though EMEA starting off weaker.

Speaker Change: Smaller items that move around from quarter to quarter and throughout the year, probably the biggest change in the Delta on we did take that number up for the full year is really around some of the execution costs on some of the margin expansion and cost reduction activities, we're going to take those on the corporate side. So that's the reason why that number went up slightly.

Speaker Change: Are you implicitly assuming there is kind of a tangible pickup in EMEA over the balance of the year do you have some visibility on that.

Speaker Change: We do again a lot of that business is driven by the machine builders I would call it out specifically.

Speaker Change: And maybe just one other quick one I think you said you expect Asia Pacific to be the weakest region for the year, even though EMEA starting off weaker.

Speaker Change: The stabilization at the Italian machine builders, and we expect particularly because it's coming off of a law.

Speaker Change: Are you implicitly assuming there is kind of a tangible pickup in EMEA over the balance of the year do you have some visibility on that.

Speaker Change: Low base with that machine builder business to recover in Europe.

Speaker Change: As they are back to normal in terms of their inventories in China is expected to continue to suffer from let's say mild deflation through the year. So while we see some recovery.

Speaker Change: We do again a lot of that business is driven by the machine builders I would call it out specifically.

Speaker Change: The stabilization at the Italian machine builders and.

Speaker Change: And we expect particularly because it's coming off of a law.

Speaker Change: There's going to be slow and they've got some structural challenges there.

Speaker Change: Low base that that machine builder business to recover in Europe.

Speaker Change: China is a small part of our business, but it's it's a big manufacturing economy and so it it remains important to us and then India.

Speaker Change: As they are back to normal in terms of their inventories China is expected to continue to suffer from let's say mild deflation through the year. So while we see some recovery.

Jeff Sprague: Mid and long term continues to be very bright, Jeff, but we're not expecting any any heroic growth from India. This year.

Speaker Change: There's going to be slow and they've got some structural challenges there.

Speaker Change: Alright, Thank you very much.

Speaker Change: Yes, Thanks, Joanne we'll take one more question.

Speaker Change: China is a small part of our business, but it's it's a big manufacturing economy and so it it remains important to us and then India.

Speaker Change: Certainly our last question today will come from Rob Mason from Baird. Please go ahead. Your line is open.

Rob Mason: Yes, good morning, Hi, Christian.

Speaker Change: Mid and long term continues to be very bright, Jeff, but we're not expecting any any heroic growth from India. This year.

Speaker Change: Thanks for taking the question.

Speaker Change: I appreciate the level of detail you provided us around your <unk>.

Speaker Change: Manufacturing footprints and imports into the U S from various regions, maybe tariff exposed could you just and I know you've made a lot of changes over the last few years around how you execute on pricing can you just remind us.

Speaker Change: Great. Thank you very much.

Speaker Change: Yes, Thanks, Joanne we'll take one more question.

Speaker Change: Certainly our last question today will come from Rob Mason from Baird. Please go ahead. Your line is open.

Speaker Change: Yes, good morning Christian.

Speaker Change: Yes, some of those changes and how quickly.

Speaker Change: Thanks for taking the question.

Speaker Change: I appreciate the level of detail you provided us around your <unk>.

Speaker Change: I guess matter of days weeks, what have you would you actually be able to put through incremental price around the tariff enactment.

Speaker Change: Manufacturing footprints and imports into the U S from various regions, maybe tariff exposed could you just I know you've made a lot of changes over the last few years around how you execute on pricing can you just remind us.

Speaker Change: Enactment.

Speaker Change: Yes, the short answer is immediately.

Speaker Change: Tariffs can be handled a little bit different than normal price increases, but as we've talked about in the past being able to move to a fixed discount our pricing structure.

Speaker Change: Some of those changes and how quickly I guess matter of days weeks, what have you would you actually be able to put through incremental price around the tariff enactment.

Speaker Change: Which was some changes that we implemented during the supply chain crisis over the last couple of years has allowed us much faster response to general price increases, but with tariffs we implemented them fairly quickly.

Speaker Change: Yes, the short answer is immediately.

Speaker Change: Tariffs can be handled a little bit different than normal price increases, but as we've talked about in the past being able to move to a fixed discount our pricing structure.

Speaker Change: First time around back in 2018, and I would say even more.

Speaker Change: <unk>, which was some changes that we implemented during the supply chain crisis over the last couple of years has allowed us much faster response to general price increases, but with tariffs we implemented them fairly quickly.

Speaker Change: Immediately this time, because the impact was potentially larger.

Speaker Change: And in repricing backlog is.

Speaker Change: Would that be a new experience for your customers.

Speaker Change: I think in general, yes that would be.

Speaker Change: The first time around back in 2018, and I would say even more.

Speaker Change: Yes.

Speaker Change: We have been very communicative around.

Speaker Change: Immediately this time, because the impact was potentially larger.

Speaker Change: The terms and conditions and how we've been selling to those customers for for some of those projects over the last several months knowing that this was a potential again, that's what happens in a scenario, where we were imagining and indeed did seem to be the case for a little while which was immediately around tariffs and wanted to ensure that.

Speaker Change: And in repricing backlog is.

Speaker Change: Would that be a new experience for your customers.

Speaker Change: I think in general, yes that would be.

Speaker Change: We have been very communicative around.

Speaker Change: Foreign carrying the cost we're going to find a way to recover it.

Speaker Change: Excellent. Thanks, I'll turn it back thank you.

Speaker Change: And conditions and how we've been selling to those customers for for some of those projects over the last several months knowing that this was a potential.

Thank you for joining us today that concludes todays conference call.

Speaker Change: That's what happens in a scenario, where we were imagining and indeed did seem to be the case for a little while which was immediately around tariffs.

Speaker Change: At this time you may disconnect. Thank you.

Speaker Change: Sure that again, if we're incurring the costs were going to find a way to recovery.

Speaker Change: Excellent. Thanks, I'll turn it back thank you.

Speaker Change: Thank you for joining us today that concludes todays conference call.

At this time you may disconnect. Thank you.

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Speaker Change: Sure.

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Speaker Change: Sure.

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Speaker Change: Okay.

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Speaker Change: Yes.

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Speaker Change: Sure.

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Speaker Change: Yes.

Speaker Change: Thanks.

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Speaker Change: Please wait the conference will begin shortly.

Speaker Change: Yes.

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Speaker Change: Sure.

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Speaker Change: Sure.

Speaker Change: Yes.

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Speaker Change: Thanks.

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Speaker Change: Yes.

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Speaker Change: Yes.

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Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Thank you.

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Speaker Change: Okay.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: Sure.

Speaker Change: Yes.

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Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: [music] community.

Speaker Change: Great.