Q2 2025 Emerson Electric Co Earnings Call

May 7, 2025

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Speaker Change: The conference over to your host Choline Butler, Vice President of Investor Relations at Emerson. Please go ahead.

Speaker Change: Good morning, and thank you for joining Emerson's second quarter 2025 earnings conference call.

Speaker Change: This morning, I am joined by President and Chief Executive Officer, Mark Heartened by Chief Financial Officer, Mike Bachman.

Mike Baughman: We are also emerging from a prolonged discrete downturn and our discrete businesses collectively turned positive in the second quarter. with underlying orders exceeding our expectations at 3%. We have some measurement orders that are up 8% with tailwinds forming across the broad-based portfolio business, which traditionally has been a leading indicator. Aerospace and Defense continues to perform well with large project wins in the U.S. And we believe the favorable macro environment will continue in the second half. where we are seeing sustained positive momentum in industrial and discrete MRO markets. Factory automation continues to be a watch area, and we believe demand may be pressured by macro uncertainty in the second half.

Speaker Change: Chief operating officer from Christian.

Speaker Change: As Ali I encourage everyone to follow along with a slide presentation, which is available on our website.

Speaker Change: Please turn to slide two.

Speaker Change: This presentation may include forward looking statements, which contain a degree of business risks and uncertainties. Please.

Speaker Change: Please take time to read the Safe Harbor statement and note on the non-GAAP measures.

Speaker Change: I will now pass the call over to Emerson's, President and CEO lockers and buy for his opening remarks.

Speaker Change: Thank you Colleen and good morning.

Speaker Change: I'd like to begin by extending my gratitude to Emerson employees for continuing to deliver differentiated results.

Speaker Change: Good morning, and welcome to the Atmos in second quarter, 'twenty 25 earnings Conference call.

Speaker Change: I'd also like to thank the Emerson board of directors, our customers and shareholders for the trustee continue to place in us.

All participants will be in listen only mode.

Speaker Change: Should you need assistance. Please signal conference specialist by pressing the star can you followed by zero.

Speaker Change: Further I'd like to congratulate the test and measurement team for an outstanding and I connect last week, and which we introduced the latest technology to enable successful creation and innovation through open flexible and modular platforms. The.

Mike Baughman: Overall, improving underlying demand fundamentals, coupled with easier second half comps, position our discrete businesses for accelerating year-over-year growth in the back half, and we expect to hit double digits as we exit the year. We are watching closely for signs of tariff-induced impacts to demand, but we have not seen any widespread indications. April was a strong start to the third quarter, with trailing three-month underlying orders growth of 7%. And we continue to see significant demand for our process-inhabited businesses and recovery industry. Energy security, self-reliance, and energy transition commitments are expected to sustain a favorable spend environment in LNG and power, while near-shoring momentum is expected to drive further growth in life science.

Speaker Change: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

Speaker Change: To withdraw your question. Please press Star then two.

Speaker Change: Please note this event is being recorded.

Speaker Change: The last few company is alive and well.

Speaker Change: Trying to conference over to your host Choline Butler, Vice President of Investor Relations at Emerson. Please go ahead.

Speaker Change: Next I would like to congratulate to individuals'.

Antonio Pietri: Antonio Pietri.

Speaker Change: Good morning, and thank you for joining Emerson's second quarter 2025 earnings conference call.

Antonio Pietri: <unk> CEO of Aspen Tech's since 2013 for successful 29 year career.

Antonio Pietri: I would also like to congratulate Vincent Servello, who will lead the business as part of Emerson.

Speaker Change: This morning, I am joined by President and Chief Executive Officer Walk Heartened by Chief Financial Officer, Mike Bachman.

Antonio Pietri: Lastly, I'm looking forward to Emerson exchange on May 19 to 20 seconds in San Antonio Texas.

Speaker Change: And Chief operating officer from Christian.

Speaker Change: As always I encourage everyone to follow along with a slide presentation, which is available on our website. Please turn to slide two.

Antonio Pietri: We will showcase our latest innovative solutions across the entire portfolio of everson businesses alongside over 2000 attendees.

Speaker Change: This presentation may include forward looking statements, which contain a degree of business risks and uncertainty.

Antonio Pietri: Please turn to slide three.

Mike Baughman: Strengthened Process and Hybrid Markets combined with a nascent discrete recovery reinforces our expectations for mid-single-digit growth in the third quarter and for high single-digit growth as we exit the year.

Antonio Pietri: While there were some continues to execute exceptionally well.

Speaker Change: Please take time to read the Safe Harbor statement and note on the non-GAAP measures.

Antonio Pietri: We like all companies are operating in a period of unusual volatility and therefore have factored a variety of outcomes into our thinking that inform the outlook I will share with you today.

Speaker Change: I will now pass the call over to Emerson's, President and CEO lockers and buy for his opening remarks.

lockers: Thank you Colleen and good morning.

Speaker Change: I'd like to begin by extending my gratitude to emerson's employees for continuing to deliver differentiated results.

Mike Baughman: Please turn off the slides. Favorable demand trends support our view for underlying sales to accelerate in the second half and reinforce our full year guide of approximately 4% growth. Beginning with process and hybrid, we saw growth across all world areas in the first half. First half growth was led by Asia and the Middle East and Africa, with robust investment in energy and LNG projects, offsetting continued weakness in China, specifically bulk chemicals. The Americas were up mid-single digits with solid MRO in North America and broad-based strength in Latin America. Europe saw low single-digit growth, but continued momentum in energy transition and life sciences.

Antonio Pietri: Emerson delivered a strong second quarter.

Antonio Pietri: Underlying orders growth of 4% exceeded our expectations in all regions were positive including China.

lockers: I'd also like to thank the Emerson Board of directors, our customers and shareholders for the trust you continue to place in us.

Antonio Pietri: Demand remains resilient for our process and hybrid businesses, which were up 6% and our discrete businesses collectively turned positive with test and measurement up 8%.

lockers: Further I'd like to congratulate the test and measurement team for an outstanding and I'd come back last week, and which we introduced the latest technology to enable successful creation and innovation through open flexible and modular platforms. The.

Antonio Pietri: Underlying sales came in at the top of our guide with record margin performance and adjusted earnings per share exceeded our guidance by six.

lockers: The lap your company is alive and well.

lockers: Next I would like to congratulate you individuals'.

Antonio Pietri: We will go into more detail on the results in the following slides.

Antonio Pietri: Antonio Pietri.

Antonio Pietri: We have conviction in our process and hybrid markets and are seeing strong indicators for a meaningful second half discrete sales recovery.

Antonio Pietri: Former CEO of Aspen Tech's since 2013 for successful 29 year career.

Antonio Pietri: I would also like to congratulate Vince since there Bello, who will lead the business that's part of Emerson.

Antonio Pietri: Our long outstanding supply chain regionalization strategy and global footprint enabled us to quickly respond to a variety of scenarios, including the recent tariffs.

Mike Baughman: We expect process and hybrid sales growth in the second half to remain in the mid-single digits, driven by sustained global investment in LNG, life sciences, and power. We are planning for gradual improvement in China, aided by easier costs and investment momentum in power and marines.

Antonio Pietri: Lastly, I'm looking forward to Emerson exchange on May 19 to 20 seconds in San Antonio Texas.

Antonio Pietri: From these we have a gross exposure of $245 million in 2025, which we expect to fully mitigate.

Antonio Pietri: We will showcase our latest innovative solutions across the entire portfolio of Emerson businesses alongside over 2000 attendees.

Mike Baughman: turning to the screen. Underlying sales were down low single digits in the first half with the most pronounced weakness in Europe and China The order's recovery in the second quarter and a low base of comparisons support our plan for high single-digit underlying sales growth in the back half. We expect continued improvement in discrete MRO as well as test and measurement markets with regional growth led by the Americas and Asia ex-China. We now see a more muted recovery for factory automation and continue to see declines in automotive. These dynamics are expected to prolong weakness in Europe and China, although we expect to see sequential improvement in both regions in the second half.

Antonio Pietri: Raj Krishnan will walk through the details in a few slides.

Antonio Pietri: Please turn to slide three.

Antonio Pietri: While there were some continues to execute exceptionally well.

Antonio Pietri: Emerson had an excellent first half.

Antonio Pietri: We are confident in our plans for the year.

Antonio Pietri: We like all companies are operating in a period of unusual volatility and therefore, not factored a variety of all comes into our thinking that inform the outlook I will share with you today.

Antonio Pietri: We are guiding underlying sales growth of approximately 4% and raising the midpoint of our adjusted EPS Guide now expecting between $5 92.

Antonio Pietri: Emerson delivered a strong second quarter.

Antonio Pietri: To $6.05 per share.

Antonio Pietri: Underlying orders growth of 4% exceeded our expectations in all regions were positive including China.

Antonio Pietri: Our free cash flow guidance is $3 1 billion to $3 2 billion.

Antonio Pietri: Reflecting good performance in cost related to the Aspen Tech transaction.

Antonio Pietri: Demand remains resilient for our process and hybrid businesses, which were up 6% and our discrete businesses collectively drove positive when testing measurement up 8%.

Antonio Pietri: We now expect to return to $3 billion to shareholders through dividend and share repurchase.

Antonio Pietri: We're also Merck, marking the completion of the portfolio transformation, we began in 2021 on.

Antonio Pietri: Underlying sales came in at the top of our guide with record margin performance and adjusted earnings per share exceeded our guidance by six cents.

Mike Baughman: The Improving Business Fundamentals reinforce our expectation for low single-digit sales growth for the full year. And lastly, industrial software ended the first half with ACV of $1.5 billion, a growth of 11 percent, driven by demand for Aspen Tech's digital grid management and manufacturing and supply chain. Delta V Software recorded double-digit growth in subscriptions, and LabVIEW also contributed high single-digit growth. For the full year, we expect double-digit ACV growth, led by a strong EPC project backlog across energy and energy transition, with continued adoption for our industrial software across power, life sciences, semiconductor, and aerospace industries.

Antonio Pietri: On March 12, we completed the buying of Aspen Tech, which now operates as an independent business unit within our control systems and software segment.

Antonio Pietri: We will go into more detail on the results in the following slides.

Antonio Pietri: We have conviction in our process and hybrid markets and are seeing strong indicators for a meaningful second half discrete sales recovery.

Antonio Pietri: We expect the transaction to be modestly accretive to adjusted EPS in 2025, and we are targeting $100 million of cost synergies by 2028.

Antonio Pietri: Our long outstanding supply chain regionalization strategy and global footprint enables us to quickly respond to a variety of scenarios, including the recent tariffs.

Antonio Pietri: Primarily through the harmonization of corporate cost and G&A as well as R&D productivity.

Antonio Pietri: Integrating Aspen Tech is a key priority in 2025.

Antonio Pietri: From these we have a gross exposure of $245 million in 2025, which we expect to fully mitigate.

Antonio Pietri: And the organization is energized by the future opportunities with Emerson as we accelerate to double digit CV growth.

Antonio Pietri: Raj Krishnan will walk through the details in a few slides.

Antonio Pietri: Additionally, we have completed the integration of test and measurement and have executed all actions to achieve 200 million dollar run rate cost synergies by the end of 2025.

Antonio Pietri: Emerson had an excellent first half.

Antonio Pietri: And we are confident in our plans for the year.

Mike Baughman: I will now turn the call over to Mike Baughman to provide additional color on our financing. Thanks a lot. Please turn to slide seven to discuss our second quarter financial results. Underlying sales growth was 2%, led by our process and hybrid businesses, which were up approximately 4%. Our discrete businesses continue to show sequential improvement, but we're still down approximately 1% year over year. Price contributed one and a half points to growth. Software and control grew 7%, driven by higher software sales, while intelligent devices was flat due to safety and productivity and discrete automation. Backlog increased to $7.5 billion, and our book-to-bill for the quarter was $1.04.

Antonio Pietri: We are guiding underlying sales growth of approximately 4% and raising the midpoint of our adjusted EPS Guide now expecting between $5 90 to $6.05 per share.

We are thankful for the hard work performed by our teams and we will continue advancing operational excellence as this business returns to growth.

Antonio Pietri: Finally, following a strategic review of our safety and productivity business, which began in November we concluded the best value for our shareholders is to retain the business say.

Antonio Pietri: Our free cash flow guidance is $3 1 billion to $3 $2 billion, reflecting good performance in cost related to the Aspen Tech transaction.

Antonio Pietri: Safety and productivity comprises approximately 8% of sales with market, leading profitability and cash generation.

Antonio Pietri: I'll expect to reach our $2 $3 billion to shareholders through.

Antonio Pietri: And share repurchase.

Antonio Pietri: This business is underpinned by demand drivers such as Richard and domestic manufacturer and we will continue leveraging the Emerson management system to create meaningful value.

Antonio Pietri: We're also Merck, marking the completion of the portfolio transformation, we began in 2021.

Antonio Pietri: On March 12, we completed the buying of Aspen Tech, which now operates as an independent business unit within our control systems and software segment.

Antonio Pietri: Please turn to slide four.

Antonio Pietri: Our industrial software businesses continued to perform well and the total company ACD is up 11% year over year with broad based strength.

Antonio Pietri: We expect the transaction to be modestly accretive to adjusted EPS in 2025, and we are targeting $100 million of cost synergies by 2028, primarily.

Mike Baughman: Sequentially, backlog was up 3%, led by our process and hybrid businesses, which were up mid-single digits, while our discrete businesses were up low-single digits. Adjusted segment EBITDA margin improved 200 basis points to 28 percent, matching our record high from Q1 and exceeding our expectations. Margin expansion was driven by favorable price cost, segment mix, and the benefits of cost reductions and synergy realization. Strong profit contributions from test and measurement and control systems and software, which includes Aspen Tech, accounted for a significant portion of the margin expanded. Operating leverage was 180%. Adjusted earnings per share grew 9% to $1.48, up 12 cents year over year.

Antonio Pietri: Demand was better than expected in the quarter with underlying orders growing 4% year over year.

Antonio Pietri: Harmonization of corporate costs, and G&A as well as R&D productivity.

Antonio Pietri: Underlying sales were up 2% with our processing hybrid businesses up mid single digits.

Antonio Pietri: Integrating Aspen Tech is a key priority in 2025.

Antonio Pietri: Emerson generated record profitability again in the second quarter with gross profit and adjusted segment EBITA margins both matching the prior highs set in the first quarter.

Antonio Pietri: And the organization is energized about the future opportunities with Emerson.

Speaker Change: Celebrate to double digit CV growth.

Speaker Change: Additionally, we have completed the integration of test and measurement and have executed all actions to achieve 200 million dollar run rate cost synergies by the end of 2025.

Antonio Pietri: Gross profit margin of 53, 5% with a 130 basis point improvement year over year, demonstrating how customers continue to recognize the value of our leading technologies.

Speaker Change: We are thankful for the hard work performed by our teams and we will continue advancing operational excellence as this business returns to growth.

Antonio Pietri: Adjusted segment EBITDA margin of $28 zero percent came in well above expectations. It was a 200 basis point improvement versus the prior year.

Speaker Change: Finally, following a strategic review of our safety and productivity business, which began in November.

Mike Baughman: I will discuss adjusted EPS in more depth on the next chart. Lastly, free cash flow was $738 million, up 14% versus the prior year. This strong performance was led by higher earnings and favorable working capital. The free cash flow margin for the quarter was 17% and was burdened by $130 million of acquisition-related costs.

Antonio Pietri: Adjusted earnings per share of $1 48 were up 9% year over year and exceeded our expectations.

Speaker Change: We concluded the best value for our shareholders is to retain the business.

Speaker Change: Safety and productivity comprises approximately 8% of sales with market, leading profitability and cash generation.

Antonio Pietri: Emerson generated strong free cash flow of $738 million, a margin of 17% up 14% year over year.

Speaker Change: This business is underpinned by demand drivers such as we sure and domestic manufacturer and we'll continue leveraging the Emerson management system to create meaningful value.

Antonio Pietri: Mike Bachman, who will provide additional details on our financials in a few slides.

Antonio Pietri: Please turn to slide five.

Mike Baughman: Please turn to slide 8. Q2 was another strong quarter operational. Bridging from prior year adjusted EPS of $1.36, operations added $0.14. including Aspentec, software and control added for sound. Intelligent Devices added $0.03. and a full quarter of Aspen Tech ownership at 57% at its seventh. The completion of the Aspen Tech buy-in benefited the quarter by a net five cents. $0.07 from the incremental 43% ownership from March 12 to the end of the quarter, less $0.02 from interest expense for debt taken on to complete the buy-in. Aspen Tech operations exceeded expectations, including $0.03 due to the timing of a key customer booking in France.

Antonio Pietri: Emerson's trailing three month underlying orders of 4% highlight the strong demand outlook for our business.

Speaker Change: Please turn to slide four.

Speaker Change: Our industrial software businesses continued to perform well and the total company ACD is up 11% year over year with broad based strength.

Antonio Pietri: Process and hybrid markets remained healthy in the quarter with 6% growth and are expected to maintain mid single digit growth in both the third and fourth quarter.

Speaker Change: Demand was better than expected in the quarter with underlying orders growing 4% year over year.

Antonio Pietri: We continue to see significant capital investment in energy and LNG projects to support global demand.

Speaker Change: Underlying sales were up 2% without processing hybrid businesses up mid single digits.

Antonio Pietri: Led by the Middle East and Africa, India, Southeast Asia, and the Americas.

Speaker Change: Emerson generated record profitability again in the second quarter with gross profit and adjusted segment EBITA margins both matching the prior highs set in the first quarter.

Antonio Pietri: Our large project funnel, which which provides a three year outlook of capital activity sits at $11 $4 billion and we are and we were awarded approximately $375 million of content in the second quarter.

Speaker Change: Gross profit margin of 53, 5% with a 130 basis point improvement year over year, demonstrating how customers continue to recognize the value of our leading technologies.

Antonio Pietri: We are also emerging from a prolonged discrete downturn and our discrete businesses collectively turned positive in the second quarter.

Mike Baughman: This contract is the largest in Aspen Tech history and previously had been expected to book in Q3. Non-operating items, including FX and pension, were a $0.07 headline. The five-penny headwind for Equex is primarily due to unfavorable balance sheet translation with some unfavorable impact on sales early in the quarter. Overall, adjusted EPS grew 9% year-on-year to $1.48.

Speaker Change: Adjusted segment EBITDA margin of 20, 810% came in well above expectations. It was a 200 basis point improvement versus the prior year.

Antonio Pietri: With underlying orders exceeding our expectations at 3%.

Speaker Change: Adjusted earnings per share of $1 48 were up 9% year over year and exceeded our expectations.

Antonio Pietri: Test and measurement orders were up 8% with tail winds forming across the broad base portfolio of business, which traditionally has been a leading indicator.

Speaker Change: Emerson generated strong free cash flow of $738 million a margin of 17%.

Antonio Pietri: Aerospace and defense continues to perform well with large project wins in the U S and we believe the favorable macro environment will continue in the second half.

Speaker Change: Up 14% year over year.

Ram Krishnan: I will now pass the call to Ram to review our tariff mitigation plans before I finish up with our guidance.

Speaker Change: Mike Bachman, who will provide additional details on our financials in a few slides.

Antonio Pietri: While we are seeing sustained positive momentum in industrial and discrete MRO markets.

Speaker Change: Please turn to slide five.

Ram Krishnan: Thanks, Mike. And good morning, everyone. Please turn to slide nine. I want to provide a clear picture of the estimated gross impacts of the current tariff situation, both from tariffs recently implemented on U.S. imports and China's retaliatory tariffs on U.S. exports. On an annualized basis in 2024, Emerson imported $1.6 billion into the U.S., representing 19% of our annual cost of goods sold as raw materials and semi-finished products for our manufacturing plants and finished products to our distribution centers. The gross incremental tariff impact on these imports driven by AIPA, steel, aluminum, and reciprocal tariffs amounts to $320 million on an annualized basis.

Speaker Change: Ever since trailing three month underlying orders of 4% highlights the strong demand outlook for our business.

Antonio Pietri: Factory automation continues to be a watch area and we believe demand may be pressured by macro uncertainty in the second half.

Speaker Change: Also same hybrid markets remained healthy in the quarter with 6% growth and are expected to maintain mid single digit growth in both the third and fourth quarter.

Antonio Pietri: Overall, improving underlying demand fundamentals, coupled with easier second half comps position, our discrete businesses for accelerating year over year growth in the back half.

Speaker Change: We continue to see significant capital investment in energy and LNG projects to support global demand.

Antonio Pietri: We expect to see it hit double digits as we exit the year.

Speaker Change: Led by the Middle East and Africa, India, Southeast Asia, and the Americas.

Antonio Pietri: We are watching closely for signs of tariff induced impacts to demand.

Speaker Change: Our large project funnel, which which provides a three year outlook of capital activity sits at $11 $4 billion and we are and we were awarded approximately $375 million of content in the second quarter.

Antonio Pietri: We have not seen any widespread indications.

Antonio Pietri: April was a strong start to the third quarter with trailing three month underlying orders growth of 7%.

Antonio Pietri: And we continue to see significant demand for our processing hybrid businesses and recovery in discrete.

Speaker Change: We are also emerging from a prolonged discrete downturn and our discrete businesses collectively turned positive in the second quarter.

Ram Krishnan: Tariff assumptions for U.S. imports are as follows, IEPA enacted on February the 4th and March the 4th are held at 25% Section 232 on steel and aluminum remain at current levels, and excluding China, reciprocal tariffs are modeled at an average rate of 15% to estimate the annualized impact. As you can see, most of our gross impact is driven by the 125% reciprocal tariff on imports from China, while the Mexico impact is significantly mitigated as 80% of our supply into the U.S. from Mexico qualifies for U.S. MCA exemptions. In 2025, we expect the gross incremental impact on US imports to be $185 million, around 1% of sales.

Antonio Pietri: Energy security self reliance and energy transition commitments I expect it to sustain a favorable spend environment in LNG and power while nearshoring momentum is expected to drive further growth in life Sciences.

Speaker Change: With underlying orders exceeding our expectations at 3%.

Speaker Change: Test and measurement orders were up 8% with tail winds forming across the broad base portfolio of business, which traditionally has been a leading indicator.

Antonio Pietri: Strength in process and hybrid markets combined with the nascent discrete recovery reinforces our expectations for mid single digit growth in the third quarter and for high single digit growth as we exit the year.

Speaker Change: Aerospace and defense continues to perform well with large project wins in the U S. We believe the favorable macro environment will continue in the second half.

Antonio Pietri: Please turn to slide six.

Speaker Change: Well, we are seeing sustained positive momentum in industrial indiscreet MRO markets.

Antonio Pietri: Favorable demand trends support our view for underlying sales to accelerate in the second half and reinforce our full year guide of approximately 4% growth.

Speaker Change: Factory automation continues to be a watch area and we believe demand may be pressured by macro uncertainty in the second half.

Antonio Pietri: Beginning with process and hybrid.

Speaker Change: Overall.

Speaker Change: Proving underlying demand fundamentals, coupled with easier second half comps position, our discrete businesses for accelerating year over year growth in the back half and we expect to hit double digits as we exit the year.

Antonio Pietri: We saw growth across all world areas in the first half.

Ram Krishnan: Now to quantify the tariff impact of U.S. exports into our China operations, we exported $105 million of critical subassemblies and some finished product from the U.S. to China in 2024 on an annualized Under the third round of China's retaliatory tariffs, which went into effect on April 10, we are now exposed to $135 million of incremental cost on an annualized basis. This assumes no waiver or exemption mechanism and that country of origin for semiconductor fabrication will be based on the location of fabrication. In 2025, we expect the gross incremental impact to be $60 million, around 0.35% of sales.

Antonio Pietri: First half growth was led by Asia, and the Middle East and Africa with robust investment in energy and LNG projects offsetting continued weakness in China, specifically bulk chemical.

Speaker Change: We are watching closely for signs of tariff induced impacts to demand.

Antonio Pietri: The Americas were up mid single digits with solid MRO in North America, and broad based strength in Latin America.

Speaker Change: We have not seen any widespread indications.

Antonio Pietri: Europe saw low single digit growth with continued momentum in the energy transition and life Sciences.

April was a strong start to the third quarter with trailing three month underlying orders growth of 7%.

Antonio Pietri: We expect process and hybrid sales growth in the second half to remain in the mid single digits driven by sustained global investment in LNG life Sciences and power.

Speaker Change: And we continue to see significant demand for our process and hybrid businesses and recovery in discrete.

Energy security self reliance and energy transition commitments I expect it to sustain a favorable spend environment in LNG and power while nearshoring momentum is expected to drive further growth in life Sciences.

Antonio Pietri: We are planning for gradual improvement in China, aided by easier comps and investment momentum in power and marine.

Ram Krishnan: So in total, a gross impact in 2025 is expected to be $245 million and $455 million on an annualized basis, which is around 2.5% of sales. We are mitigating these impacts through targeted surcharges and pricing actions, production reconfiguration using our global manufacturing footprint, and additional supply chain regionalization initiatives. In 2025, we're targeting $190 million of incremental price and surcharges in the fiscal year with another $55 million of operational mitigation benefits from inventory on hand and supply chain action. These mitigation actions will completely offset the tariff headwinds in the fiscal year with carryover benefit to completely cover the full annualized impact we will encounter in 2026 under these assumptions.

Antonio Pietri: Turning to the screen.

Antonio Pietri: Underlying sales were down low single digits in the first half with the most pronounced weakness in Europe and China.

Speaker Change: Strength in process and hybrid markets combined with the nascent discrete recovery reinforces our expectations for mid single digit growth in the third quarter and for high single digit growth as we exit the year.

Antonio Pietri: The orders recovery in the second quarter and a low base of comparison support our plan for high single digit underlying sales growth in the back half.

Antonio Pietri: We expect continued improvement in discrete MRO as well as test and measurement markets with regional growth led by the Americas and Asia ex China.

Speaker Change: Please turn to slide six.

Speaker Change: Favorable demand trends support our view for underlying sales to accelerate in the second half and reinforced our full year guide of approximately 4% growth.

Antonio Pietri: We now see a more muted recovery for factory automation and continued to see declines in automotive.

Speaker Change: Beginning with processing the hybrid.

Speaker Change: We saw growth across all world areas in the first half.

Antonio Pietri: These dynamics are expected to prolonged weakness in Europe, and China, Although we expect to see sequential improvement in both regions in the second half.

Speaker Change: First half growth was led by Asia, and the Middle East and Africa with robust investment in energy and LNG projects offsetting continued weakness in China, specifically bulk chemical.

Antonio Pietri: The improving business fundamentals reinforced our expectation for low single digit sales growth for the full year.

Speaker Change: The Americas were up mid single digits with solid MRO in North America, and broad based strength in Latin America.

Antonio Pietri: And lastly, industrial software ended the first half of <unk> of $1 5 billion a growth of 11% driven by demand for Aspen text digital grid management and manufacturing and supply chain suite.

Ram Krishnan: As stated in the February call, we had pricing actions ready to be implemented when the first IEPA tariffs took effect. Pricing actions are underway across all of our businesses and all increases will be completed inside the quarter, including surcharges to our backlog where applicable. The remainder of our mitigation center around leveraging our global operational footprint that gives us a lot of flexibility to move production capacity around. Clearly, our regionalization efforts over the years put us in a strong position to drive these actions with speed and effectiveness.

Speaker Change: Europe saw low single digit growth with continued momentum in the energy transition and life Sciences.

Speaker Change: We expect process and hybrid sales growth in the second half to remain in the mid single digits driven by sustained global investment in LNG life Sciences and power.

Antonio Pietri: Delta the software recorded double digit growth in subscriptions and laugh you also contributed high single digit growth.

Speaker Change: We are planning for gradual improvement in China, aided by easier comps and investment momentum in power and marine.

Antonio Pietri: For the full year, we expect double digit ACB growth led by a strong EPC project backlog across energy and energy transition with continued adoption for our industrial software across power life Sciences, semiconductor and aerospace and defense.

Speaker Change: Turning to the screen.

Speaker Change: Underlying sales were down low single digits in the first half with the most pronounced weakness in Europe and China.

Mike Baughman: Mike, I will now pass it over to you. Thanks, Ron. Please turn to slide 10, where I will walk through the details of our 2025 Guide for Sales and Adjusted EPS. As Lal and Ram discussed, the sustained momentum in process and hybrid markets, positive outlook on discrete, strong Q2 operational performance, and ability to navigate tariffs put us in a position to guide underlying sales growth in 2025 of approximately 4%, holding the midpoint of our February guide. We expect the pricing actions we are taking to mitigate tariffs to add an incremental point of price, so we now expect total price of approximately 3% in a year.

Speaker Change: I will now turn the call over to Mike Bachman to provide additional color on our financials.

Speaker Change: The orders recovery in the second quarter and a low base of comparison support our plan for high single digit underlying sales growth in the back half.

Mike Bachman: Thanks, Paul Please turn to slide seven to discuss our second quarter financial results.

Speaker Change: We expect continued improvement in discrete MRO as well as test and measurement markets with regional growth led by the Americas and Asia ex China.

Mike Bachman: Underlying sales growth was 2% led by our process and hybrid businesses, which were up approximately 4%.

Mike Bachman: Our discrete businesses continued to show sequential improvement, but were still down approximately 1% year over year.

Speaker Change: We now see a more muted recovery for factory automation and continued to see declines in automotive.

Speaker Change: These dynamics are expected to prolonged weakness in Europe, and China, Although we expect to see sequential improvement in both regions in the second half.

Mike Bachman: Price contributed one five points to growth.

Mike Bachman: Software and control grew 7% driven by higher software sales, while integrated intelligent devices was flat due to safety and productivity and discrete automation.

Speaker Change: The improving business fundamentals reinforced our expectation for low single digit sales growth for the full year.

Mike Baughman: This is offset by pockets of reduced outlook for demand, including muted expectations in China, a slower recovery in factory automation, and weakened demand and safety and productivity from continued softness in construction. We now expect FX to be flat for the year versus the February expectation of one and a half points of unfavorable FX. Turning to EPS, we are raising the midpoint of our adjusted EPS guide and now expect to land the year between $5.90 and $6.05. We have an $0.08 benefit from the outstanding operational performance in the second quarter and as Ram outlined, we expect to completely offset the earnings impact of tariffs in 2025.

Mike Bachman: Backlog increased to $7 $5 billion and our book to Bill for the quarter was 1.04.

Speaker Change: And lastly, industrial software ended the first half with H C V. A $1 5 billion a growth of 11% driven by demand for Aspen Tech's digital grid management and manufacturing and supply chain suite.

Mike Bachman: Sequentially backlog was up 3% led by our process and hybrid businesses, which were up mid single digits, while our discrete businesses were up low single digits.

Speaker Change: Delta V software recorded double digit growth in subscriptions and laugh you also contributed high single digit growth.

Mike Bachman: Adjusted segment EBITA margin improved 200 basis points to 28% matching our record high from Q1 and exceeding our expectations.

Speaker Change: For the full year, we expect double digit ACB growth led by a strong EPC project backlog across the energy and the energy transition with continued adoption for our industrial software across power life Sciences, semiconductor and aerospace and defense.

Mike Bachman: Margin expansion was driven by favorable price cost segment mix and the benefits of cost reductions and synergy realization.

Mike Bachman: Strong profit contributions from test and measurement and control systems and software, which includes Aspen Tech accounted for a significant portion of the margin expansion.

Speaker Change: I'll now turn the call over to Mike Bachman to provide additional color on our financials.

Mike Baughman: The softer demand dynamics mentioned earlier results in an approximately 10 cents headwind for the year, while the impact of the change in our FX expectation provides approximately 5 cents of upside relative to the February guide.

Mike Bachman: Thanks, Paul Please turn to slide seven to discuss our second quarter financial results.

Mike Bachman: Operating leverage was 180%.

Adjusted earnings per share grew 9% to $1 48 up 12 cents year over year.

Mike Bachman: Underlying sales growth was 2% led by our process and hybrid businesses, which were up approximately 4%.

Mike Bachman: I will discuss adjusted EPS and more depth on the next chart.

Mike Baughman: Please turn to slide 11 for additional details on our third quarter and full year 2025 guidance. We expect our process and hybrid businesses to grow mid-single digits for the year, supported by healthy backlog and pace of business. As discussed, discrete orders have turned positive and will benefit from easier sales comps resulting in a meaningful second half recovery and low single-digit full-year growth in our discrete business. Adjusted segment EBITDA margin for the year is expected to be approximately 27% of 100 basis points over the prior year, but lower than the first half of the year due to the effect of tariffs and segment measures.

Mike Bachman: Our discrete businesses continued to show sequential improvement, but were still down approximately 1% year over year.

Mike Bachman: Lastly, free cash flow was $738 million up 14% versus the prior year.

Mike Bachman: Price contributed one five points to growth.

Mike Bachman: This strong performance was led by higher earnings and favorable working capital.

Mike Bachman: Software and control grew 7% driven by higher software sales, while integrated intelligent devices was flat due to safety and productivity and discrete automation.

Mike Bachman: Free cash flow margin for the quarter was 17% and was burdened by $130 million of acquisition related costs.

Mike Bachman: Please turn to slide eight.

Mike Bachman: Backlog increased to seven $5 billion and our book to Bill for the quarter was 1.04.

Mike Bachman: Q2 was another strong quarter operationally.

Mike Bachman: Bridging from prior year, adjusted EPS of $1.36 operations added <unk> <unk>.

Mike Bachman: Sequentially backlog was up 3% led by our process and hybrid businesses, which were up mid single digits, while our discrete businesses were up low single digits.

Mike Bachman: Excluding Aspen Tech software and control added <unk> intelligent devices added <unk>.

Mike Baughman: Free cash flow guidance is now $3.1 billion to $3.2 billion as we have rolled in the impact of the Aspen Tech acquisition. Strong operational performance in the first half helped offset Aston Tech transaction-related headwinds of approximately $200 million. Including these headwinds, free cash flow margin is expected to be approximately 17%. For the third quarter, we expect underlying sales to be up three and a half to four and a half percent and FX to be favorable, approximately one point. Our growth reflects the continued positive environment for our process and hybrid businesses and a return to growth in our discrete business.

Mike Bachman: And a full quarter of asset intact ownership at 57% added seven cents.

Mike Bachman: Adjusted segment EBITA margin improved 200 basis points to 28% matching our record high from Q1 and exceeding our expectations.

Mike Bachman: The completion of the Aspen Tech by and benefited the quarter by a net five seven.

Mike Bachman: Margin expansion was driven by favorable price cost segment mix and the bench.

Mike Bachman: <unk> from the incremental 43% ownership from March 12 to the end of the quarter less <unk> from interest expense for debt taken on to complete the buying.

Mike Bachman: With cost reductions and synergy realization.

Mike Bachman: Strong profit contributions from test and measurement and control systems and software, which includes Aspen Tech accounted for a significant portion of the margin expansion.

Mike Bachman: Aspen Tech operations exceeded expectations, including <unk> due to the timing of a key customer booking in France.

Mike Bachman: This contract is the largest in Aspen Tech history, and previously had been expected to book in Q3.

Mike Bachman: Operating leverage was 180%.

Mike Bachman: Adjusted earnings per share grew 9% to $1 48 up 12 cents year over year.

Mike Bachman: Non operating items, including FX and pension were a 7% headwind.

Mike Baughman: We expect adjusted segment EBITDA margin of approximately 27% and adjusted EPS between $1.48 and $1.52.

Mike Bachman: I will discuss adjusted EPS and more depth on the next chart.

Mike Bachman: The five penny headwind for our tax is primarily due to unfavorable balance sheet translation with some unfavorable impact on sales early in the quarter.

Mike Bachman: Lastly, free cash flow was 738 million up 14% versus the prior year.

Mike Baughman: Please turn to slide 12. Emerson has remained committed to disciplined capital allocation through the Portfolio Transformation and we will continue to have four primary capital allocation priorities. The first remains reinvestment in the business to foster organic growth and Emerson will continue these high return investments to support our 4-7% growth framework. We are in our 69th year of increased dividends per share and expect to distribute $1.2 billion to shareholders through dividend in 2025. The dividend will continue to be a priority. Our A2A credit ratings are also a priority for Emerson and influence how we manage our balance sheet and capital allocation decisions.

Mike Bachman: This strong performance was led by higher earnings and favorable working capital.

Mike Bachman: Overall, adjusted EPS grew 9% year on year to $1.48.

Mike Bachman: Free cash flow margin for the quarter was 17% and was burdened by $130 million of acquisition related costs.

Mike Bachman: I will now pass the call to Ron to review, our tariff mitigation plans before I finish up with our guidance.

Mike Bachman: Please turn to slide eight.

Ron: Thanks, Mike and good morning, everyone. Please turn to slide nine I want to provide a clear picture of the estimated gross impacts of the current tariff situation. Both from tariffs recently implemented on U S imports and China's retaliatory tariffs on U S exports.

Mike Bachman: Q2 was another strong quarter operationally.

Mike Bachman: Bridging from prior year adjusted EPS of $1.36 operations added 40 cents excluding.

Mike Bachman: Excluding Aspen Tech software and control added four cents.

Mike Bachman: Intelligent devices added three cents.

Ron: On an annualized basis in 2020 for Emerson imported one $6 billion into the U S representing 19% of our annual cost of goods sold as raw materials and semi finished products for our manufacturing plants and finished products to our distribution centers the <unk>.

Mike Bachman: And a full quarter of asset ownership at 57% added seven cents.

Mike Bachman: The completion of the Aspen Tech by and benefited the quarter by a net five cents seven.

Mike Baughman: The decision to retain the S&P business makes debt paydown a priority over the next two years. We have updated our guidance for fiscal 25 share repurchase to $1.1 billion, which was completed in the first half. As we look beyond 2025, we expect to have available approximately $2.5 billion of free cash flow over the next two years to allocate to share repurchase and strategic bolt-on M&A. With this plan, we expect to bring our net debt to adjusted EBITDA back to approximately two times by the end of fiscal 2027.

Mike Bachman: Seven from the incremental 43% ownership from March 12 to the ended the quarter last two cents from interest expense for debt taken on to complete the buying.

Ron: <unk> incremental tariff impact on these imports driven by I E.

Mike Bachman: Aspen Tech operations exceeded expectations, including <unk> due to the timing of a key customer booking in France.

Ron: Steel aluminum and reciprocal tariffs amounts to $320 million on an annualized basis.

Mike Bachman: This contract is the largest in Aspen Tech history, and previously had been expected to book in Q3.

Ron: Tariff assumptions for U S imports are as follows <unk> enacted on February the fourth end March the fourth are held at 25%.

Mike Bachman: Non operating items, including FX and pension worth seven headwind.

Ron: Section 232 on steel and aluminum remain at current levels and excluding China reciprocal tariffs are modeled at an average rate of 15% to estimate the annualized impact.

Mike Bachman: The five penny headwind for FX is primarily due to unfavorable balance sheet translation with some unfavorable impact on sales early in the quarter.

Operator: And with that, we will now turn the call back to the operator for Q&A. Yes, thank you.

Mike Bachman: Overall, adjusted EPS grew 9% year on year to $1.48.

Ron: As you can see most of our gross impact is driven by the 125% reciprocal tariff on imports from China, while the Mexico impact is significantly mitigated as 80% of our supply into the U S from Mexico qualifies for U S MCA exemptions.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing star. At any time your question has been addressed and you would like to withdraw it, please press star then 2.

Ron: I will now pass the call to Ron to review, our tariff mitigation plans before I finish up with our guidance.

Operator: At this time we will pause momentarily to assemble the roster.

Ron: In 2025, we expect the gross incremental impact on U S imports to be $185 million around 1% of sales.

Andrew Obin: And this morning's first question comes from Andrew Obin with Bank of America, Maryland. Ah yes, good morning.

Andrew Obin: Just a question on discrete automation, clearly you guys seeing some momentum, like you're highlighting test and measurement orders, but at the same time, you're highlighting factory automation, limited recovery.

Ron: How to quantify the tariff impact of U S exports into our China operations, we exported $105 million of critical sub assemblies and some finished product from the U S to China in 2024 on an annualized basis.

Andrew Obin: So what exactly is getting better in discrete? What end markets? Thank you.

Ron: Under the third round of China's retaliatory tariffs, which went into effect on April <unk>. We are now exposed to $135 million of incremental cost on an annualized basis. This assumes no waiver or exemption mechanism and the country of origin for semiconductor fabrication will.

Lal Karsanbhai: Hi Andrew. Good morning.

Lal Karsanbhai: So a couple of things here. First on test and measurement, the recovery in the test and measurement business has been driven by the portfolio business and aerospace and defense. The portfolio business is a broad-based business with tens of thousands of customers and is a great indicator of industrial activity across the world. We continue to be muted in semiconductor, although recovering, and certainly down on automotive. We saw those same negative trends in automotive across the traditional Emerson discrete business. That's predominantly impacting our China and Germany business, which has a higher exposure to automotive, although we see some of that in the U.S.

Ron: <unk> incremental tariff impact on these imports driven by I E.

Ron: Steel aluminum and reciprocal tariffs amounted to $320 million on an annualized basis.

Ron: Tariff assumptions for U S imports are as follows I E enacted on February the fourth in March the fourth are held at 25%.

Ron: Based on the location of fabrication and.

Ron: In 2025, we expect the gross incremental impact to be $60 million around three 5% of sales. So in total our gross impact in 2025 is expected to be $245 million and $455 million on an annualized basis, which is around.

Ron: Section 232 on steel and aluminum remain at current levels and excluding China reciprocal tariffs are modeled at an average rate of 15% to estimate the annualized impact.

Ron: Two 5% of sales.

Ron: We are mitigating these impacts through targeted surcharges and pricing actions production reconfiguration, using our global manufacturing footprint and additional supply chain regionalization initiatives in 2025, we're targeting $190 million of incremental price in store.

Lal Karsanbhai: as well. Now, in terms of positives and underlying discrete, we saw some green shoots across a number of industries, some of the packaging industries, MRO markets and applications, which turned positive for us as well in the quarter. So overall, certainly in a different place than we were a quarter ago at plus three, but very encouraged about the turn in test and measurement. We believe that it's sustained, as we indicated in our materials, and accelerating as we go through the year.

Ron: In 2025, we expect that gross incremental impact on U S imports to be $185 million around 1% of sales.

Ron: Charges in the fiscal year with another $55 million of operational mitigation benefits from inventory on hand and supply chain actions.

Ron: Now to quantify the tariff impact of U S exports into our China operations, we exported $105 million of critical sub assemblies and some finished product from the U S to China in 2024 on an annualized basis under.

Ron: These mitigation actions will completely offset the tariff headwinds in the fiscal year with carryover benefit to completely cover the full annualized impact we will encounter in 2026 under these assumptions.

Lal Karsanbhai: Thank you. And just a follow-up question. If you look at the pharma announcements out there, right, I think Roche is talking about $50 billion, InSpan, Novartis $23 billion, J&J $55 billion, Eli Lilly $27. I mean, these are like sort of semiconductor-like numbers, and you guys do have a very strong position in this market. You know, just from your perspective, how much of it is political posturing, and how much of it you actually see in your discussions with the customers? And when should we start seeing it, you know, this activity, if it is in fact real, in your orders?

Ron: As stated in the February call, we had pricing actions ready to be implemented when the first I E. The tariffs took effect pricing actions are underway across all of our businesses and all increases will be completed inside the quarter, including surcharges to our backlog where applicable the remainder of our mitigation center.

Ron: Under the third round of China's retaliatory tariffs, which went into effect on April 10, and we are now exposed to $135 million of incremental cost on an annualized basis. This assumes no waiver or exemption mechanism and the country of origin for semiconductor fabrication will be.

Ron: Around leveraging our global operational footprint that gives us a lot of flexibility to move production capacity around.

Ron: Based on the location of fabrication in.

Clearly our regionalization efforts over the years put us in a strong position to drive these actions with speed and effectiveness, Mike I will now pass it over to you. Thanks Ron.

Lal Karsanbhai: Because clearly, one of your strongest global franchises.

Lal Karsanbhai: Thank you. Yeah, no. No, I think it's very real. I think companies are making serious commitments around reshoring the manufacturer. We've been speaking about life-size reshoring, if you'll recall, Andrew, for a number of years now, as one of the underlying drivers in our business. And we are seeing real activity. Now, of course, it takes time. We're seeing some early projects coming to our funnel, but early days yet. There's tremendous demand for some underlying treatments out there, weight loss, diabetes. There are new cancer drugs coming onto the market, large molecule drugs being introduced. And we're going to see that those manufacturing facilities and decisions on where to place those facilities are going to be heavily influenced by the current environment.

Mike Bachman: Please turn to slide 10, where I will walk through the details of our 2025 guide for sales and adjusted EPS.

Ron: 2.5% of sales.

Speaker Change: As <unk> discussed the sustained momentum in process and hybrid markets positive outlook on discrete strong Q2 operational performance and ability to navigate tariffs put us in a position to guide underlying sales growth in 2025 of approximately 4%.

Ron: In the fiscal year with another $55 million of operational mitigation benefits from inventory on hand and supply chain actions.

Mike Bachman: The midpoint of our February guidance.

Mike Bachman: We expect our pricing actions, we are taking to mitigate tariffs to add an incremental point of price. So we now expect total price of approximately 3% in the year.

Lal Karsanbhai: So, we're very excited about that. We're well-positioned and working closely with all of those customers on their plan.

Lal Karsanbhai: Thank you very much.

Mike Bachman: This is offset by pockets of reduced outlook for demand, including muted expectations in China.

Operator: Thank you.

Scott Davis: And the next question comes from Scott Davis of Milius Research. Hey, good morning, guys. and Brett on the numbers. Thank you, sir.

Mike Bachman: Slower recovery in factory automation and weakened demand in safety and productivity from continued softness in construction markets.

Ron: As stated in the February call, we had pricing actions ready to be implemented when the first I E. The tariffs took effect pricing actions are underway across all of our businesses and all the increases will be completed inside the quarter, including surcharges or backlog, where applicable the remainder of our mitigation center.

Scott Davis: Hey, I just wanted to ask on Aspen Tech and just get a sense now that you've closed the What can you do, what do you feel like you can do with the asset now that you fully control the outcome that you really couldn't do before?

Mike Bachman: We now expect FX to be flat for the year versus the February expectation of one five points of unfavorable FX.

Mike Bachman: Turning to EPS, we are raising the midpoint of our adjusted EPS Guide and now expect to land the year between $5 96.

Lal Karsanbhai: I'll start off and I'll hand it off to Ram to give his perspective as well. Look, first, we're very excited about completing that transaction. We have a great management team that we put in place, which, much like we did at NI, is a combination of Emerson folks and Aspen Tech folks, so I think we have a team that can execute on a plan. predominantly driven around growth. The opportunity here is to drive ECB into the double-digit range and sustain that over time. We believe the technology is highly differentiated and we further believe, Scott, as we'll highlight at Emerson Exchange, that to deliver our vision of boundless automation in the next generation of distributed control system around enterprise software, the Aspen Tech and Delta V Ovation platforms collaboratively coming together is going to be critical.

Ron: Around leveraging our global operational footprint that gives us a lot of flexibility to move production capacity, Iraq, clearly our regionalization efforts over the years put us in a strong position to drive these actions with speed and effectiveness, Mike I will now pass it over to you. Thanks.

Mike Bachman: $6 five.

Mike Bachman: We have an <unk> <unk> benefit from the outstanding operational performance in the second quarter and as Ron outlined we expect to completely offset the earnings impact of tariffs in 2025.

Wrong.

Mike Bachman: Please turn to slide 10, where I will walk through the details of our 2025 guide for sales and adjusted EPS.

Mike Bachman: The softer Diana the softer demand dynamics mentioned earlier results in an approximately <unk> 10 headwind for the year, while the impact of the change in our FX expectation provides approximately <unk> <unk> of upside relative to the February guide.

Mike Bachman: Please turn to slide 11 for additional details on our third quarter and full year 2025 guidance.

Mike Bachman: The midpoint of our February guidance.

Mike Bachman: We expect our process and hybrid businesses to grow mid single digits for the year supported by healthy backlog and pace of business.

Ram Krishnan: Yeah, and Scott, I would say we're obviously, in terms of the accelerated momentum on the commercial engagements that we've already had with Aspen Tech, we're very encouraged by that, and that should continue both in terms of greenfield pursuits as well as the opportunities we see in end markets like power and life sciences, as well as the installed base of Delta V and our opportunity to collaborate there to sell more Aspen Tech software. And then, certainly on the technology front, as Walt pointed out, our vision of a software-defined automation architecture, this will enable faster execution of many of the roadmaps that we have been working with them on, but now, as a hundred percent part of Emerson, we will accelerate those roadmaps.

Mike Bachman: We expect the pricing actions, we are taking to mitigate tariffs to add an incremental point of price. So we now expect total price of approximately 3% in the year.

Mike Bachman: As discussed discrete orders have turned positive and will benefit from easier sales comps, resulting in a meaningful second half recovery and low single digit full year growth in our discrete businesses.

Mike Bachman: This is offset by pockets of reduced outlook for demand, including muted expectations in China.

Mike Bachman: Adjusted segment EBITA margin for the year is expected to be approximately 27% up 100 basis points over the prior year, but lower than the first half of the year due to the effect of tariffs and segment mix.

Mike Bachman: Slower recovery in factory automation and weakened demand in safety and productivity from continued softness in construction markets.

Mike Bachman: We now expect FX to be flat for the year versus the February expectation of one and a half points of unfavorable FX.

Mike Bachman: Free cash flow guidance is now $3 1 billion to $3 2 billion as we have rolled and the impact of the Aspen Tech acquisition.

Mike Bachman: Turning to EPS, we are raising the midpoint of our adjusted EPS Guide and now expect to land the year between $5 96.

Mike Bachman: Strong operational performance in the first half helped offset Aspen tech transaction related headwinds of approximately $200 million.

Scott Davis: Okay, and guys, I just wanted to clarify on the sequentially the tariff impact, do you expect to offset by the end of the fiscal year calendar year? Can you do it faster than that? It wasn't entirely clear to me, but maybe I'm just just missed it.

Mike Bachman: $6 <unk>.

Mike Bachman: Including these headwinds free cash flow margin is expected to be approximately 17%.

Mike Bachman: For the third quarter, we expect underlying sales to be up three five to four 5% and FX to be favorable approximately one point.

Mike Bachman: The softer Diana the softer demand dynamics mentioned earlier results in an approximately <unk> 10 headwind for the year, while the impact of the change in our FX expectation provides approximately five cents of upside relative to the February guide.

Ram Krishnan: Thanks. Yeah, we will completely cover the tariffs by the end of 2025. We'll cover it obviously at the expulsion in 2025 with the programs having momentum to cover it in 2026 as well. Fiscal 2025. Okay, you mean fiscal. Okay, good.

Mike Bachman: Our growth reflects the continued positive environment for our process and hybrid businesses and a return to growth in our discrete businesses.

Mike Bachman: We expect adjusted segment EBITDA margin of approximately 27% and adjusted EPS between $1 48.

Mike Bachman: Please turn to slide 11 for additional details on our third quarter and full year 2025 guidance.

Scott Davis: All right, I'll pass on. Thank you guys. Appreciate it. Thank you.

Mike Bachman: And $1 52.

Deane Dray: And the next question comes from Deane Dray with RBC Capital Markets. Thank you. Good morning, everyone. Good morning, Dean.

Mike Bachman: We expect our process and hybrid businesses to grow mid single digits for the year supported by healthy backlog and pace of business.

Mike Bachman: Please turn to slide 12.

Mike Bachman: Emerson has remained committed to disciplined capital allocation through the portfolio transformation and we will continue to have four primary capital allocation priorities.

Deane Dray: Hey, could you start with the decision to keep safety and productivity? I mean, it's been it's got a great reputation, great brands. Was did you not get the right multiple for it?

Mike Bachman: First remains reinvestment in the business to foster our organic growth and Emerson will continue these high return investments to support our Florida, 7% growth framework.

Lal Karsanbhai: Is this maybe it's not the right environment given the macro to maximize value, but just kind of what was the process? And would this be revisited? Yeah, no, thanks for the question. Look, we did conduct a very thorough review of the S&P business. And through that review, obviously, the external environment has something to do with it. We ultimately concluded that the best value for the shareholders is to retain the business. And Deane, one of the things that this management team has been very focused on through this transformative transaction is value creation for shareholders in terms of not just the disposals, but certainly on the acquisition side as well.

Mike Bachman: We are in our 69th year of increased dividends per share and expect to distribute $1 2 billion to shareholders through dividends in 2025.

Mike Bachman: The dividend will continue to be a priority.

Mike Bachman: Free cash flow guidance is now $3 1 billion to $3 2 billion as we have rolled and the impact of the Aspen Tech acquisition.

Mike Bachman: Our <unk> a credit ratings are also a priority for Emerson and influence how we manage our balance sheet and capital allocation decisions.

Mike Bachman: Strong operational performance in the first half helped offset Aspen tech transaction related headwinds of approximately $200 million.

Mike Bachman: The decision to retain the S&P business makes debt Paydown a priority over the next two years.

Mike Bachman: Including these headwinds free cash flow margin is expected to be approximately 17%.

Mike Bachman: We have updated our guidance for fiscal 'twenty five share repurchase to $1 1 billion, which was completed in the first half.

Mike Bachman: For the third quarter, we expect underlying sales to be up three five to four 5% and FX to be favorable approximately one point.

Mike Bachman: As we look beyond 2025, we expect to have available approximately $2 5 billion of free cash flow over the next two years to allocate to share repurchase and strategic bolt on M&A.

Lal Karsanbhai: So, look, at this point, we feel really good about the opportunities. We do believe the business is well aligned to the macros of reassuring and particularly U.S. manufacturing. As you may know, this is entirely a U.S. manufacturing business with manufacturing in Elyria, Ohio, with great technology to address those secular drivers. So, look, we will apply the Emerson management system. We see opportunities for value creation within a highly profitable segment leading margins and cash flow, and are excited to manage on a go-forward basis.

Mike Bachman: Our growth reflects the continued positive environment for our process and hybrid businesses and a return to growth in our discrete businesses.

Mike Bachman: We expect adjusted segment EBITDA margin of approximately 27% and adjusted EPS between $1 48.

Mike Bachman: With this plan, we expect to bring our net debt to adjusted EBITDA back to approximately two times by the end of fiscal 2027.

Mike Bachman: And $1 52.

Mike Bachman: And with that we will now I will turn the call back to the operator for Q&A.

Mike Bachman: Please turn to slide 12.

Speaker Change: Yes. Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Mike Bachman: Emerson has remained committed to disciplined capital allocation through the portfolio transformation and we will continue to have four primary capital allocation priorities.

Deane Dray: That's really helpful.

Lal Karsanbhai: And then just second question, can You said no definitive signs of slowing, but you also call out pockets of softness in China, factory automation, and construction markets. If you just step back and say, what are the data points that you're basing that on? Is it funnel? Is it any sort of leaping indicators that you think that there's the slowing, the depth of it, the duration, and so forth? So for those three pockets of softness, what are the data points that you're basing it on? Yes, I'll break it up into a couple pieces. China, predominantly, softness is involved chemical.

Speaker Change: Speakerphone, please pick up your handset before pressing the keys. The same time. Your question has been addressed and you would like to withdraw it. Please press Star then two.

Mike Bachman: The first remains reinvestment in the business to foster our organic growth and Emerson will continue these high return investments to support our 4% to 7% growth framework.

Speaker Change: At this time, we will pause momentarily to assemble the roster.

Andrew: And this morning's first question comes from Andrew <unk> with Bank of America Merrill Lynch.

Mike Bachman: We are in our 61 ninth year of increased dividends per share and expect to distribute $1 2 billion to shareholders through dividend and 2025.

Andrew: Hi, guys good Burger boring.

Andrew: Just a question on discrete automation clearly you guys.

Mike Bachman: The dividend will continue to be a priority.

Andrew: Seeing some momentum right, if you're highlighting test and measurement of orders.

Mike Bachman: Our <unk> a credit ratings are also a priority for Emerson and influence how we manage our balance sheet and capital allocation decisions.

Andrew: But at the same time, you're highlighting a factory automation a limited recovery. So one is what exactly is getting better and discrete what end markets. Thank you.

Mike Bachman: The decision to retain the S&P business makes debt pay down our priority over the next two years.

Lal Karsanbhai: We don't see project activity, spend activity to give us confidence in demand in that segment. Having said that, there are other segments in China that are interesting, particularly around power generation and coal and nuclear, and we're benefiting from those investments. We're also seeing nascent growth in China of export EPC business, Chinese homegrown EPCs that are now beginning to take their skills and capabilities around the world. So we are participating there. And then lastly, in China, the marine business. Shipbuilding in China has become a very large segment, certainly one that we've been participating in. In terms of factory automation, automotive has a big element to that for us, both in China and in Germany.

Speaker Change: Hi, Andrew Good morning, Yes, good morning.

Speaker Change: So a couple of things here first on test and measurement.

Mike Bachman: We have updated our guidance for fiscal 'twenty five share repurchase to $1 1 billion, which was completed in the first half.

Speaker Change: That that the recovery in the test and measurement business is being driven by the portfolio business and aerospace and defense.

Mike Bachman: As we look beyond 2025, we expect to have available approximately $2 5 billion of free cash flow over the next two years to allocate to share repurchase and strategic bolt on M&A.

Speaker Change: The portfolio of businesses is a broad based business with tens of thousands of customers.

Speaker Change: It is a great indicator of <unk>.

Speaker Change: Industrial activity.

Speaker Change: Across across the world.

Mike Bachman: With this plan, we expect to bring our net debt to adjusted EBITDA back to approximately two times by the end of fiscal 2027.

Speaker Change: We continue to be muted in semiconductor and although recovering.

Speaker Change: And certainly down all automotive we saw those same negative trends in automotive across the discrete traditional emerson discrete business.

Mike Bachman: And with that we will now I will turn the call back to the operator for Q&A.

Mike Bachman: Yes. Thank you we will now begin the question and answer session.

Speaker Change: That's predominantly impacting.

Mike Bachman: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: Our China, and Germany business, which has a higher exposure to automotive, although we see some of that in the U S as well that.

Lal Karsanbhai: And we're looking at, obviously, data around automotive spend, but mostly we see that as reflected in our daily orders and funnel activity.

Speaker Change: Speakerphone, please pick up your handset before pressing the keys. So anytime you have questions and address that you'd like to withdraw. It. Please press star then two.

Speaker Change: In terms of positives and underlying discrete we saw some green shoots across a number of industries some of the packaging industry.

Mike Bachman: At this time, we will pause momentarily to assemble the roster.

Lal Karsanbhai: Great end to construction. On overall construction, you know, outside of China, again, we don't see any underlying concerns here at this point in time, but again, and some of that perhaps reflected in the recovery in discrete globally, so I don't have any commentary there.

Andrew: And this morning's first question comes from Andrew <unk> with Bank of America Merrill Lynch.

Speaker Change: <unk> markets and applications, which turned positive for us as well.

Speaker Change: Hi, guys good Burger boarding.

Speaker Change: In the quarter so overall.

Speaker Change: Just a question on discrete automation and clearly you guys are seeing some momentum right, if you're highlighting test and measurement of waters.

Speaker Change: Certainly in a different place than we were a quarter ago at plus three but very encouraged about the turn in test and measurement. We believe that is sustained as we indicated in our materials and accelerating as we go through the year.

Speaker Change: But at the same time, you're highlighting a factory automation a limited recovery. So one is what exactly is getting better and discrete what end markets. Thank you.

Lal Karsanbhai: Great, thank you. Thank you.

Speaker Change: Thank you and just a follow up question. If you look at the pharma announcements out there right I think Roche is talking about 50 billion.

Andy Kaplowitz: And the next question comes from Andy Kaplowitz with Citigroup. Good morning, everyone. Nice quarter. Thanks, Sandy.

Speaker Change: Hi, Andrew Good morning, Yes, good morning.

Speaker Change: Novartis 23 billion J&J 55 billion.

Speaker Change: So a couple of things here first on test and measurement.

Mike Baughman: Lau, can you give us a little more color into the strength of your incrementals in Q2 and how you're thinking about incrementals in the second half? I know you've been talking about good material productivity versus cost, and mix has been positive for you. But is there anything else going on? I assume you're keeping a significant lid on cost. Do you expect temporary costs to come back in the second half? Maybe give us a little more color on what's going on.

Speaker Change: Literally 27, I mean, these are like sort of semiconductor like numbers and you guys do have a very strong position.

Speaker Change: That that the recovery in the test and measurement business is being driven by the portfolio business and aerospace and defense.

Speaker Change: In this market.

Speaker Change: The portfolio of businesses is a broad based business with tens of thousands of customers.

Speaker Change: From your perspective, how much of it is political posturing and how much of if you actually see in your discussions with the customers and when should we start seeing it.

Speaker Change: It is a great indicator of industrial activity.

Mike Baughman: Hey, Andy, it's Mike. I'll take that one. Yeah, our leverage for the first half was exceedingly high, you know, about 220%. And there were some interesting dynamics there with FX effect on reported sales, so we had a lower growth at the top line. But we continued to drive all of the levers around profitability. We had some very good mix with Aspen Tech, the T&M synergies reading through cost controls, as you mentioned, and we talked about last quarter. And then the hard work that was done last year around restructurings in the second half of the year was reading through in the first half of the year.

Speaker Change: This activity if it is in fact real in your orders because clearly one of your strongest global franchises. Thank you.

Speaker Change: Cross across the world.

Speaker Change: We continue to be muted in semiconductor and although recovery.

Speaker Change: No no no I think its very real I think companies are making serious commitments around we're showing with manufacturer. We've been speaking about life science was showing if you recall Andrew for a number of years now as one of the underlying drivers in our business and we're seeing real activity and of course. It takes time, we're seeing some early projects come into our funnel, but early days yet.

Speaker Change: Certainly down all automotive we saw those same negative trends in automotive across the discrete the traditional Emerson discreet business.

Speaker Change: That's predominantly impacting.

Speaker Change: Our China, and Germany business, which has a higher exposure to automotive, although we see some of that in the U S. As well in terms of positives and underlying discrete we saw some green shoots across a number of industries some of the packaging industry.

Speaker Change: Yes.

Speaker Change: There is tremendous demand for some underlying treatments out there weight loss diabetes, there are new cancer drugs coming onto the market large molecule drugs being introduced and you're going to see that those manufacturing facilities and decisions on where to where to place those facilities that can be heavily influenced by the current environment. So we're we're very.

Speaker Change: Micro markets and applications, which turned positive for us as well.

Mike Baughman: The second half of the year, this year, the leverage will probably look, in fact, a little lower than traditional. And there's a couple of things going on, mainly FX flips on us and the tariff impact, where we'll have a lot of sales coming through with no incremental profit but fully offset, as Ram talked about. And the profitability will be a little bit lower due to the Aspen Tech timing that we talked about. They had the large sale that booked in Q2 that was modeled in for Q3. So on balance, we're looking at a great year with 60%-ish expected incremental leverage in the full year.

Speaker Change: In the <unk> in the quarter so overall.

Charlie: Certainly in a different place than we were a quarter ago at plus three but very encouraged about the Charlie and test and measurement. We believe that is sustained as we indicated in our materials and accelerating as we go through.

Speaker Change: Excited about that we are well positioned on working closely with all of those customers.

Speaker Change: On their plans.

Speaker Change: Thank you very much.

Speaker Change: Okay.

Speaker Change: Thank you and the next question comes from Scott Davis Melius research.

Speaker Change: Thank you Andrew.

Speaker Change: Just a follow up question. If you look at the pharma announcements out there right I think Roche is talking about 50 billion in spend Novartis 23 billion J&J 55 billion.

Speaker Change: Yeah.

Speaker Change: Hey, good morning, guys.

Speaker Change: Good morning, Craig on the numbers.

Craig: Thank you Sir.

Speaker Change: Just wanted to ask on Aspen Tech and just get a sense now that you've closed the.

Speaker Change: I literally 27, I mean, these are like sort of semiconductor like numbers and you guys do have a very strong position in.

Speaker Change: I mean, what.

Speaker Change: What can you do what do you feel like you can do with the asset now that you've fully control the outcome that you really couldnt do before.

Speaker Change: In this market you know just from your perspective, how much of it is political posturing and how much have you actually see.

Speaker Change: I'll start off and I'll give I'll hand, it off to run to give his perspectives as well look first we're very excited about completing that transaction.

Andy Kaplowitz: Thanks for that, Mike.

Lal Karsanbhai: And then I want to double click on Aspen for a second, maybe just a little more color as it enters your portfolio. I think you're originally expecting Aspen to be neutral EPS for FY25. It's coming in mildly accretive. What exactly is outperforming your expectations? And I know you talked about greater than 10% ACV growth, but maybe you could elaborate on what you're seeing in the near to medium term in the business.

Speaker Change: Your discussions with the customers and when should we start seeing it as Oh. This activity. If it is in fact real in your orders because clearly.

Speaker Change: Have a great management team that we put in place which much like we did at Ni is a combination of Emerson selves and Aspen Tech folks. So I think we have a team that can execute on our plan.

Speaker Change: Global franchises. Thank you.

Speaker Change: Yeah, No no I think it's very wheel I think companies are making serious commitments around we're showing with manufacturer. We've been speaking about life sciences, showing if you'll recall Andrew for a number.

Speaker Change: Predominantly driven around growth the opportunity here is to drive ECB into the double digit range.

Ram Krishnan: I'll say a few comments and then Ron, if you have something to add. So I think there are two predominant elements there, Andy. The first is timing. Obviously, we exceeded in the second quarter. The timing does matter in terms of the EPS accretion. And the second is our commitment around the opportunities of cost. And the management team has pursued that very aggressively off the bat, particularly around GNA and corporate costs. And we feel really good that this will contribute positively in the year.

Speaker Change: As one of the underlying drivers in our business and we are seeing real activity and of course. It takes time, we're seeing some early projects come into our funnel, but early days yet.

Speaker Change: And sustained out overtime, we believe the technology is highly differentiated and we further believe Scott as we will highlight at Emerson exchange that to deliver our vision of boundless automation and the next generation of distributed control system around enterprise software.

Speaker Change: There is tremendous demand for some underlying treatments out there weight loss diabetes, there are new cancer drugs coming onto the market large molecule drugs being introduced and you're going to see that those manufacturing facilities and decisions on where to where to place those facilities are going to be heavily influenced by the current environment. So where we are.

Speaker Change: The Aspen Tech and Delta V ovation platforms collaboratively coming together is going to be critical.

Scott: Yeah, Scott I would say we.

Ram Krishnan: So the next one starts. Yeah, you said it. And I think the pace of business across DTM continues to be robust. And I think we'll continue to accelerate in terms of momentum and, and the core Aspen Tech suites continue to perform very well. So we haven't seen any slowdown in demand and you augment that with the synergy actions that you all referenced. I think we feel very good about the contribution Aspen Tech will make this year and into 26 and beyond.

Scott: Obviously in terms of the accelerated momentum on the commercial engagements that we've already had with Aspen Tech. We're very encouraged by that and that should continue both in terms of greenfield pursuits as well as the opportunities we see in end markets like power and life Sciences as well as the installed base of Delta E and our opportunities to.

Speaker Change: Very excited about that we are well positioned with working closely with all of those customers.

Speaker Change: On their plans.

Speaker Change: Thank you very much.

Speaker Change: Thank you and the next question comes from Scott Davis of Melius Research.

Scott Davis: Hey, good morning, guys.

Scott: Collaborate there to sell more Aspen Tech software and then certainly on the technology front as <unk> pointed out our vision of a software defined automation architecture. This will enable faster execution of many of the roadmaps that we have been working with them on but now.

Speaker Change: Good morning.

Speaker Change: On the numbers.

Speaker Change: Thank you Sir.

Andy Kaplowitz: Appreciate all the color. Thank you.

Speaker Change: Just wanted to ask on Aspen Tech and just get a sense now that you've closed the.

Steve Tusa: And the next question comes from Steve Tusa with J.P. Morgan. Hey, good morning. Good morning.

Speaker Change: I mean, what what can you do what do you feel like you can do with the asset.

Speaker Change: Okay.

Speaker Change: Troll the outcome that you really couldn't do before.

Steve Tusa: Can you just talk about maybe what's within process, what's holding up for you guys and where the strongest growth is and maybe how the MRO is playing in there with kind of the field device MRO side? Yeah, Steve, this is all. Yeah, look, MRO is about 62% of sales in the quarter, so it continues to be robust, which is important. And we've watched that very carefully with our programs, as you know. But also the capital funnel continues to be important here. The awards at $375 million are relatively balanced, but the three areas that I pick out in hybrid and process are life sciences, power, and LNG.

Scott: 100% part of Emerson, we will accelerate our roadmaps.

Speaker Change: I'll start off and I'll I'll give out.

Scott: Okay and guys I just wanted to clarify on the <unk>.

Speaker Change: To give his perspectives as well look first we're very excited.

Scott: Sequentially the tariff impact do you expect to.

Speaker Change: About.

Speaker Change: That transaction we.

Scott: To offset.

Speaker Change: We have a great management team that we put in place which much like we did at Ni is a combination of Emerson stopes and Aspen Tech folks. So I think we have a team that can execute on our plan.

Scott: By the end of the fiscal year calendar year.

Scott: You do it faster than that it wasn't entirely clear to me and maybe I'm just.

Scott: Just just missed it.

Scott: Yes.

Speaker Change: Predominantly driven around growth the opportunity here is to drive ECB into the double digit range.

Scott: We will completely cover the tariffs.

Scott: By the end of 2025 will cover it obviously is the explosion in 2025 with the programs having momentum to cover it in 2026 as well.

Speaker Change: And sustained out over time, we believe the technology is highly differentiated and we further believe Scott as we will highlight at Emerson exchange that to deliver our vision of boundless automation and the next generation of distributed control system around enterprise software.

Speaker Change: <unk> you mean.

Scott: Okay, Alright, Thank you guys I appreciate it.

Speaker Change: Thank you and our next question comes from Deane Dray with RBC capital markets.

Lal Karsanbhai: And we have not seen any arrest in the momentum in those markets and continue to be relatively bullish as we go through the remainder of this year into the exit of 2025.

Speaker Change: The Aspen Tech and Delta the ovation platforms collaboratively coming together is going to be critical.

Deane Dray: Thank you and good morning, everyone.

Speaker Change: Good morning Deane.

Scott: Hey could you just start with.

Speaker Change: Scott I would say we are.

Scott: The decision to keep safety and productivity.

Speaker Change: Obviously in terms of.

It's been it's got a great reputation great brands.

Antonio Pietri: Momentum on the commercial engagements that we've already had with Aspen Tech, we're very encouraged by that.

Steve Tusa: Okay, and then just lastly, any variability around like the end of the quarter, any signs of pre-buy or unusual customer activity? I know you guys are now guiding the second half for pretty decent order growth. Any kind of choppiness that you've seen out there in the last couple months? Yeah, I looked for that really carefully, and I wanted to put the April order number out there to give you some reflection. We did not see any of that across our businesses. As you know, we're not a big stock inventory business within across the portfolio, but we have not seen any signs of pre-buys get ahead of tariffs or surcharges across the business.

Scott:

Scott: Did you not get the right multiple for it.

Antonio Pietri: Continued bolt in terms of greenfield pursuits, as well as the opportunities we see in end markets like power.

Scott: Maybe it's not the right environment, given the macro to maximize value, but just kind of what was the process and would this be revisited.

Antonio Pietri: Life Sciences, as well as the installed base of Delta E and our opportunities to collaborate there to sell more.

Speaker Change: Yeah no. Thanks for the question look we did conduct a very thorough review of the S&P business and through that review obviously, the external environment has had something to do with it.

Antonio Pietri: Aspen Tech software and then certainly on the technology front as <unk> pointed out our vision of a software defined automation architecture. This will enable faster execution.

Scott: We ultimately concluded that the best value.

Antonio Pietri: Okay.

Antonio Pietri: We have been working with them on right now.

Scott: For the shareholders is to retain the business and indeed, one of the things that this management team has been very focused on through this transformative transaction is value creation for shareholders in terms of not just the disposals, but it but certainly on the on the acquisition side as well. So look at this point we feel.

Antonio Pietri: As a 100% part of Emerson, we will accelerate those roadmaps.

Lal Karsanbhai: This has been underlying demand that has continued to accelerate in the segments that we expected and continued resiliency in process.

Speaker Change: Okay and guys I just wanted to clarify on the.

Antonio Pietri: Sequentially.

Antonio Pietri: Europe impact do you expect to.

Antonio Pietri: To offset.

Operator: All right. Great. Thanks a lot. Thank you.

Antonio Pietri: By the end of the fiscal year calendar year.

Scott: Really good about the opportunities we do believe the business is well aligned to the macros of reassuring and particularly U S. Manufacturing as you May know this is entirely a U S manufacturing business with manufacturing in Elyria, Ohio.

Antonio Pietri: Can do it faster than that it wasn't entirely clear to me and maybe I'm just.

Joe O'dea: Thank you, and the next question comes from Joe O'Dea with Wells Fargo. Hi, good morning. Thanks for taking my question. Can you expand on test and measurement a little bit? I think there were at least a couple data points over the course of the past couple months that pointed to some push outs that was more on the production side and the R&D side. And so just talk about where you sit on the validation side and then market exposures and why the demand trends for you could be a little bit more insulated from some of the other pressure that's out there.

Antonio Pietri: Sure.

Antonio Pietri: Okay.

Antonio Pietri: Yes.

Antonio Pietri: We will completely cover the tariffs.

Antonio Pietri: By the end of 2025, well tolerate obviously is the exposure in 2025 with the programs having momentum to cover it in 2026 as well fiscal 2020, you mean.

Scott: With great technology to address those those under secular drivers. So look we will apply the Amherst the management system, we see opportunities for value creation within our highly profitable segment, leading margins and cash flow and are excited to go to manage on a go forward basis.

Antonio Pietri: Okay, Alright, Thank you guys I appreciate it.

Speaker Change: Thank you and the next question.

Speaker Change: That's really helpful. And then just second question Ken.

Gary: Gary with RBC capital markets.

Speaker Change: Thank you and good morning, everyone.

Lal Karsanbhai: Yeah, so, you know, in test and measurement, we have four segments, so equally weighted 20 to 25% of the sales mix. Two of those segments, aerospace and defense and portfolio, are seeing very, very strong growth driven by underlying demand fundamentals. Certainly, the portfolio business, which is a broad variety of end markets, 30,000 plus customers, and mostly sold through distributors and integrators, represents the broadest exposure that we have to customers. And so, a strength in that segment bodes well for the overall recovery in the test and measurement markets overall. And then, the aerospace and defense piece is stimulated by focused customer spending at large accounts.

Scott: You said no definitive signs of slowing.

Speaker Change: Morning Deane.

Speaker Change: Hey could you just start with.

Speaker Change: But you also call out pockets of softness in China factory automation and construction markets. If you just step back and say what are the data points that you're basing that on is that funnel is that.

Speaker Change: The decision to keep safety and productivity.

Ben: It's Ben.

Speaker Change: Got a great reputation great brands.

Speaker Change: Was did you not get the right multiple for it.

Speaker Change: Maybe it's not the right environment, given the macro to maximize value, but just kind of.

Speaker Change: Kind of any sort of lead team.

Speaker Change: Indicators that you think that there is slowing the depth a bit the duration and so forth. So for those three pockets of softness what are the data points that youre passing it on.

Speaker Change: Hi.

Speaker Change: Would this be revisit it.

Speaker Change: Yeah no. Thanks for the question look we did conduct a very thorough review of the SMP gross and through that review obviously, the external environment has had something to do with it.

Speaker Change: Yes, I'll break it up into into a couple pieces of China predominantly software who've been bulk chemical.

Speaker Change: We don't see project activity spend activity too to give us confidence in demand in that segment, having said that there are other segments in China that are interesting, particularly around power generation and coal and nuclear and we're benefiting from those investments. We're also seeing nascent growth in China.

Speaker Change: We ultimately concluded that the best.

Lal Karsanbhai: So, those two markets are very strong. Semiconductors, we are seeing recovery. We expect further recovery into the second half supported by earnings releases from the likes of TI, for example, that saw robust demand for their analog segment. We play an analog and mixed signal, RF and mixed signal. So, we expect that trend to get positive in the second half. The only segment where we haven't seen any signs of recovery is the automotive piece, which is primarily EV battery testing. That's the one part that we're watching. But certainly, three of the four markets that we play in, we see strong fundamental demand.

Speaker Change: For the shareholders is to retain the business and indeed, one of the things.

Speaker Change: This management team has been very good.

Speaker Change: Focused on through this transformative transaction is value creation for shareholders in terms of not just the disposals, but it but certainly on the on the acquisition side as well.

Speaker Change: Net of export EPC business needs that Chinese homegrown Pcs that are now beginning to take their skills and capabilities around the world. So we are participating there and then lastly in China at the Marine business Shipbuilding in China has become a very large segment.

Speaker Change: Look at this point, we feel really good about the opportunities we see.

Speaker Change: The business is well aligned to the macros of reassuring and particularly U S. Manufacturing as you May know this is entirely a U S manufacturing business with manufacturing in Elyria, Ohio.

Speaker Change: Certainly.

Speaker Change: One that we've been participating in in terms of factory automation automotive has a big element to that for us both in China and.

Speaker Change: Okay.

Speaker Change: It was under a secular drivers so look we will.

Speaker Change: In Germany, and we're looking at obviously data around automotive spend but mostly we see that as reflected in our daily orders and.

Joe O'dea: That's great, Keller.

Lal Karsanbhai: And then, well, I just wanted to ask on the portfolio and the comments in the release about portfolio transformation is complete now with Aspen buy-in. As you think about moving forward and capital available for bolt-ons, just how should we think about the sizing of that and thresholds that you think about where, you know, the types of deal values that we could see, but a threshold above which you just really wouldn't have an appetite for? Yeah, no, I think it's a, as we talked about in prior quarters, going forward, we're really thinking about bolt-on opportunities across the business.

Speaker Change: Okay.

Speaker Change: The system, we see opportunities for value creation within our highly profitable segment, leading margins and cash flow and are excited to go to manage on a go forward basis.

Speaker Change: Funnel activity in the area.

Speaker Change: Great and the construction.

Speaker Change: Construct overall construction.

Speaker Change: That's really helpful. And then just second question Ken.

Speaker Change: Side of China again, we don't see any underlying concerns here at this point in time.

Speaker Change: You said no.

Speaker Change: Of slowing.

Speaker Change: But.

Speaker Change: But again.

Speaker Change: But you also called out pockets of softness in China.

Speaker Change: And Thats some of that perhaps are reflected in the recovery and discrete globally.

Speaker Change: Nation and construction markets. If you just step back and say what are the data.

Speaker Change: So I don't have any any commentary there.

Lal Karsanbhai: The way we scale those are sub-billion dollars, but again, we have to balance that with the overall capital allocation requirements in the business. We're committed around share repurchase and the dividend, of course. We have the debt pay-down issue that Mike described, but with that said, we'll have ample room for those opportunities if they present themselves or they come into the market. But at this point in time, really a focus on running and delivering value with the company we've created, which I think can create the most value through organic growth and investment in the business. Good to hear.

Speaker Change: Great. Thank you.

Speaker Change: That you're basing that on is that funnel is that.

Speaker Change: Thank you and our next question comes from Andy Kaplowitz with Citigroup.

Speaker Change: Kind of any sort of lead team.

Good morning, everyone nice quarter.

Speaker Change: Indicators that you think that there's slowing the depth a bit the duration and so forth. So for those three pockets of softness what are the data points that you're basing it on yes.

Speaker Change: Thanks, Sandy low can you give us some more color on the strength into the strength of your Incrementals in Q2, and how you're thinking about incrementals in the second half I know you had been talking about good material productivity versus <unk>.

Speaker Change: Yes, I'll break it up into a couple of people.

Speaker Change: China predominantly software who've been bulk chemicals.

Speaker Change: Cost and mix has been positive for you, but is there anything else going on I assume you're keeping a significant lid on cost do you expect temporary costs come back in the second half maybe you could give us some more color on what's going on.

Speaker Change: Project activity.

Speaker Change: <unk> activity to to give us confidence in demand in that segment, having said that there are other segments in China that are interesting, particularly around power generation.

Mike Bachman: Hey, Andy it's Mike I'll take that one.

Speaker Change: Our leverage.

Speaker Change: For the first half was exceedingly high you know about 220% and there were some interesting dynamics there with FX effect on reported sales. So we so we had a lower growth at the top line, but we continue to drive all of the levers around profitability.

Operator: Thank you.

Speaker Change: The nuclear and we're benefiting from those investments. We're also seeing decent growth in China of export EPC business needs that Chinese homegrown EPC that are now beginning to take their skills and capabilities.

Katie Fletcher: And the next question comes from Ken Newman with Heba. Hey, good morning. This is Katie Fletcher on for Ken. I was just wondering if you could give some more color around slide five. You know, orders are up about 4% in 2Q and then mid-single digits in 3Q and high-single digits in 4Q. So how does that translate to the second half sales that are expected to be softer? Is that just driven more by mix or higher conservatism and any color on that, please? No, I don't quite understand. So the order acceleration gives us confidence in the second half of sales acceleration that we have in the plan, which then delivers approximately 4% underlying sales growth overall for the year.

Speaker Change: Round the world. So we are participating there and then the last thing Sean at the Marine vessels Shipbuilding in China has become a very large segment.

Speaker Change: Had some very good mix with Aspen Tech the PNM synergies reading through cost controls as you mentioned and we talked about.

Speaker Change: Last quarter and then the hard work that was done last year around restructuring.

Speaker Change: Certainly.

Speaker Change: One that we've been participating in in terms of factory automation automotive has a big element to that for us both in China and in Germany, and we're looking at.

Speaker Change: In the second half of the year was reading through in the first half of the year.

Speaker Change: The second half of the year. This year the leverage will probably look in fact, a little lower than traditional and Theres a couple of things going on mainly FX flips on us and the tariff impact where we will have a lot of sales coming through.

Speaker Change: Obviously data around automotive.

Speaker Change: Most of them.

Speaker Change: As reflected in the orders and.

Speaker Change: Tunnel activity in the area.

Speaker Change: Great and the construction.

Speaker Change: With no incremental profit, but fully offset as Ron talked about.

Lal Karsanbhai: If you recall, we grew slightly under 2% in the first quarter, around 2% now in the second quarter, and we'll finish at underlying sales of 4% for the year. So it's an acceleration supported by the order grant that we're seeing. Okay.

Speaker Change: Construct overall construction.

Speaker Change: China again, we don't see any underlying concerns here at this point in time.

Speaker Change: So and the profitability will be a little bit lower due to the Aspen Tech timing that we talked about they had the.

Speaker Change: But.

Speaker Change: But again.

Speaker Change: The large sale that booked in Q2 that was.

Speaker Change: And thats some of that perhaps reflected in.

Speaker Change: Modeled in for Q3, so on balance we're looking at a great year with 60% ish.

Speaker Change: Probably in discrete globally.

Speaker Change: So I don't have any any commentary there.

Lal Karsanbhai: And then, any color that you can give on the strategic project funnel? Notice that slide wasn't included in the deck, so any additional details there would be helpful. Yeah. No, I shared that in my opening remarks. It's $11.4 billion in size. We were awarded $375 million of projects in the queue. That's generally consistent with awards over the last few quarters around that $350 to $400 million range. And it was broad-based across LNG, power, life sciences, and sustainability and decarbonization. Thank you.

Speaker Change: Expected incremental leverage.

Speaker Change: Great. Thank you.

Speaker Change: In the full year.

Speaker Change: Thank you and the next question comes from handicapped with Citigroup.

Speaker Change: Thanks for that Mike and then I wanted to double click on asking for a second I immediate just a little more color as it enters your portfolio. I think you were originally expecting asking to be neutral to EPS for FY 'twenty fives coming in mildly accretive, but what exactly is outperforming your expectations and I know you talked about greater than 10% Acs ACB growth, but maybe you can elaborate on what youre seeing.

Speaker Change: Good morning, everyone nice quarter.

Sandy: Thanks Sandy.

Speaker Change: Can you give us some more color on district into the strength of your Incrementals in Q2, and how you're thinking about incrementals in the past.

Speaker Change: And <unk> been talking about good material productivity versus core.

Speaker Change: Cost and mix has been positive for you, but is there anything else going on I assume you're keeping a significant lid on costs.

Speaker Change: In the near to medium term in the business.

Speaker Change: I'll say a few comments and then Rob if you have some debt. So I think there are two predominant elements there Andy the first is timing obviously, we exceeded in the second quarter. The timing does matter in terms of.

Speaker Change: Temporary costs come back in the second half, maybe you could give us some more color on what's going on.

Mike Bachman: Hey, Andy it's Mike I'll take that one.

Speaker Change: Great.

Speaker Change: For the first half was exceedingly high you know about 220% and there were some interesting dynamics there with FX effect on reported sales. So we had a loan.

Speaker Change: The EPS accretion.

Speaker Change: And the second is our commitment around the opportunities of cost.

Operator: And that concludes both the question and answer session as well as the call itself.

Speaker Change: The management team has pursued that very aggressively after bad, particularly around G&A and corporate costs and we feel really good that this will contribute positively to the year. So an excellent start for the business.

Thank you so much for attending today's presentation.

Speaker Change: At the top line, but we continue to drive all of the levers around profitability.

Speaker Change: Had some very good mix with Aspen, Zach the PNM synergies reading through cost controls as you mentioned and we talked about.

Speaker Change: And I think the pace of business across D. GM continuous to be robust and I think we will continue to accelerate in terms of momentum and the poor Aspen Tech suites continue to perform very well. So we haven't seen any slowdown in demand then you augment that with the synergy actions that <unk> referenced I think we feel very good about the contribution of Aspen Tech will make this.

Speaker Change: Last quarter and then the <unk>.

Speaker Change: Work that was done last year around restructuring.

Speaker Change: In the second half of the year was reading through in the first half of the year.

Speaker Change: The second half of the year. This year the leverage will probably look in fact, a little lower than traditional and Theres a couple of things going on mainly slips on us.

Speaker Change: This year and into 2006 and beyond.

Speaker Change: Appreciate all the color.

Speaker Change: Thank you.

Steve Tusa: Thank you and the next question comes from Steve Tusa with JP Morgan.

Speaker Change: And the tariff impact, where we will have a lot of sales coming through.

Steve Tusa: Hey, good morning.

Speaker Change: With no incremental profit, but fully offset as Ron talked about.

Steve Tusa: <unk>.

Steve Tusa: Can you just talk about maybe what's within process.

Steve Tusa: What's what's holding up for you guys and where the the strongest our strongest growth is and maybe.

Speaker Change: So.

Speaker Change: The profitability will be a little bit lower due to the <unk> timing that we talked about they had the.

Steve Tusa: How the MRO.

Speaker Change: The large sale that booked in Q2 that was.

Steve Tusa: Is playing playing in there with kind of the field device MRO side.

Speaker Change: Modeled in for Q3 so.

Steve Tusa: Yes, Steve This is al Yeah look.

Speaker Change: On balance we're looking at a great year with 60%.

Steve Tusa: <unk> was about 62% of sales in the quarter still continues to be robust.

Speaker Change: Expected incremental leverage.

Speaker Change: In the full year.

Speaker Change: Thanks for that Mike and I wanted to double click on asking for a second I mean, just a little more color as it enters your portfolio. I think you were originally expecting aspen to be neutral to EPS for FY 'twenty fives coming in mildly accretive, but what exactly is outperforming your expectations.

Steve Tusa: Which is which is important when we watch that very carefully with our programs as you know, but also the capital funnel continues to be.

Steve Tusa: To be important here the awards of $375 million of relatively balanced, but but the two areas of that in the three areas I would pick out in hybrid and process, our life Sciences power and LNG.

Speaker Change: I know you talked about greater than 10% Acs ACB growth. So maybe you can elaborate on what you're seeing in the near to medium term in the business.

Steve Tusa: And we have not seen any arrest in the momentum in those markets.

Speaker Change: I'll say a few comments and then Rob if you have something to add so I think there are two dominant.

Rob: Elements there Andy the first is timing obviously, we exceeded in the second quarter the timing does matter in terms of.

Steve Tusa: And continued to be relatively bullish as we go through the remainder of this year into the exit of 2025 and into 'twenty.

Speaker Change: The EPS accretion.

Speaker Change: Okay, and then just lastly, any any variability around like the end of the quarter any any signs of pre buy or unusual customer activity. I know you guys are now guiding the second half for pretty decent order growth.

Rob: In the second half.

Rob: They've been around the opportunities of the cost.

Rob: And the management team has pursued that very aggressively after bad, particularly around G&A and corporate costs and we feel really good that this will contribute positively to the year.

Speaker Change: Any kind of choppiness that you've seen out there in the last couple of months, Yeah look for that really carefully and I wanted to put the April order number I'll try to give you. Some reflection, we did not see any of that across our businesses.

Rob: So.

Rob: Okay.

Rob: Yeah.

Rob: And I think the pace of business across D. G. M continues to be robust and I think we will continue to accelerate in terms of momentum and the poor Aspen Tech suites continue to perform very well. So we haven't seen any slowdown in demand and then you augment that with the synergy actions that <unk> referenced I think we feel very good about the contribution and capital.

Speaker Change: As you know, we don't we're not a big stock inventory business.

Speaker Change: Within with them across the portfolio.

Speaker Change: But we have not seen any signs of pre buys get ahead of tariffs surcharges across the business. This has been a underlying demand that has continued to accelerate in the segments that we expected and continued resiliency in process and hybrid.

Rob: This year and into 2006 and beyond.

Rob: I appreciate all the color.

Rob: Thank you.

Rob: Yeah.

Speaker Change: Thank you and our next question comes from Steve Tusa with Jpmorgan.

Speaker Change: Alright, great. Thanks, a lot.

Steve Tusa: Hey, good morning.

Speaker Change: Thank you.

Speaker Change: Good morning.

Speaker Change: Okay.

Speaker Change: Can you just talk about maybe what's within process.

Speaker Change: Thank you and our next question comes from Joe O'dea with Wells Fargo.

Speaker Change: What's what's holding up for you guys and where the.

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

Speaker Change: Okay.

Speaker Change: Strongest growth is and maybe.

Joe O'dea: Can you expand on test and measurement a little bit I think there were at least a couple of data points over the course of the past couple of months that pointed to some push outs that was more on the production side and the R&D side and so just talk about where you sit on the validation side and end market exposures and why the demand trends for you.

Speaker Change: How do your MRO.

Speaker Change: Playing playing in there with kind of the field device MRO side.

Steve Tusa: Yes, Steve This is al Yeah look.

Speaker Change: MRO.

Speaker Change: Okay.

Speaker Change: 82% of sales in the quarter. So it continues to be robust.

Speaker Change: <unk>, which is which is important when we watch that very carefully with our programs as you know, but also the capital funnel.

Joe O'dea: Could be a little bit more insulated from some of the other pressure that's out there.

Joe O'dea: Yes so.

Joe O'dea: You know in test and measurement, we have four segments saw equally weighted at 20% to 25% of the sales mix two of those segments aerospace and defense on portfolio.

Speaker Change: To be.

Speaker Change: To be important here the awards of $375 million of relatively balanced, but but the two areas that are the three areas I would pick out in hybrid and process our life Sciences.

Joe O'dea: We're seeing very very strong growth driven by underlying demand fundamentals certainly the portfolio of business, which is a broad variety of end markets 30000 plus customers.

Speaker Change: Hi.

Speaker Change: LNG.

Speaker Change: And we have not seen any arrest in the momentum in those markets.

Joe O'dea: And mostly sold through distributors and integrators represents the broadest exposure that we have to customers and so our strength in that segment bodes well for the overall recovery in the test and measurement markets overall, and then the aerospace and defense pieces are stimulated by focused customer spending.

Speaker Change: And in Kentucky.

Speaker Change: Okay.

Speaker Change: Certainly bullish as we go through the remainder of this year.

Speaker Change: Okay.

Speaker Change: Of 2025 and into 'twenty.

Speaker Change: Okay, and then just lastly, any any variability around like the end of the quarter any any signs of life.

Speaker Change: Yeah.

Speaker Change: Unusual customer activity you guys are now guiding the second half for pretty decent order growth.

Joe O'dea: Large accounts. So those two markets are very strong semiconductors. We did what we are seeing recovery. We expect further recovery into the second half supported by earnings releases from the likes of Ti for example that saw robust demand for their analog segment, we play in analog and mixed signal RF.

Speaker Change: He kind of Choppiness that you've seen out there in the last couple of months it looks like that really carefully and I wanted to put the April order number I'll try to give you. Some reflection, we did not see any of that across our businesses.

Speaker Change: As you know, we don't we're not a big stock.

Joe O'dea: Mixed signals. So we expect that trend to get positive in the second half the only segment, where we haven't seen any signs of a recovery as the automotive fees, which is primarily EV battery testing. That's the one part that we're watching but certainly three of the four markets that we plan we see <unk>.

Speaker Change: For the business.

Speaker Change: Within with them across the portfolio.

Speaker Change: But we have not seen any signs of pre buys get ahead of tariffs or surcharges across the business. This is Ben.

Speaker Change: Underlying demand.

Speaker Change: Continued to accelerate in the cycles that we expected.

Joe O'dea: <unk> fundamental demand.

Speaker Change: And continued resiliency in process and hybrid.

Speaker Change: That's great color and then just wanted to ask on the portfolio in the comments in the release about portfolio transformation is complete now it's aspen buying.

Speaker Change: Alright, great. Thanks, a lot.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Thank you Anna.

Speaker Change: As you think about moving forward and capital available for bolt ons, just how should we think about the sizing of that and thresholds that you think about where the types of deal values that we could see but a threshold above which you just really wouldnt have an appetite for.

Speaker Change: <unk> with Wells Fargo.

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

Speaker Change: Can you expand on test and measurement a little bit I think there were at least a couple of data points over the course of the past couple of months that pointed to some push outs that was more on the production side and the R&D side and so just talk about where you sit on the validation side and end market exposures and why.

Speaker Change: Yeah, No I think it's a as we've talked about in prior quarters going forward, we're really thinking about bolt on opportunities across the business. The way we scale those are sub billion dollars, but again, we have to balance that with the.

Speaker Change: That's trends for you could be a little bit more insulated from.

Speaker Change: Pressure that's out there.

Speaker Change: The overall capital allocation requirements in the business, we're committed around share repurchase and the dividend of course, we have the debt pay down.

Speaker Change: Yes so.

Speaker Change: In test and measurement, we have four segments saw equally weighted.

Speaker Change: 5% of the sales mix.

Speaker Change: Issue that Mike described but with that said, we will have ample room for those opportunities if they present themselves or they come when they come into the market, but at this point in time, we really are focused on.

Speaker Change: Segments.

Speaker Change: Defense on portfolio.

Speaker Change: We are seeing very very strong growth driven by underlying demand fundamentals certainly the portfolio of business, which is a broad variety of end markets 30000 plus customers.

Speaker Change: Running and delivering value with the company we've created.

Speaker Change: And mostly sold through distributors and integrators represents.

Speaker Change: Which I think can create the most value through organic growth and investment in the company.

Speaker Change: Broadest explored.

Speaker Change: After the customers and so.

Speaker Change: Okay. Good to hear thank you.

Speaker Change: <unk> okay.

Speaker Change: Thanks, Joe.

Speaker Change: Well for the overall recovery in the test and measurement markets overall, and then the aerospace and defense pieces are stimulated by focused customer spending at large accounts. So those two markets are very strong semiconductors. We did what we are seeing recovery. We expect further recovery into the second half are supported.

Speaker Change: Thank you and the next question comes from Ken Newman with Keybanc.

Katy Pleasure: Hey, Good morning, this is katy pleasure on for Ken.

Katy Pleasure: I was just wondering if you could give some more color around slide five.

You know orders are up to about 4% in <unk> and then mid single digits in <unk> and high single digits in <unk>. So how does that translate to the second half healthy.

Speaker Change: Earnings releases from the likes of Ti for example.

Speaker Change: Robust demand for their analog segment, we play in analog and mixed signal RF and mixed signal.

Katy Pleasure: Actually to be softer than that.

Katy Pleasure: This is driven more by mix or higher conservatism and any color on that please.

Speaker Change: That trend to get positive in the second half the only segment, where we haven't seen any signs of a recovery as the automotive fees, which is primarily EV battery testing thats. The one partner that we're watching but.

Katy Pleasure: No.

Katy Pleasure: I don't I don't quite understand so the order acceleration gives us confidence in the second half of sales acceleration that we have in the plan, which then delivers a approximately 4% underlying sales growth overall for the year. If you recall, we grew slightly under 2% in the first quarter.

Speaker Change: Certainly three of the four.

Speaker Change: We play in we see strong fundamental demand.

Speaker Change: That's great color and then just wanted to ask on the portfolio in the comments in the release about portfolio transformation is complete now with Aspen by and.

Katy Pleasure: At around 2% now in the second quarter will finish at underlying sales of 4% for the year.

Katy Pleasure: So it's an acceleration supported.

Speaker Change: By the order ramped up versus.

Speaker Change: As you think about moving forward and capital available for bolt ons, just how should we think about the sizing of that and thresholds, but do you think about where the types of deal values that we could see but a threshold above which you just really wouldnt have an appetite for.

Katy Pleasure: Okay.

Katy Pleasure: And then any color that you think is on the strategic project funnel.

Katy Pleasure: I noticed that fine wasn't included in the deck. So any additional details there would be helpful.

Speaker Change: Yeah, No I think it's a as we talked about.

Katy Pleasure: Yes.

Katy Pleasure: I shared that in my opening remarks, its $11 $4 billion in size, we were awarded $375 million of projects in the queue. That's generally consistent with awards over the last few quarters around that $350 million to $400 million range and it was broad based across LNG power.

Speaker Change: By quarters going forward, we're really thinking.

Speaker Change: Collyn opportunities across the business the way we scale those are sub billion dollars, but again, we have to balance that with.

Speaker Change: The overall capital allocation requirements in the business, we're committed around share repurchase and the dividend of course, we have the debt pay down.

Katy Pleasure: Your life Sciences, and sustainability of Decarbonization.

Speaker Change: Issue that Mike described but with that said, we will have ample room for those opportunities if they present themselves or they come they come into the market, but at this point in time, we really are focused on.

Katy Pleasure: Okay.

Katy Pleasure: Okay. Thank you.

Katy Pleasure: The question and answer session as well as the call itself. Thank you. So much for attending today's presentation you may now the centralized.

Speaker Change: Running and delivering value to the company.

Speaker Change: We've created.

Speaker Change: Which I think can create the most value through organic growth and investment in the company.

Speaker Change: That's good to hear thank you.

Joe: Thanks, Joe.

Speaker Change: Thank you and the next question comes from Ken Newman with Keybanc.

Katy Pleasure: Hey, Good morning, this is katy pleasure on for Ken.

Katy Pleasure: I was just wondering if you could give some more color around slide five.

Speaker Change: Orders are up about 4% in <unk>, and then mid single digit in <unk> and.

Katy Pleasure: High single digits in <unk>, so how does that translate to the second half.

Speaker Change: Okay.

Speaker Change: I expect it to be soft or is that.

Speaker Change: It's driven more by mix or higher conservatism and any color on that please.

Speaker Change: No.

Speaker Change: I don't I don't quite understand so the order acceleration gives us confidence in the second half sales acceleration that we have in the plan, which then delivers a approximately 4% underlying sales.

Speaker Change: Overall for the year, if you recall, we grew slightly under 2% in the first quarter.

Speaker Change: Around 2% now in the second quarter will finish at underlying sales of 4%.

Speaker Change: So it's an acceleration supported by the order ramped up.

Speaker Change: Okay.

Speaker Change:

Speaker Change: And then any color that you can give on the strategic project funnel.

Speaker Change: Is that fine wasn't included in the deck, so any additional detail there would be helpful.

Speaker Change: Yes.

Speaker Change: I shared that in my opening remarks, it's 11 $4 billion in size, we were awarded $375 million of projects in the queue.

Speaker Change: Generally consistent with awards over the last few quarters around that 350 to 400.

Q2 2025 Emerson Electric Co Earnings Call

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