DuPont de Nemours Q4 2025 DuPont De Nemours Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 DuPont De Nemours Inc Earnings Call
Speaker #1: Welcome you to DuPont's fourth quarter and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise.
Speaker #1: After the speakers' remarks there will be a question-and-answer session. If you would like to ask a question at that time, simply press star, followed by the number 1 on your telephone keypad.
Speaker #1: And if you'd like to withdraw that question, again press star 1. Thank you. I would now like to turn the conference over to Anne Giancristoforo, Vice President Investor Relations and please go ahead.
Speaker #1: We will continue to expand the use of Kaizen events across the businesses and functions to processes, and accelerate commercial identify areas to drive development.
Speaker #2: Good morning and thank you for joining us for DuPont's fourth quarter and full year 2025 financial results conference call. Joining me today are Lori Koch, Chief Executive Officer and Antonella Franzen, Chief Financial Officer.
Speaker #1: On commercial excellence, we continue to advance the framework across commercial enablement, sales effectiveness, and strategic marketing. We have completed a productivity improvement end-to-end identification of key initiatives in maturity assessment, resulting in the 2026 plan centered primarily on demand generation and pipeline discipline.
Speaker #2: We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking disclaimer.
Speaker #1: Operational excellence enhancements will continue in 2026. on safety, quality, delivery, and cost, and refreshed Last year, we rolled out an updated set of KPIs aligned with our focus our excellence toolkit with a stronger methodologies.
Speaker #2: Contained in the slides. During this call we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on Karen assumptions and factors that involve risks and uncertainties are actual performance and results may differ materially from our forward-looking statements.
Speaker #1: focus on lean and process capabilities across functions. In order to enhance the customer experience, these improvements and investments will drive overall productivity in 2026.
Speaker #2: Our Form 10-K, as updated by our Karen and periodic reports, includes detailed discussion of principal risks and uncertainties which may cause such differences. Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclude significant items.
Speaker #1: disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. making investments in our labs to Within innovation, we are enable streamlined workflows and time.
Speaker #1: disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. making investments in our labs to Within innovation, we are enable streamlined workflows and our supply chain and quality utilizing tools in the accelerate our product development cycle reliability and maintenance space to improve uptime and reduce costs.
Speaker #2: We will also refer to other non-GAAP measures. A reconciliation to the most directly comparable GAAP financial measure is included in our press release and presentation materials and has been posted to DuPont Investor Relations website.
Speaker #1: the commercial side, we are focusing on investments in workflow and process automation to improve the customer In addition, we invested in people Across these And on a proven model that enables both consistent investments and high return organic opportunities as experience.
Speaker #2: As a quick reminder, on the basis of presentation for our fourth quarter and full year financial results, our total company net sales operating EBITDA and adjusted EPS reflect the separation of community and the previously announced divestiture of the Aramitz business reported as discontinued operations.
Speaker #1: Greater returns. A strong balance sheet is a priority for us. We will continue to return cash to shareholders through a quarterly dividend in line with our targeted payout ratio, as well as utilizing share repurchases.
Speaker #2: I'll now turn the call over to Lori who will begin on slide
Speaker #2: 3. Good morning and thanks everyone for
Speaker #3: joining our fourth quarter call. Earlier today we reported our fourth quarter and full year financial results which were ahead of our previously communicated guidance.
Speaker #1: We previously announced a $2 billion share repurchase authorization, and we executed a $500 million ASR in the fourth quarter of 2025. On capital allocation, we have
Speaker #3: We finished the year strong delivering full year organic sales growth of 2%, operating EBITDA growth of 6%, expansion. Operational discipline and a focus on productivity were key to our earnings growth and margin improvement.
Speaker #1: With these priorities, let's move to our 5. Our financial guidance: 2026 outlook on slide, the medium-term targets that we outlined at Day. On a reported basis, we expect organic sales to grow about 3% year over year, 80 basis points, and our September Investor operating margins to expand 60 to share.
Speaker #3: These results led to an adjusted EPS of $1.68 per share up 16% year over year. We cash flow generation was strong in the year while delivering on our financial metrics we also executed significant operational and portfolio transformation during the year.
Speaker #1: $2.25 to $2.30 per On a pro forma year. Free cash flow generation will be 12% year over solid with an expected conversion of adjusted EPS of greater than basis, our EPS will grow 10 to 90%.
Speaker #3: We successfully completed the separation of community electronics, standing up a premier pure-play technology solutions partner to the semiconductor value chain. We also completed the build-out of my executive leadership team.
Speaker #1: Underpinning our organic growth is a mixed macro environment. Market indicators for healthcare and water technology continue to expect mid-single-digit growth in both spaces on increasing medical procedures to support an aging and growing population, and strong global water demand.
Speaker #3: Adding external talent from well-run companies as well as promoting within the organization. We set the strategic direction of new DuPont starting with enhancing our core values to drive a culture focus on growth and continuous improvement.
Speaker #1: Overall automotive demand is about flat in 2026 with weakness in builds to significantly outpace overall builds. In construction, after years of declines, market stabilization is year.
Speaker #3: This includes building a robust business system and continuing the progress on both our commercial and operational excellence frameworks. Finally, we set clear and robust medium-term financial targets aligned with our performance-based culture.
Speaker #1: We are off to a good start to the year. Our January sales were in line with expectations and overall expected with flattish demand year over business, which we view as an indication that we are seeing improving order trends in these markets, which were down last the U.S.
Speaker #3: I want to thank our employees for remaining focused on delivering these results and driving the transformation during the year. The momentum and progress we made in 2025 is carrying forward to our 2026 strategic priorities which I will cover on slide 4.
Speaker #1: year, are beginning to stabilize and recover. Overall, our teams are we continue to expect EV and our strategic priorities position us executing with a focus on driving well for long-term value growth and operational discipline, and Europe.
Speaker #3: Consistent with what we outlined at Investor Day, our strategic priorities for 2026 are clear. Drive above market organic growth, continue to build out a robust business system, deploy a balanced capital allocation model, all while consistently delivering financial results.
Speaker #1: detail.
Speaker #2: The fourth quarter marked a mix and productivity, resulting And good morning, However, improvement in the quarter. in strong EBITDA and margin Beginning with fourth quarter financial highlights on slide 6.
Speaker #2: strong operational finish to the everyone.
Speaker #3: We have successfully repositioned ourselves and have a streamlined portfolio of leading businesses. The majority of which are aligned to secular end markets which will enable strong organic growth.
Speaker #3: We saw 2% organic growth for full year 2025 and expect that to accelerate to about 3% in 2026. We are well positioned in secular end markets and our top line growth will continue to be bolstered by our innovation engine which launched more than 125 new products in 2025.
Speaker #2: Net sales of $1.7 billion over to Antonella to cover the financials were about flat versus the year-ago period, as a 1% organic sales decline was offset by a 1% benefit from consisted of a 1% decrease in volume which included a $30 year.
Speaker #3: Our new products generated greater than $2 billion in sales this past year, and our vitality index remained strong at about 30%. We are advancing the build-out of our business system and made significant progress last year.
Speaker #2: million or 2% headwind from order timing shifts into the third quarter from the fourth quarter, advance of the electronic due to system cutover activities in separation.
Speaker #2: Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic segment view, during the quarter, currency.
Speaker #2: Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic segment view, during the quarter, currency. year-ago period.
Speaker #3: We introduced a core set of enhanced KPIs focused on driving improvement for our shareholders, customers, and employees. These KPIs are embedded in our refresh set of management standards which has added more visibility, rigor, and structure to our business processes.
Speaker #2: healthcare and water Organic sales We exceeded our financial technology, offset by a 4% decline in diversified industrials. From the second half From a perspective, healthcare and water technologies grew 5% on an organic basis, partially diversified industrials.
Speaker #3: In addition, we will continue to expand the use of Kaizen events across the businesses and functions to identify areas to drive productivity, improve end-to-end processes, and accelerate commercial development.
Speaker #3: On commercial excellence, we continue to advance the framework across commercial enablement, sales effectiveness, and strategic marketing. We have completed a maturity assessment resulting in the identification of key initiatives in 2026 centered primarily on demand generation and pipeline discipline.
Speaker #2: From a regional perspective, in the quarter, we saw organic growth in offset by a 1% decline in 2%. North America was about flat year over year.
Speaker #2: Fourth quarter operating EBITDA of $409 million. Sales increased 2% versus the year-ago period and increased 4% on a favorable mix year, with Asia-Pacific down and cost productivity.
Speaker #3: Operational excellence enhancements will continue in 2026. Last year we rolled out an updated set of KPIs aligned with our focus on safety, quality, delivery, and cost, and refreshed our excellence toolkit with a stronger focus on lean methodologies.
Lori Koch: We will continue to expand the use of Kaizen events across the businesses and functions to identify areas to drive productivity, improve end-to-end processes, and accelerate commercial development. On commercial excellence, we continue to advance the framework across commercial enablement, sales effectiveness, and strategic marketing. We have completed a maturity assessment resulting in the identification of key initiatives in 2026 centered primarily on demand generation and pipeline discipline. Operational excellence enhancements will continue in 2026. Last year we rolled out an updated set of KPIs aligned with our focus on safety, quality, delivery, and cost, and refreshed our excellence toolkit with a stronger focus on lean methodologies. In addition, we invested in people and process capabilities across our supply chain and quality functions in order to enhance the customer experience. These improvements and investments will drive overall productivity in 2026.
Lori Koch: We will continue to expand the use of Kaizen events across the businesses and functions to identify areas to drive productivity, improve end-to-end processes, and accelerate commercial development. On commercial excellence, we continue to advance the framework across commercial enablement, sales effectiveness, and strategic marketing. We have completed a maturity assessment resulting in the identification of key initiatives in 2026 centered primarily on demand generation and pipeline discipline. Operational excellence enhancements will continue in 2026. Last year we rolled out an updated set of KPIs aligned with our focus on safety, quality, delivery, and cost, and refreshed our excellence toolkit with a stronger focus on lean methodologies. In addition, we invested in people and process capabilities across our supply chain and quality functions in order to enhance the customer experience. These improvements and investments will drive overall productivity in 2026.
Speaker #2: Operating EBITDA margin of 24.2% increased 80 basis points year over year. Turning to slide 7, adjusted EPS for the quarter of $4.60 was up. Operating EBITDA margin during the quarter was 18% versus the year-ago period.
Speaker #3: In addition, we invested in people and process capabilities across our supply chain, and quality functions. In order to enhance the customer experience, these improvements and investments will drive overall productivity in 2026.
Speaker #2: The increase was driven by higher segment earnings of $0.04, and a $0.02 benefit from exchange gains and losses. This was partially offset by a $0.02, lower interest expense of 8, healthcare and water technologies fourth quarter net sales of $821 million were up 4% versus the year-ago period.
Speaker #3: Across these disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. Within innovation, we are making investments in our labs to enable streamlined workflows and accelerate our product development cycle times.
Speaker #2: On a 3% organic growth and a 1% benefit from currency. Organic growth included a headwind of approximately 2% in order timing shifts into the third quarter.
Speaker #3: Within operations, we are utilizing tools in the reliability and maintenance space to improve uptime and reduce costs. And on the commercial side, we are focusing on investments in workflow and process automation to improve the customer experience.
Speaker #2: $15 million or Adjusting for this headwind, organic sales growth was 5% in the quarter. on an organic basis versus the year-ago period. Organic For the fourth quarter, healthcare sales were up mid-single digits growth was broad-based, led by continued strength in medical $0.01 headwind from a higher tax rate.
Speaker #3: On capital allocation, we have a proven model that enables both consistent investments and high return organic opportunities as well as bolting on to existing businesses with M&A to enable even greater returns.
Lori Koch: Across these disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. Within innovation, we are making investments in our labs to enable streamlined workflows and accelerate our product development cycle time. Within operations, we are utilizing tools in the reliability and maintenance space to improve uptime and reduce costs. On the commercial side, we are focusing on investments in workflow and process automation to improve the customer experience. On capital allocation, we have a proven model that enables both consistent investments and high-return organic opportunities, as well as bolting on to existing businesses with M&A to enable even greater returns. A strong balance sheet is a priority for us. We will continue to return cash to shareholders through a quarterly dividend in line with our targeted payout ratio, as well as utilizing share repurchases.
Lori Koch: Across these disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. Within innovation, we are making investments in our labs to enable streamlined workflows and accelerate our product development cycle time. Within operations, we are utilizing tools in the reliability and maintenance space to improve uptime and reduce costs. On the commercial side, we are focusing on investments in workflow and process automation to improve the customer experience. On capital allocation, we have a proven model that enables both consistent investments and high-return organic opportunities, as well as bolting on to existing businesses with M&A to enable even greater returns. A strong balance sheet is a priority for us. We will continue to return cash to shareholders through a quarterly dividend in line with our targeted payout ratio, as well as utilizing share repurchases.
Speaker #3: A strong balance sheet is a priority for us. We will continue to return cash to shareholders through a quarterly dividend in line with our targeted payout ratio as well as utilizing share repurchases.
Speaker #2: an organic basis, packaging and medical devices. water markets. A majority of the headwind from the order timing Water sales were up a low single digits on quarter of $255 Turning to slide million was up 4% versus the year-ago period gains.
Speaker #3: We previously announced a $2 billion share repurchase authorization and we executed a $500 million ASR in the 2025. With these priorities, let's move to our 2026 outlook on fourth quarter of slide 5.
Speaker #2: Partially offset by growth investments. Operating Operating EBITDA for the segment during the EBITDA margin during the quarter was on organic growth and productivity 31.1%, flat with the prior year.
Speaker #3: Our in line with the medium-term targets that we financial guidance for 2026 is outlined at our September Investor Day. On the reported basis, we expect organic sales to grow about 3% year over year, operating margins to expand 60 to 80 basis points, and adjusted EPS of $2.25 to $2.30 per share.
Speaker #2: Turning to diversified industrials on slide 9. Fourth $872 million decreased 3% versus the year-ago period on a 4% organic 1% benefit from currency. The organic decline included a headwind of approximately $15 quarter net sales of million in order timing shifts into the decline partially offset by a third quarter.
Speaker #3: On a pro forma basis, our EPS will generation will be solid with an expected year. Free cash flow grow 10 to 12% year over conversion of greater than 90%.
Lori Koch: We previously announced a $2 billion share repurchase authorization, and we executed a $500 million ASR in Q4 2025. With these priorities, let's move to our 2026 outlook on slide 5. Our financial guidance for 2026 is in line with the medium-term targets that we outlined at our September Investor Day. On a reported basis, we expect organic sales to grow about 3% year-over-year, operating margins to expand 60 to 80 basis points, and adjusted EPS of $2.25 to $2.30 per share. On a pro forma basis, our EPS will grow 10% to 12% year-over-year. Free cash flow generation will be solid with an expected conversion of greater than 90%. Underpinning our organic growth is a mixed macro environment.
Lori Koch: We previously announced a $2 billion share repurchase authorization, and we executed a $500 million ASR in Q4 2025. With these priorities, let's move to our 2026 outlook on slide 5. Our financial guidance for 2026 is in line with the medium-term targets that we outlined at our September Investor Day. On a reported basis, we expect organic sales to grow about 3% year-over-year, operating margins to expand 60 to 80 basis points, and adjusted EPS of $2.25 to $2.30 per share. On a pro forma basis, our EPS will grow 10% to 12% year-over-year. Free cash flow generation will be solid with an expected conversion of greater than 90%. Underpinning our organic growth is a mixed macro environment.
Speaker #2: Adjusting for this headwind, organic sales declined 2% in the quarter. At the line of business level, technologies were down high single digits organic sales for building markets.
Speaker #3: Underpinning our organic growth is a mixed macro environment. Market indicators for healthcare and water technology continue to expect mid-single digit growth in both spaces on increasing medical procedures to support an aging and growing population, and strong global water demand.
Speaker #2: Technologies organic sales were down. Industrial was low single digits, as strength in aerospace was more than offset by weakness in printing and packaging, on continued weakness in construction markets.
Speaker #3: Overall automotive demand is about flat in 2026 with weakness in the U.S. and Europe. However, we continue to expect EV builds to significantly outpace overall builds.
Speaker #2: The headwind from the order timing—a majority of the shift was within Industrial Technologies. Operating EBITDA for Diversified Industrials of $197 million was up 2% versus the year-ago period on favorable mix and cost productivity.
Speaker #3: In construction, after years of decline, market stabilization is expected with flattish demand year over year. We are off to a good start to the year.
Speaker #2: Operating EBITDA margin during the quarter was 22.6%, up 110 basis points versus the year-ago period. Turning to slide 10, which outlines our first financial guidance.
Speaker #3: Our January sales were in line with expectations and overall we are seeing improving order trends in our industrial technologies business, which we view as an indication that these markets, which were down last year, are beginning to stabilize and recover.
Lori Koch: Market indicators for healthcare and water technology continue to expect mid-single-digit growth in both spaces on increasing medical procedures to support an aging and growing population and strong global water demand. Overall automotive demand is about flat in 2026 with weakness in the US and Europe. However, we continue to expect EV builds to significantly outpace overall builds. In construction, after years of declines, market stabilization is expected with flatish demand year-over-year. We are off to a good start to the year. Our January sales were in line with expectations, and overall, we are seeing improving order trends in our industrial technologies business, which we view as an indication that these markets, which were down last year, are beginning to stabilize and recover.
Lori Koch: Market indicators for healthcare and water technology continue to expect mid-single-digit growth in both spaces on increasing medical procedures to support an aging and growing population and strong global water demand. Overall automotive demand is about flat in 2026 with weakness in the US and Europe. However, we continue to expect EV builds to significantly outpace overall builds. In construction, after years of declines, market stabilization is expected with flatish demand year-over-year. We are off to a good start to the year. Our January sales were in line with expectations, and overall, we are seeing improving order trends in our industrial technologies business, which we view as an indication that these markets, which were down last year, are beginning to stabilize and recover.
Speaker #2: For the first quarter, we estimate net sales of about $1.67 EBITDA of about $395 million and adjusted billion operating EPS of $48 per share.
Speaker #3: Overall, our teams are executing with a focus on driving growth and operational discipline, and our strategic priorities position us well for long-term value creation.
Speaker #3: With that, I'm now turning the call over to Antonella to cover the financials and outlook in more
Speaker #2: Our first quarter net sales guidance assumes about 2% organic growth and about currency. Our operating EBITDA assumes a 10% increase year and lower corporate costs.
Speaker #3: detail. Thanks, Lori.
Speaker #2: And good morning, everyone. The fourth quarter marked a strong operational finish to the year. We exceeded our financial guidance on better than expected top line mix and productivity, resulting in strong EBITDA and margin improvement in the quarter.
Speaker #2: For the full year 2026, in line with our medium-term targets, we expect net sales of about $7.1 billion. As Lori noted, our guidance is operating EBITDA of about $1.74 billion and a 2% benefit from $2.25 per share.
Speaker #2: Beginning with fourth quarter financial highlights on slide 6. Net sales of $1.7 billion were about flat versus the year-ago period, as a 1% organic sales decline was offset by a 1% benefit from currency.
Lori Koch: Overall, our teams are executing with a focus on driving growth and operational discipline, and our strategic priorities position us well for long-term value creation. With that, I'll now turn the call over to Antonella to cover the financials and outlook in more detail.
Lori Koch: Overall, our teams are executing with a focus on driving growth and operational discipline, and our strategic priorities position us well for long-term value creation. With that, I'll now turn the call over to Antonella to cover the financials and outlook in more detail.
Speaker #2: Organic sales consisted of a 1% decrease in volume which included a $30 million or 2% headwind from order timing shifts into the third quarter from the fourth quarter, due to system cutover activities in advance of the electronic separation.
Speaker #2: Our full-year net sales guidance assumes about 3% organic growth and a currency benefit of about 1% year-over-year, and margin, a 6% to 8% increase year-over-year, with 60 to 80 basis points of margin expansion driven by business improvement. Our operating EBITDA assumes expansion.
Antonella Franzen: Thanks, Lori, and good morning, everyone. The fourth quarter marked a strong operational finish to the year. We exceeded our financial guidance on better-than-expected top-line mix and productivity, resulting in strong EBITDA and margin improvement in the quarter. Beginning with fourth quarter financial highlights on slide six. Net sales of $1.7 billion were about flat versus the year-ago period, as a 1% organic sales decline was offset by a 1% benefit from currency. Organic sales consisted of a 1% decrease in volume, which included a $30 million or 2% headwind from order timing shifts into the third quarter from the fourth quarter due to system cutover activities in advance of the electronic separation. Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic sales increased 2% versus the year-ago period.
Antonella Franzen: Thanks, Lori, and good morning, everyone. The fourth quarter marked a strong operational finish to the year. We exceeded our financial guidance on better-than-expected top-line mix and productivity, resulting in strong EBITDA and margin improvement in the quarter. Beginning with fourth quarter financial highlights on slide six. Net sales of $1.7 billion were about flat versus the year-ago period, as a 1% organic sales decline was offset by a 1% benefit from currency. Organic sales consisted of a 1% decrease in volume, which included a $30 million or 2% headwind from order timing shifts into the third quarter from the fourth quarter due to system cutover activities in advance of the electronic separation. Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic sales increased 2% versus the year-ago period.
Speaker #2: Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic sales increased 2% versus the year-ago period.
Speaker #2: Our adjusted EPS guidance at the midpoint on a reported assumes about a 35% increase basis and an 11% increase on a pro forma basis.
Speaker #2: From a segment view, during the quarter, organic sales grew 3% in healthcare and water technologies, offset by a 4% decline in diversified industrials. From the second half perspective, healthcare and water technologies grew 5% on an organic basis, partially offset by a 1% decline in diversified industrials.
Speaker #2: For the healthcare and water segment, we expect full year 2026 organic sales adjusted EPS of growth in the mid-single digits growth is expected to be driven by broad-based strength within demand in medical packaging applications and medical devices.
Speaker #2: From a regional perspective, in the quarter, we saw organic growth in Europe up 2% year over year, with Asia-Pacific down 2%. North America was about flat year over year.
Speaker #2: In water, we expect continued growth primarily driven by demand for percent range. reverse osmosis and ion exchange within industrial This assumed and municipal water markets.
Speaker #2: For the full year 2026, we expect organic sales growth to be in the low single digits percent range. Within Building Technologies, after a year of market declines, primarily due to healthcare, we are expecting 2026 to be about flat.
Speaker #2: Fourth quarter operating EBITDA of $409 million increased 4% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter of 24.2% increased 80 basis points year over year.
Antonella Franzen: From a segment view, during the quarter, organic sales grew 3% in healthcare and water technologies, offset by a 4% decline in diversified industrials. From a second-half perspective, healthcare and water technologies grew 5% on an organic basis, partially offset by a 1% decline in diversified industrials. From a regional perspective, in the quarter, we saw organic growth in Europe up 2% year-over-year, with Asia Pacific down 2%. North America was about flat year-over-year. Q4 operating EBITDA of $409 million increased 4% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter of 24.2% increased 80 basis points year-over-year. Turning to slide 7, adjusted EPS for the quarter of $0.46 was up 18% versus the year-ago period.
Antonella Franzen: From a segment view, during the quarter, organic sales grew 3% in healthcare and water technologies, offset by a 4% decline in diversified industrials. From a second-half perspective, healthcare and water technologies grew 5% on an organic basis, partially offset by a 1% decline in diversified industrials. From a regional perspective, in the quarter, we saw organic growth in Europe up 2% year-over-year, with Asia Pacific down 2%. North America was about flat year-over-year. Q4 operating EBITDA of $409 million increased 4% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter of 24.2% increased 80 basis points year-over-year. Turning to slide 7, adjusted EPS for the quarter of $0.46 was up 18% versus the year-ago period.
Speaker #2: Primarily driven by stabilization within U.S. construction technologies, we expect a low single demand recovery within by strength in aerospace and lines. With that, we are pleased to take your questions and let me turn it back to the operator to open the
Speaker #2: Turning to slide 7, adjusted EPS for the quarter of $46 was up 18% versus the year-ago period. The increase was driven by higher segment earnings of $0.02, lower interest expense of $0.04, and a $0.02 benefit from exchange gains and losses.
Speaker #2: This was partially offset by a $0.01 headwind from a higher tax rate. Turning to slide 8, healthcare and water technologies fourth quarter net sales of $821 million were up 4% versus the year-ago period.
Speaker #2: Q&A. Thank you. Digit growth year over year driven.
Speaker #1: you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Speaker #1: And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself
Speaker #2: On a 3% organic growth and a 1% benefit from currency. Organic growth included a headwind of approximately $15 million or 2% in order timing shifts into the third quarter.
Speaker #1: to one question in one re-queue. And your first question comes markets.
Speaker #1: From the line of Jeff Sprague with Vertical Research Partners. Follow-up.
Speaker #2: Adjusting for this headwind, organic sales growth was 5% in the quarter. For the fourth quarter, healthcare sales were up mid-single digits on an organic basis versus the year-ago period.
Speaker #1: ahead.
Antonella Franzen: The increase was driven by higher segment earnings of $0.02, lower interest expense of $0.04, and a $0.02 benefit from exchange gains and losses. This was partially offset by a $0.01 headwind from a higher tax rate. Turning to Slide 8, healthcare and water technologies fourth quarter net sales of $821 million were up 4% versus the year-ago period on a 3% organic growth and a 1% benefit from currency. Organic growth included a headwind of approximately $15 million or 2% in order timing shifts into the third quarter. Adjusting for this headwind, organic sales growth was 5% in the quarter. For the fourth quarter, healthcare sales were up mid-single digits on an organic basis versus the year-ago period. Organic growth was broad-based, led by continued strength in medical packaging and medical devices.
Antonella Franzen: The increase was driven by higher segment earnings of $0.02, lower interest expense of $0.04, and a $0.02 benefit from exchange gains and losses. This was partially offset by a $0.01 headwind from a higher tax rate. Turning to Slide 8, healthcare and water technologies fourth quarter net sales of $821 million were up 4% versus the year-ago period on a 3% organic growth and a 1% benefit from currency. Organic growth included a headwind of approximately $15 million or 2% in order timing shifts into the third quarter. Adjusting for this headwind, organic sales growth was 5% in the quarter. For the fourth quarter, healthcare sales were up mid-single digits on an organic basis versus the year-ago period. Organic growth was broad-based, led by continued strength in medical packaging and medical devices.
Speaker #3: Hey, thank you. Good morning,
Speaker #3: Everyone, it's a solid good morning. Nice.
Speaker #4: Jeff, any additional questions? Please, in industrial.
Speaker #3: to see a solid clean opening remarks there, all the focus on
Speaker #2: Organic growth was broad-based, led by continued strength in medical packaging and medical devices. Water sales were up a low single digits on an organic basis, primarily due to strength in industrial water markets.
Speaker #3: And you were working on that along the way, quarter, and also, Lori, your internal KPIs and growth execution from portfolio moves is—
Speaker #3: anyhow. Yeah.
Speaker #1: Thank you.
Speaker #2: A majority of the headwind from the order timing shift was within water. Operating EBITDA for the segment during the quarter of $255 million was up 4% versus the year-ago period on organic growth and productivity gains.
Speaker #1: Thank you.
Speaker #3: Good luck with all welcome on my behalf that. the external. If I
Speaker #3: could. You just put a little
Speaker #3: industrial side of the equation. Sort of industrial production in your guide that you Thank mentioned but then Please go seems a little bit countered by your comments about industrial orders the soft U.S.
Speaker #2: Partially offset by growth investments. Operating EBITDA margin during the quarter was 31.1%, flat with the prior year. Turning to diversified industrials on slide 9.
Speaker #3: picking up. So maybe just a little bit more color, what you're seeing really in the core industrial parts of the portfolio. How orders are trending and what But the shift to you think is going on with channel inventories.
Speaker #2: Fourth quarter net sales of $872 million decreased 3% versus the year-ago period on a 4% organic decline partially offset by a 1% benefit from currency.
Antonella Franzen: Water sales were up low single digits on an organic basis, primarily due to strength in industrial water markets. A majority of the headwind from the order timing shift was within water. Operating EBITDA for the segment during the quarter of $255 million was up 4% versus the year-ago period on organic growth and productivity gains, partially offset by growth investments. Operating EBITDA margin during the quarter was 31.1%, flat with the prior year. Turning to diversified industrials on slide nine, fourth quarter net sales of $872 million decreased 3% versus the year-ago period on a 4% organic decline, partially offset by a 1% benefit from currency. The organic decline included a headwind of approximately $15 million in order timing shifts into the third quarter. Adjusting for this headwind, organic sales declined 2% in the quarter.
Antonella Franzen: Water sales were up low single digits on an organic basis, primarily due to strength in industrial water markets. A majority of the headwind from the order timing shift was within water. Operating EBITDA for the segment during the quarter of $255 million was up 4% versus the year-ago period on organic growth and productivity gains, partially offset by growth investments. Operating EBITDA margin during the quarter was 31.1%, flat with the prior year. Turning to diversified industrials on slide nine, fourth quarter net sales of $872 million decreased 3% versus the year-ago period on a 4% organic decline, partially offset by a 1% benefit from currency. The organic decline included a headwind of approximately $15 million in order timing shifts into the third quarter. Adjusting for this headwind, organic sales declined 2% in the quarter.
Speaker #1: Yeah, thanks, Jeff. So on the industrial side, so talking ex the shelter business, which we had mentioned we digits in 2025. And the moderating from down mid-single think will be about flat this year, so flat on the shelter side is general kind of low single digit growth On non-res and repair and remodel, and then down low to mid-single digits on the resi side.
Speaker #2: The organic decline included a headwind of approximately $15 million in order timing shifts into the third quarter. sales declined 2% in the quarter. At the line of business level, organic sales for building technologies were down high single digits on continued weakness in construction markets.
Speaker #1: Primarily coming from the Advanced Mobility businesses—expectations for the full year—aerospace, and on the Consumer Packaged Goods side, with some of our packaging goods and spiral.
Speaker #2: Industrial technologies organic sales were down low single digits as strength in aerospace was more than offset by weakness in printing and packaging markets. A majority of the headwind from the order timing shift was within industrial technologies.
Speaker #1: Which comprise automotive, and we're seeing nice low double-digit growth, so it's in that range. But all the businesses, kind of in that industrial technology space, are seeing recovery that other names have been pointing to.
Speaker #1: So we've seen nice order pickup as we But on exited the year and went into Q1. A lot of it is being driven by aerospace.
Speaker #2: Operating EBITDA for diversified industrials of $197 million was up 2% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter was 22.6%, up 110 basis points versus the year-ago period.
Antonella Franzen: At the line of business level, organic sales for building technologies were down high single digits on continued weakness in construction markets. Industrial technologies organic sales were down low single digits as strength in aerospace was more than offset by weakness in printing and packaging markets. A majority of the headwind from the order timing shift was within industrial technologies. Operating EBITDA for diversified industrials of $197 million was up 2% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter was 22.6%, up 110 basis points versus the year-ago period. Turning to slide 10, which outlines our first quarter and full year 2026 financial guidance. For the first quarter, we estimate net sales of about $1.67 billion, operating EBITDA of about $395 million, and adjusted EPS of $0.48 per share.
Antonella Franzen: At the line of business level, organic sales for building technologies were down high single digits on continued weakness in construction markets. Industrial technologies organic sales were down low single digits as strength in aerospace was more than offset by weakness in printing and packaging markets. A majority of the headwind from the order timing shift was within industrial technologies. Operating EBITDA for diversified industrials of $197 million was up 2% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter was 22.6%, up 110 basis points versus the year-ago period. Turning to slide 10, which outlines our first quarter and full year 2026 financial guidance. For the first quarter, we estimate net sales of about $1.67 billion, operating EBITDA of about $395 million, and adjusted EPS of $0.48 per share.
Speaker #1: nicely and seeing kind of the short cycle
Speaker #2: Turning to slide 10, which outlines our first quarter and full year 2026 financial guidance. For the first quarter, we estimate net sales of about $1.67 billion operating EBITDA of about $395 million and adjusted EPS of $48 per share.
Speaker #3: Great. And then just on price cost, obviously a lot of attention less of an issue for you than some of the But what's going on on the inflation side of the metal vendors I cover.
Speaker #3: is embedded in the outlook for
Speaker #2: Our first quarter net sales guidance assumes about 2% organic growth and about a 2% benefit from currency. Our operating EBITDA assumes a 10% increase year over year and margin expansion driven by business improvement and lower corporate costs.
Speaker #1: So, Jeff,
Speaker #1: when our organic growth was 3% is
Speaker #1: predominantly related to
Speaker #1: volume for 2026. I would tell headwinds from any of on metals costs, which is maybe equation? utilities kind of going into next year. We expect that
Speaker #2: For the full year 2026, as Lori noted, our guidance is in line with our medium-term targets. We expect net sales of about $7.1 billion operating EBITDA of about $1.74 billion and adjusted EPS of $2.25 to $2.30 per share.
Speaker #1: Given our productivity, what sort or kind of price is 2026? Improvement in our gross margins on a year-over-year, the raws, logistics, and kind of—
Speaker #1: basis.
Speaker #3: Got it. Great. Thank
Speaker #3: you.
Speaker #1: Yep. Question comes from the line of You Scott Davis with Malia's research. Please go
Speaker #4: Yep.
Speaker #2: Our full year net sales guidance assumes about 3% organic growth and a currency benefit of about 1%. Our operating EBITDA assumes a 6 to 8% increase year over year with $60 to $80 basis points of margin expansion.
Antonella Franzen: Our Q1 net sales guidance assumes about 2% organic growth and about a 2% benefit from currency. Our operating EBITDA assumes a 10% increase year-over-year and margin expansion driven by business improvement and lower corporate costs. For the full year 2026, as Lori noted, our guidance is in line with our medium-term targets. We expect net sales of about $7.1 billion, operating EBITDA of about $1.74 billion, and adjusted EPS of $2.25 to $2.30 per share. Our full year net sales guidance assumes about 3% organic growth and a currency benefit of about 1%. Our operating EBITDA assumes a 6 to 8% increase year-over-year with 60 to 80 basis points of margin expansion. Our adjusted EPS guidance at the midpoint assumes about a 35% increase on a reported basis and an 11% increase on a pro forma basis.
Antonella Franzen: Our Q1 net sales guidance assumes about 2% organic growth and about a 2% benefit from currency. Our operating EBITDA assumes a 10% increase year-over-year and margin expansion driven by business improvement and lower corporate costs. For the full year 2026, as Lori noted, our guidance is in line with our medium-term targets. We expect net sales of about $7.1 billion, operating EBITDA of about $1.74 billion, and adjusted EPS of $2.25 to $2.30 per share. Our full year net sales guidance assumes about 3% organic growth and a currency benefit of about 1%. Our operating EBITDA assumes a 6 to 8% increase year-over-year with 60 to 80 basis points of margin expansion. Our adjusted EPS guidance at the midpoint assumes about a 35% increase on a reported basis and an 11% increase on a pro forma basis.
Speaker #5: Hey, good morning.
Speaker #5: I echo what Jeff said. Nice to see a more you we're not really expecting any significant here. I wanted to follow up a little bit on Jeff's
Speaker #5: question, but on the shelter side, we're going from kind of a negative high single digits to something that's
Speaker #2: Our adjusted EPS guidance at the midpoint assumes about a 35% increase on a reported basis and an 11% increase on a pro forma basis.
Speaker #5: more flatish. How do we Lori and Antonella. normalized quarter 2026? Is it more backend cadence that into loaded, or do you see real initiatives, we expect to see a nice ahead.
Speaker #2: For the healthcare and water segment, we expect full year 2026 organic sales growth in the mid-single digits percent range. This assumed growth is expected to be driven by broad-based strength within healthcare.
Speaker #5: seen to be able to call a
Speaker #5: recovery?
Speaker #1: So let me start on that one. So when you look at Yes. our overall shelter business, we
Speaker #1: Mentioned that it was down around mid-single digits in 2025. So, when we start off 2026, I would tell you that we expect it to be slightly down as we start the year.
Speaker #2: Primarily due to demand in medical packaging applications and medical devices. In water, we expect continued growth primarily driven by demand for reverse osmosis and ion exchange within industrial and municipal water markets.
Speaker #1: So, part of year-over-year basis—so just keep in mind that we were down around 6% in that business. So, on a year-over-year basis, when you look at the two-year stack, it's not really changing significantly from kind of the second half of the year of where we're exiting.
Speaker #2: For the diversified industrial segment, we expect full year 2026 organic sales growth in the low single digits percent range. Within building technologies, after a year of market declines, we are expecting 2026 to be about flat.
Antonella Franzen: For the healthcare and water segment, we expect full-year 2026 organic sales growth in the mid-single digits percent range. This assumed growth is expected to be driven by broad-based strength within healthcare, primarily due to demand in medical packaging applications and medical devices. In water, we expect continued growth primarily driven by demand for Reverse Osmosis and Ion Exchange within industrial and municipal water markets. For the diversified industrial segment, we expect full-year 2026 organic sales growth in the low single digits percent range. Within building technologies, after a year of market declines, we are expecting 2026 to be about flat, primarily driven by stabilization within US construction markets. In industrial technologies, we expect a low single digit growth year-over-year driven by strength in aerospace and demand recovery within markets served by our industrial-based product lines.
Antonella Franzen: For the healthcare and water segment, we expect full-year 2026 organic sales growth in the mid-single digits percent range. This assumed growth is expected to be driven by broad-based strength within healthcare, primarily due to demand in medical packaging applications and medical devices. In water, we expect continued growth primarily driven by demand for Reverse Osmosis and Ion Exchange within industrial and municipal water markets. For the diversified industrial segment, we expect full-year 2026 organic sales growth in the low single digits percent range. Within building technologies, after a year of market declines, we are expecting 2026 to be about flat, primarily driven by stabilization within US construction markets. In industrial technologies, we expect a low single digit growth year-over-year driven by strength in aerospace and demand recovery within markets served by our industrial-based product lines.
Speaker #1: Kind of going into the beginning of the year. So we do expect slight improvement as we go through the course of the year. If we start out slightly negative, getting a little bit better, that gets you to the overall flat for
Speaker #2: Primarily driven by stabilization within U.S. construction markets. In industrial technologies, we expect a low single digit growth year over year driven by strength in aerospace and demand recovery within markets served by our industrial-based product lines.
Speaker #5: That's helpful. historically and perhaps just some color on how helpful And I in Q1 of 2025, is this as it relates to mix or price or volume?
Speaker #5: I don't recall hearing 'vitality index' on these calls in the past. Maybe you do it and I just haven't heard it, okay. But 30% seems like a pretty robust number.
Speaker #2: With that, we are pleased to take your questions and let me turn it back to the operator to open the Q&A.
Speaker #5: But I don't really have any context to what that's been
Speaker #1: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.
Speaker #1: And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question in one follow-up.
Speaker #5: or are there real Are these iterative slight improvements
Speaker #5: Changes? Just a little color would be helpful, I think.
Speaker #5: Thanks.
Speaker #1: Any additional questions, please re-queue. And your first question comes from the line of Jeff Sprague, with vertical research partners. Please go
Speaker #1: Sure. Yeah. We had first talked about the year.
Speaker #1: it in Investor Day where we mentioned that the that same performance in 2025. of those products, that So there's work that comprise the new product sales, it is higher than the overall margin of the company.
Speaker #1: 2020 core number was about 30%. We expect So it is helpful on both the top line side as well goes into not only releasing new products where we can get enhanced price and get as the margin side.
Speaker #1: ahead. Hey, thank you.
Speaker #3: Good morning,
Speaker #3: everyone. A nice and solid, clean Good morning, Jeff. good morning. Nice to see a solid, clean quarter and also Lori, your opening remarks there, all the focus on internal KPIs and growth and you were working on that along the way.
Antonella Franzen: With that, we are pleased to take your questions, and let me turn it back to the operator to open the Q&A.
Antonella Franzen: With that, we are pleased to take your questions, and let me turn it back to the operator to open the Q&A.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question and one follow-up. Any additional questions, please re-queue. And your first question comes from the line of Jeff Sprague with Vertical Research Partners. Please go ahead.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question and one follow-up. Any additional questions, please re-queue. And your first question comes from the line of Jeff Sprague with Vertical Research Partners. Please go ahead.
Speaker #1: work that goes on on the kind of some incremental share. There's also the value engineering side to take costs out and deliver margin improvement.
Speaker #3: But the shift to execution from portfolio moves is welcome on my behalf
Speaker #3: anyhow.
Speaker #4: Thank
Speaker #4: you.
Speaker #4: you. Thank you. Yeah. Thank you.
Speaker #3: Good luck with all that. I wanted to shift, though, a little bit to the external. If I could. You just put a little bit finer point on the industrial side of the equation.
Speaker #1: Both sides. Our efforts—and so we're seeing a nice lift from internally. We did 125 new products last year. We'll—so if we look at the margin profile—expect to continue to do nicely this year.
Speaker #3: Sort of the soft U.S. industrial production in your guide that you mentioned but then seems a little bit countered by your comments about industrial orders picking up.
Speaker #1: And we'll focus on making sure that the shift is versus grow. So you had happening from renew of that 30% vitality sure that we stay competitive and we can get incremental top line mentioned the impact to the top line.
Jeffrey Sprague: Hey, thank you. Good morning, everyone. Hey, nice to see you in solid, clean. Good morning. Nice to see a solid, clean quarter. And also, Lori, your opening remarks there, all the focus on internal KPIs and growth, and you were working on that along the way. But the shift to execution from portfolio moves is welcome on my behalf anyhow.
Jeffrey T. Sprague: Hey, thank you. Good morning, everyone. Hey, nice to see you in solid, clean. Good morning. Nice to see a solid, clean quarter. And also, Lori, your opening remarks there, all the focus on internal KPIs and growth, and you were working on that along the way. But the shift to execution from portfolio moves is welcome on my behalf anyhow.
Speaker #3: So maybe just a little bit more color of what you're seeing really in the core industrial parts of the portfolio. How orders are trending and what you think is going on the channel
Speaker #1: So that of luck.
Speaker #3: inventories. Yeah, thanks,
Speaker #1: Engine. Shift the mix towards growth. Thank you.
Speaker #1: Jeff. So on the industrial side, so talking ex the shelter business, which we had mentioned we think will be about flat this year, so moderating from down mid-single digits in 2025.
Speaker #5: Okay. Thanks, Lori. Best
Operator: Thank you. Thank you.
Operator: Thank you. Thank you.
Jeffrey Sprague: Yeah. Good luck with all that. I wanted to shift, though, a little bit to the external, if I could. Can you just put a little bit finer point on the industrial side of the equation, sort of the soft US industrial production in your guide that you mentioned, but then seems a little bit countered by your comments about industrial orders picking up? So maybe just a little bit more color, what you're seeing really in the core industrial parts of the portfolio, how orders are trending, and what you think is going on with channel inventories.
Jeffrey T. Sprague: Yeah. Good luck with all that. I wanted to shift, though, a little bit to the external, if I could. Can you just put a little bit finer point on the industrial side of the equation, sort of the soft US industrial production in your guide that you mentioned, but then seems a little bit countered by your comments about industrial orders picking up? So maybe just a little bit more color, what you're seeing really in the core industrial parts of the portfolio, how orders are trending, and what you think is going on with channel inventories.
Speaker #5: Pass it on. differentiated.
Speaker #1: You. You are, I appreciate it.
Speaker #1: Next, question comes from the line of Steve Tusa with JP Morgan. And we want to continue to do that, but also, please go ahead.
Speaker #1: And the flat on the shelter side is general kind of low single digit growth expectations for the full year. On non-res and repair and remodel, and then down low to mid-single digits on the resi side.
Speaker #1: ahead. Hi.
Speaker #6: This is Shigusa
Speaker #6: Kotoko on for Steve. So, my first question—thanks for taking my question—is on margins. You're making great progress on the margin front, and I just wanted to go back to the margin bridge that you provided at Analyst Day. There is a portion—
Speaker #1: But on the industrial side, it's primarily coming from the advanced mobility businesses which comprise automotive and aerospace and on the consumer package goods side with some of our packaging goods and spiral.
Speaker #6: And you provided 0 to 50 bits of productivity here. And I was wondering, given the execution, is there potential upside here, or are you tracking ahead of plan?
Speaker #1: So we've seen nice order pickup as we exited the year and went into Q1. A lot of it is being driven by aerospace. We're seeing nice low double-digit improvement in order in aerospace.
Lori Koch: Yeah, thanks, Jeff. So on the industrial side, so talking ex the shelter business, which we had mentioned, we think will be about flat this year. So moderating from down mid-single digits in 2025. And the flat on the shelter side is general kind of low single digit growth expectations for the full year on non-res, repair, and remodel, and then down low to mid-single digits on the resy side. But on the industrial side, it's primarily coming from the advanced mobility businesses, which comprise automotive and aerospace, and on the consumer package goods side with some of our packaging goods in Cyrel. So we've seen nice order pickup as we exited the year and went into Q1. A lot of it is being driven by aerospace. We're seeing nice low double-digit improvement in order in aerospace. It's about 3% or 4% of our revenue.
Lori Koch: Yeah, thanks, Jeff. So on the industrial side, so talking ex the shelter business, which we had mentioned, we think will be about flat this year. So moderating from down mid-single digits in 2025. And the flat on the shelter side is general kind of low single digit growth expectations for the full year on non-res, repair, and remodel, and then down low to mid-single digits on the resy side. But on the industrial side, it's primarily coming from the advanced mobility businesses, which comprise automotive and aerospace, and on the consumer package goods side with some of our packaging goods in Cyrel. So we've seen nice order pickup as we exited the year and went into Q1. A lot of it is being driven by aerospace. We're seeing nice low double-digit improvement in order in aerospace. It's about 3% or 4% of our revenue.
Speaker #1: At a time, as we progress through the—well, I'll say let's take it as a one-year, three-year plan. But I would say we're clearly starting out of the gates in a nice, good spot.
Speaker #1: It's about three or four percent of our revenue. So it's in that range. But all the businesses kind of in that industrial technology space are doing nicely and seeing kind of the short cycle recovery that other names have been pointing
Speaker #1: And when you look at our guidance for 2026, we have at least 20 basis points of margin expansion coming from productivity. Clearly, the teams are doing a great job.
Speaker #1: outlined a lot of activities that we have ongoing in the organization. I think Lori you saw some of the benefit of that in our Q4 results.
Speaker #1: to. Great.
Speaker #3: And then just on price cost, obviously a lot of attention on metals costs, which is maybe less of an issue for you than some of the metal vendors I cover.
Speaker #1: You'll see that, and we'll continue to drive that as we move.
Speaker #1: period.
Speaker #6: Okay. That's great.
Speaker #3: But what's going on on the inflation side of the equation? What sort of kind of prices embedded in the outlook for 2026?
Speaker #6: the area mix divest, sure, I think is Thanks. And then on expected to close at the end of the first quarter. Which is going to bring
Speaker #6: the area mix divest, sure, I think is Thanks. And then on expected to close at the end of the first
Speaker #6: in about $1.2 billion of pre-tax proceeds, if I remember correctly. But any initial thoughts on what you were thinking about capital deployment? continue as we go into 2026.
Speaker #1: So, Jeff, when it's our organic growth of 3% is predominantly related to volume for 2026, I would tell you we're not really expecting any significant headwinds from any of the roles, logistics, and kind of utilities kind of going in the next year.
Lori Koch: So it's in that range. But all the businesses kind of in that industrial technology space are doing nicely and seeing kind of the short cycle recovery that other names have been pointing to.
Lori Koch: So it's in that range. But all the businesses kind of in that industrial technology space are doing nicely and seeing kind of the short cycle recovery that other names have been pointing to.
Speaker #6: Thanks.
Speaker #1: Yeah. So we're still in that range of closing around the end of the first quarter. And it'll be about a billion won on a net tax basis.
Speaker #1: We expect that to be relatively flat. And given our productivity initiatives, we expect to see a nice improvement in our gross margins on a year-over-year basis.
Speaker #1: Keep through the three-year with the $500 million ASR that we already have, which is enabling about 2.5% PS growth for us this year. So we'll continue, and keep in mind, we've already deployed about half of that with respect to deployment of the proceeds.
Jeffrey Sprague: Great. And then just on price-cost, obviously, a lot of attention on metals costs, which is maybe less of an issue for you than some of the metal vendors I cover. But what's going on on the inflation side of the equation? What sort of kind of price is embedded in the outlook for 2026?
Jeffrey T. Sprague: Great. And then just on price-cost, obviously, a lot of attention on metals costs, which is maybe less of an issue for you than some of the metal vendors I cover. But what's going on on the inflation side of the equation? What sort of kind of price is embedded in the outlook for 2026?
Speaker #3: Got it. Great. Thank
Speaker #1: Yep. you.
Speaker #1: Yep. you. You are next, question comes from the you. line of Scott Davis with Malleus Research. Please go ahead.
Speaker #4: Thank
Speaker #1: We add to the top line through opportunities that we're looking at, primarily in the healthcare side, right? M&A. So we've got some—what we did with Spectrum and Donatel.
Speaker #5: Hey, good morning. Lori and Antonella.
Antonella Franzen: So, Jeff, when it's our organic growth of 3% is predominantly related to volume for 2026. I would tell you, we're not really expecting any significant headwinds from any of the roles, logistics, and kind of utilities kind of going into next year. We expect that to be relatively flat. Given our productivity initiatives, we expect to see a nice improvement in our growth margins on a year-over-year basis.
Antonella Franzen: So, Jeff, when it's our organic growth of 3% is predominantly related to volume for 2026. I would tell you, we're not really expecting any significant headwinds from any of the roles, logistics, and kind of utilities kind of going into next year. We expect that to be relatively flat. Given our productivity initiatives, we expect to see a nice improvement in our growth margins on a year-over-year basis.
Speaker #4: Good morning,
Speaker #4: Good morning, Scott. I echo what Jeff
Speaker #5: said. Nice to see a more normalized quarter here. I wanted to follow up a little bit on Jeff's question, but on the shelter side, we're going from kind of a negative high single digits to something that's more flattish.
Speaker #1: We'll continue to be mindful, obviously, have mentioned that we would like to continue to announced last quarter and have completed to be shareholder-friendly So we'll look to get up about ensuring a really strong return.
Speaker #1: Capital by year five with respect to the IRR on the deal. So we'll continue to be shareholder-friendly. We've proven that we've done it now within similar aspects, too. And we'll look to deploy them efficiently.
Speaker #5: How do we cadence that into 2026? Is it more backend loaded, or do you see real green shoots here in early in the year that you've already seen to be able to call a recovery?
Jeffrey Sprague: Got it. Great. Thank you.
Jeffrey T. Sprague: Got it. Great. Thank you.
Antonella Franzen: Yep.
Antonella Franzen: Yep.
Speaker #6: Okay. Great. Thank you.
Operator: Your next question comes from the line of Scott Davis with Melius Research. Please go ahead.
Operator: Your next question comes from the line of Scott Davis with Melius Research. Please go ahead.
Speaker #4: You are next. Question comes from the line of John
Speaker #1: Yeah. So let me start on that one. So when you look at our overall shelter business, we mentioned that it was down around mid-single digits in 2025.
Speaker #4: McNulty with BMO. Please go
Scott Davis: Hey, good morning, Lori and Antonella.
John Roberts: Hey, good morning, Lori and Antonella.
Speaker #4: ahead.
Speaker #7: Yeah. Good
Speaker #7: morning. Thanks for taking my question. Maybe you wanted to dig into the It was a pretty chunky lift. I guess, how much of that is around the mix with the benefit of aerospace kind past significantly.
Lori Koch: Good morning, Scott.
Lori Koch: Good morning, Scott.
Speaker #1: So when we start off 2026, I would tell you that we expect it to be slightly down as we start the year. So part of it's going to be the comps on a year-over-year basis.
Scott Davis: Echo what Jeff said. Nice to see a more normalized quarter here. I wanted to follow up a little bit on Jeff's question, but on the shelter side, going from kind of a negative high single digits to something that's more flat-ish, how do we cadence that into 2026? Is it more backend-loaded, or do you see real green shoots here early in the year that you've already seen to be able to call a recovery?
John Roberts: Echo what Jeff said. Nice to see a more normalized quarter here. I wanted to follow up a little bit on Jeff's question, but on the shelter side, going from kind of a negative high single digits to something that's more flat-ish, how do we cadence that into 2026? Is it more backend-loaded, or do you see real green shoots here early in the year that you've already seen to be able to call a recovery?
Speaker #1: So just keep in mind that in Q1 of 2025, we were down around 6% in that business. So on a year-over-year basis, when you look at the two-year stack, it's not really changing significantly from kind of the second half of the year of where we're exiting, kind of going into the beginning of the year.
Speaker #7: Of hanging in as a really strong—to some of that 80/20 kind of work that I know Beth is working on—really kind of accelerating as we push over the next 12 to 18 months?
Speaker #7: Can you help us to diversify margin lift? Think about
Speaker #1: So we do expect slight improvement as we go through the course of the year. If we start out slightly negative, getting a little bit better, that gets you to the overall flat for the year.
Speaker #1: Yeah. So a couple of things that I would mention there. I would say you're not really yet seeing the benefits of 80/20. It's a little too early.
Antonella Franzen: Yes. So let me start on that one. So when you look at our overall shelter business, we mentioned that it was down around mid-single digits in 2025. So when we start off 2026, I would tell you that we expect it to be slightly down as we start the year. So part of it's going to be the comps on a year-over-year basis. So just keep in mind that in Q1 of 2025, we were down around 6% in that business. So on a year-over-year basis, when you look at the two-year stack, it's not really changing significantly from kind of the second half of the year of where we're exiting, kind of going into the beginning of the year. So we do expect slight improvement as we go through the course of the year.
Antonella Franzen: Yes. So let me start on that one. So when you look at our overall shelter business, we mentioned that it was down around mid-single digits in 2025. So when we start off 2026, I would tell you that we expect it to be slightly down as we start the year. So part of it's going to be the comps on a year-over-year basis. So just keep in mind that in Q1 of 2025, we were down around 6% in that business. So on a year-over-year basis, when you look at the two-year stack, it's not really changing significantly from kind of the second half of the year of where we're exiting, kind of going into the beginning of the year. So we do expect slight improvement as we go through the course of the year.
Speaker #1: Beth recently arrived, so yes, she's working on that. But the benefits of that, I would say, as you know, are to come. As we move forward, when you kind of look at the activity in the fourth quarter, I would point more towards what drove the margin expansion to be a bit of mix related to the businesses that were growing. When you look at the line of business level as well, productivity is what really drove a nice margin expansion in the fourth quarter on a basis.
Speaker #5: Okay. That's helpful. And I don't recall hearing vitality index on these calls in the past, maybe you do, and I just haven't heard it.
Speaker #5: But 30% seems like a pretty robust number. But I don't really have any context to what that's been historically and perhaps just some color on how helpful is this as it relates to mix or price or volume?
Speaker #7: Got it. And then in terms of Okay. innovation, I mean, you mentioned the a year-over-year vitality index. You kind of spoke to, I think it was $2 billion of growth that you saw from some of the new products.
Speaker #5: Are these iterative slight improvements or are there real meaningful product changes? Just a little color would be helpful, I think.
Speaker #5: Are these iterative slight improvements or are there real meaningful product changes? Just a little color would be helpful, I think. Thanks. Sure.
Antonella Franzen: If we start out slightly negative, getting a little bit better, that gets you to the overall flat for the year.
Antonella Franzen: If we start out slightly negative, getting a little bit better, that gets you to the overall flat for the year.
Speaker #1: Yeah. We had first talked about it in yesterday where we mentioned that the 2020 four number was about 30%. We expect that same performance in 2025.
Speaker #7: I guess, can you help us to think about some of the more exciting innovations—the ones that are starting to move the needle, maybe more as we look through '26 into—
Scott Davis: Okay. That's helpful. And I don't recall hearing Vitality Index on these calls in the past. Maybe you do, and I just haven't heard it. But 30% seems like a pretty robust number, but I don't really have any context to what that's been historically. And perhaps just some color on how helpful is this as it relates to mix or price or volume? Are these iterative slight improvements, or are there real meaningful product changes? Just so color would be helpful, I think. Thanks.
John Roberts: Okay. That's helpful. And I don't recall hearing Vitality Index on these calls in the past. Maybe you do, and I just haven't heard it. But 30% seems like a pretty robust number, but I don't really have any context to what that's been historically. And perhaps just some color on how helpful is this as it relates to mix or price or volume? Are these iterative slight improvements, or are there real meaningful product changes? Just so color would be helpful, I think. Thanks.
Speaker #1: So it is helpful on both the top line side as well as the margin side. So there's work that goes into not only releasing new products where we can get enhanced price and get some incremental share.
Speaker #7: 27? Yeah.
Speaker #1: So the $2 billion is the total
Speaker #1: New product sales that are within others that we should be looking for as we see the roughly $7 billion of sales that we reported. So it's a portion of replacement and a portion of growth.
Speaker #1: There's also work that goes on on the kind of the value engineering side to take costs out and deliver margin improvement. So if we look at the margin profile of those products, that comprise the new product sales, it is higher than the overall margin of the company.
Speaker #1: So we'll continue to try to shift that mix towards more growth versus replacement in the future. But as far as exciting innovations that are on the come, I think one, for this year, we highlighted on the last call, and I'll highlight again just because it was such a sizable improvement So we announced at a trade show model that has the best breathability late last year that we came out with a new and the best protection in the industry.
Speaker #1: And so we're seeing nice lift from both sides. Our efforts internally we did 125 new products last year. We'll expect to continue to do nicely this year.
Lori Koch: Sure. Yeah. We had first talked about it in yesterday, where we mentioned that the 2024 number was about 30%. We expect that same performance in 2025. So it is helpful on both the top-line side as well as the margin side. So there's work that goes into not only releasing new products where we can get enhanced price and get some incremental share. There's also work that goes on on the kind of the value engineering side to take costs out and deliver margin improvements. So if we look at the margin profile of those products that comprise the new product sales, it is higher than the overall margin of the company. And so we're seeing nice lift from both sides. Our efforts internally, we did 125 new products last year. We'll expect to continue to do nicely this year.
Lori Koch: Sure. Yeah. We had first talked about it in yesterday, where we mentioned that the 2024 number was about 30%. We expect that same performance in 2025. So it is helpful on both the top-line side as well as the margin side. So there's work that goes into not only releasing new products where we can get enhanced price and get some incremental share. There's also work that goes on on the kind of the value engineering side to take costs out and deliver margin improvements. So if we look at the margin profile of those products that comprise the new product sales, it is higher than the overall margin of the company. And so we're seeing nice lift from both sides. Our efforts internally, we did 125 new products last year. We'll expect to continue to do nicely this year.
Speaker #1: And we'll focus on making sure that the shift is happening from renew versus grow. So you had mentioned the impact to the top line.
Speaker #1: And we've seen really, really nice customer reaction to that. We announced it first in Europe. And we'll continue to roll it where the enhanced tieback garment.
Speaker #1: There is a portion of that 30% fatality index that is replacement and making sure that we stay competitive and differentiated. And we want to continue to do that, but also shift the mix towards growth.
Speaker #1: On Adina site to be able to produce the Gen 4, which would be the highest-end technology that would ownership to our customers. So we're continuing to advance that.
Speaker #1: the water side, we continue to advance the latest technology within the reverse osmosis side. So this year, we're expanding capacity at our out across the globe.
Speaker #1: So that we can get incremental top-line growth out of the innovation
Speaker #1: engine. Okay.
Speaker #5: Thanks, Lori. Best of luck as appreciated. Pass it on.
Speaker #1: Thank you. You are next, question comes from the line of Steve Tusa with JP Morgan. Please go ahead.
Speaker #1: And we'll look to commercialize that in 2027. So those are just two of the highlights. But obviously, with 125 new products last year, it's happening kind of all
Speaker #6: Shigusa Kotoko on for Steve. Thanks Hi. This is for taking my question. So my first question is on so you're making great progress on the margin front.
Lori Koch: And we'll focus on making sure that the shift is happening from renew versus grow. So you had mentioned the impact to the top line. There is a portion of that 30% Vitality Index that is replacement, making sure that we stay competitive and differentiated. And we want to continue to do that, but also shift the mix towards growth so that we can get incremental top-line growth out of the innovation engine.
Lori Koch: And we'll focus on making sure that the shift is happening from renew versus grow. So you had mentioned the impact to the top line. There is a portion of that 30% Vitality Index that is replacement, making sure that we stay competitive and differentiated. And we want to continue to do that, but also shift the mix towards growth so that we can get incremental top-line growth out of the innovation engine.
Speaker #1: portfolio. Got it.
Speaker #6: And I just wanted to go back to the margin bridge that you provided at Analyst Day. And you provided 0 to 50 bits of productivity here.
Speaker #7: Thanks very much for
Speaker #7: the
Speaker #7: color. You are next.
Speaker #4: Question comes from the line of John Roberts with Mizuho. Please go
Speaker #4: ahead. Good.
Speaker #6: And I was wondering, given the execution, is there potential upside here, or are you tracking ahead of
Speaker #7: Thank you. And congrats on a good start here. Could you provide some margin color on the four across the subsegments: water, health, building—you want to provide there.
Speaker #1: Yes. Well, I'll say let's take it one year at a time as we progress through the three-year plan. But I would say we're clearly starting out of the gates in a nice good spot.
Scott Davis: Okay. Thanks, Lori. Best of luck. I just appreciate it. Pass it on to Jeff.
John Roberts: Okay. Thanks, Lori. Best of luck. I just appreciate it. Pass it on to Jeff.
Speaker #7: and industrial? I'm not sure how much detail
Antonella Franzen: Hey, thank you.
Antonella Franzen: Hey, thank you.
Operator: Your next question comes from the line of Steve Tusa with J.P. Morgan. Please go ahead.
Operator: Your next question comes from the line of Steve Tusa with J.P. Morgan. Please go ahead.
Speaker #1: And when you look at our guidance for 2026, we have at least 20 basis points of margin expansion coming from productivity. Clearly, the teams are doing a great job.
Speaker #1: typically give color on the segments. But when you do look from a margin perspective, I mean, what I would add is you will see margin improvement, I would say, in both of our revenue side.
Chigusa Katoku: Hi. This is Chigusa Katoku on for Steve. Thanks for taking my question. So my first question is on, so you're making great progress on the margin front. And I just wanted to go back to the margin bridge that you provided at analyst day. And you provided 0 to 50 basis points of productivity here. And I was wondering, given the execution, is there potential upside here, or are you tracking ahead of plan?
Chigusa Katoku: Hi. This is Chigusa Katoku on for Steve. Thanks for taking my question. So my first question is on, so you're making great progress on the margin front. And I just wanted to go back to the margin bridge that you provided at analyst day. And you provided 0 to 50 basis points of productivity here. And I was wondering, given the execution, is there potential upside here, or are you tracking ahead of plan?
Speaker #1: Of our 2% organic.
Speaker #1: Lori outlined a lot of activities that we have ongoing in the organization. I think you saw some of the benefit of that in our Q4 results.
Speaker #1: reportable segments as we move Yes. forward. expansion from a lower corporate And we'll also obviously get some margin cost as well. And that's certainly We
Speaker #1: You'll see that continue as we go into 2026. And we'll continue to drive that as we move through the three-year period.
Speaker #1: 2026. what's going to drive the 60 to 80 basis points of And then your
Speaker #6: Okay. That's great. Thanks. And then on the area mix divest, sure, I think is expected to close at the end of the first quarter.
Speaker #7: Was that water supply margin expansion going on chain contraction again there? Or is there something else?
Antonella Franzen: Yes. Well, I'll say let's take it one year at a time as we progress through the three-year plan. But I would say we're clearly starting out of the gates in a nice good spot. And when you look at our guidance for 2026, we have at least 20 basis points of margin expansion coming from productivity. Clearly, the teams are doing a great job. Lori outlined a lot of activities that we have ongoing in the organization. I think you saw some of the benefit of that in our Q4 results. You'll see that continue as we go into 2026, and we'll continue to drive that as we move through the three-year period.
Antonella Franzen: Yes. Well, I'll say let's take it one year at a time as we progress through the three-year plan. But I would say we're clearly starting out of the gates in a nice good spot. And when you look at our guidance for 2026, we have at least 20 basis points of margin expansion coming from productivity. Clearly, the teams are doing a great job. Lori outlined a lot of activities that we have ongoing in the organization. I think you saw some of the benefit of that in our Q4 results. You'll see that continue as we go into 2026, and we'll continue to drive that as we move through the three-year period.
Speaker #6: Which is going to bring in about $1.2 billion of pre-tax proceeds, if I remember correctly. But any initial thoughts on what you were thinking about capital deployment?
Speaker #1: No, it wasn't water. The change in our Shelter business—that was the change in the distributor joint venture—was the single largest item. Relationship. So nothing—so it was really just a permanent change that will push it into 2026.
Speaker #1: diversified side. We had a supply chain It was primarily within the
Speaker #6: Thanks.
Speaker #1: Yeah. So we're still in
Speaker #1: that range of closing around the end of the first quarter. And it'll be about a billion won on a net tax basis. Keep in mind, we've already deployed about half of that with the $500 billion ASR that we announced last quarter and have completed already, which is enabling about 2.5% PS growth for us this year.
Speaker #1: So, nothing material. We expect to return to growth across all the regions, both in the quarter and the full year for 2026.
Chigusa Katoku: Okay. That's great. Thanks. Then on the area of mid-service, sure, I think it's expected to close at the end of Q1, which is going to bring in about $1.2 billion of pre-tax proceeds, if I remember correctly. But any initial thoughts on what you were thinking about capital deployment? Thanks.
Chigusa Katoku: Okay. That's great. Thanks. Then on the area of mid-service, sure, I think it's expected to close at the end of Q1, which is going to bring in about $1.2 billion of pre-tax proceeds, if I remember correctly. But any initial thoughts on what you were thinking about capital deployment? Thanks.
Speaker #4: You Asia-Pacific sales were down are next. Question comes from the line UBS.
Speaker #1: So we'll continue to be shareholder-friendly with respect to deployment of the proceeds. We have mentioned that we would like to continue to add to the top line through M&A.
Speaker #4: ahead.
Speaker #8: Yeah. Hi. Good
Speaker #1: So we've got some opportunities that we're looking at primarily in the healthcare side right now within similar aspects to what we did with Spectrum and Donatel.
Speaker #8: Maybe one slightly related to the comment earlier on Asia is that when you're Please go forecast, you're talking about mid-single-digit '26, China's lower than that.
Speaker #8: growth in water.
Lori Koch: Yeah. So we're still in that range of closing around the end of Q1, and it'll be about $1 billion on a net cash basis. Keep in mind, we've already deployed about half of that with the $500 million ASR that we announced last quarter and have completed already, which is enabling about 2.5% EPS growth for us this year. So we'll continue to be shareholder-friendly with respect to deployment of the proceeds. We have mentioned that we would like to continue to add to the top line through M&A. So we've got some opportunities that we're looking at primarily in the healthcare side right now within similar aspects to what we did with Spectrum and Donatelle. We'll continue to be mindful, obviously, about ensuring a really strong return.
Lori Koch: Yeah. So we're still in that range of closing around the end of Q1, and it'll be about $1 billion on a net cash basis. Keep in mind, we've already deployed about half of that with the $500 million ASR that we announced last quarter and have completed already, which is enabling about 2.5% EPS growth for us this year. So we'll continue to be shareholder-friendly with respect to deployment of the proceeds. We have mentioned that we would like to continue to add to the top line through M&A. So we've got some opportunities that we're looking at primarily in the healthcare side right now within similar aspects to what we did with Spectrum and Donatelle. We'll continue to be mindful, obviously, about ensuring a really strong return.
Speaker #1: We'll continue to be mindful, obviously, about ensuring a really strong return. So we'll look to get up to higher than our cost of capital by year five with respect to the IRR on the deal.
Speaker #8: Can you go into some of the details on why and what you're seeing there? I mean, you and some other peers are seeing slower growth in China in general.
Speaker #8: And then secondly, does that help or hurt your mix in the overall segment?
Speaker #1: So we'll continue to be shareholder-friendly. We've proven that we've done it in the past significantly. And we'll look to deploy them
Speaker #1: seeing a slower start in morning.
Speaker #1: efficiently.
Speaker #1: water business. And it's primarily stemming from China with respect to overall growth within the I have two questions on water. Yeah. So we are region.
Speaker #6: Okay. Great. Thank
Speaker #6: you.
Speaker #4: You are next, question comes from the line of John McNulty with BMO. Please go ahead.
Speaker #1: in the low single digits in
Speaker #1: China. In water, and then we'll So we'll start ramp into the back half to get over all you had mentioned, our peers are seeing a similar to that mid-single-digit.
Speaker #5: Yeah. Good morning. Thanks for taking my question. Maybe you wanted to dig into the diversified margin lift. It was a pretty chunky lift. I guess, how much of that is around the mix with the benefit of aerospace kind of hanging in as a really strong driver versus how much of it is tied to some of that 80/20 kind of work that I know Beth is working on really kind of accelerating as we push over the next 12 to 18 months?
Speaker #1: Reflection of the industrial production malaise in China—about half of dynamic—the industrial wastewater treatment or industrial utility water space. And so, when industrial—and I think, as production is down, obviously, it would have an impact, so it's really just on that.
Lori Koch: So we'll look to get up to higher than our cost of capital by year five with respect to the IRR on the deal. So we'll continue to be shareholder-friendly. We've proven that we've done it in the past significantly, and we'll look to deploy them efficiently.
Lori Koch: So we'll look to get up to higher than our cost of capital by year five with respect to the IRR on the deal. So we'll continue to be shareholder-friendly. We've proven that we've done it in the past significantly, and we'll look to deploy them efficiently.
Speaker #1: As far as the mix, no material change in mix depending on where the regional growth is. Or—
Speaker #5: Can you help us to think about that?
Chigusa Katoku: Okay. Great. Thank you.
Chigusa Katoku: Okay. Great. Thank you.
Speaker #1: Yeah. So a couple of things that I would mention there. I would say you're not really yet seeing the benefits of 80/20. It's a little too early.
Operator: Your next question comes from the line of John McNulty with BMO. Please go ahead.
Operator: Your next question comes from the line of John McNulty with BMO. Please go ahead.
Speaker #8: Thank you. I'll leave margin.
Speaker #8: it Okay. there.
Speaker #1: As you know, Beth recently arrived. So yes, she's working on that. But the benefits of that, I would say, are to come. As we move forward, when you kind of look at the activity in the fourth quarter, I would point more towards what drove the margin expansion to be a bit of mix related to the businesses that were growing when you look at the line of business level as well as a strong push relative to productivity.
Speaker #4: You are next. Question comes
Speaker #4: You are next. Question comes
Jeffrey Sprague: Yeah. Good morning. Thanks for taking my question. Maybe you wanted to dig into the diversified margin lift. It was a pretty chunky lift. I guess, how much of that is around the mix with the benefit of aerospace kind of hanging in as a really strong driver versus how much of it is tied to some of that 80/20 kind of work that I know Beth is working on really kind of accelerating as we push over the next 12 to 18 months? Can you help us to think about that?
John McNulty: Yeah. Good morning. Thanks for taking my question. Maybe you wanted to dig into the diversified margin lift. It was a pretty chunky lift. I guess, how much of that is around the mix with the benefit of aerospace kind of hanging in as a really strong driver versus how much of it is tied to some of that 80/20 kind of work that I know Beth is working on really kind of accelerating as we push over the next 12 to 18 months? Can you help us to think about that?
Speaker #1: with KeyBanc . go ahead Please .
Speaker #2: this is Paul on Hi ,
Speaker #2: for Alexey . Can what you're in currently seeing auto the cadence trends right for outlook for Thanks discuss much so for you're 2026 ?
Speaker #1: Is what really drove the nice margin expansion in the fourth quarter on a year-over-year
Speaker #1: Is what really drove the nice margin expansion in the fourth quarter on a year-over-year basis. Got it.
Speaker #2: Trends may be the cadence for outlook and 2026. Much thanks.
Speaker #5: Okay. No, thanks for the color. And then in terms of innovation, I mean, you mentioned the vitality index. You kind of spoke to, I think it was $2 billion of growth that you saw from some of the new products.
Speaker #3: Overall the Yeah . builds for
Speaker #3: from expectation IHS about would expect a slightly be that just on outperform based EV our growth . And so we did see nice .
Antonella Franzen: Yeah. So a couple of things that I would mention there. I would say you're not really yet seeing the benefits of 80/20. It's a little too early. As you know, Beth recently arrived, so yes, she's working on that. But the benefits of that, I would say, are to come as we move forward. When you kind of look at the activity in Q4, I would point more towards what drove the margin expansion to be a bit of mix related to the businesses that were growing, when you look at the line of business level, as well as a strong push relative to productivity, is what really drove a nice margin expansion in Q4 on a year-over-year basis.
Antonella Franzen: Yeah. So a couple of things that I would mention there. I would say you're not really yet seeing the benefits of 80/20. It's a little too early. As you know, Beth recently arrived, so yes, she's working on that. But the benefits of that, I would say, are to come as we move forward. When you kind of look at the activity in Q4, I would point more towards what drove the margin expansion to be a bit of mix related to the businesses that were growing, when you look at the line of business level, as well as a strong push relative to productivity, is what really drove a nice margin expansion in Q4 on a year-over-year basis.
Speaker #3: growth in 2025 . And will continue to see nice growth EV in 2026 . It will quarter .
Speaker #5: I guess, can you help us to think about some of the more exciting innovations, the ones that are starting to move the needle maybe more than others that we should be looking for as we kind of look through 26 into
Speaker #3: But overall the now ?
Speaker #3: year And and will . slightly up be flat is
Speaker #5: 27? Yeah.
Speaker #1: So the $2 billion is the total new product sales that are within the roundly $7 billion of sales that we reported. So it's a portion of replacement and a portion of growth.
Speaker #1: Your next question comes line of Dale Matthew from the America . ahead Please go
Speaker #1: So we'll continue to try to shift that mix towards more growth versus replacement in the future. But as far as exciting innovations that are on the come, I think one, for this year, we highlighted on the last call, and I'll highlight again just because it was such a sizable improvement where the enhanced Tyvek garment.
Jeffrey Sprague: Got it. Okay. No, thanks for the color. And then in terms of innovation, I mean, you mentioned the Vitality Index. You kind of spoke to, I think it was $2 billion of growth that you saw from some of the new products. I guess, can you help us to think about some of the more exciting innovations, the ones that are starting to move the needle maybe more than others that we should be looking for as we kind of look through 2026 into 2027?
John McNulty: Got it. Okay. No, thanks for the color. And then in terms of innovation, I mean, you mentioned the Vitality Index. You kind of spoke to, I think it was $2 billion of growth that you saw from some of the new products. I guess, can you help us to think about some of the more exciting innovations, the ones that are starting to move the needle maybe more than others that we should be looking for as we kind of look through 2026 into 2027?
Speaker #4: Morning , Yeah . everyone . So clearly the portfolio is shaken
Speaker #4: Morning , Yeah . everyone . So clearly the portfolio is shaken out a lot . But we settle here
Speaker #1: So we announced at a trade show late last year that we came out with a new model that has the best breathability and the best protection in the industry.
Speaker #4: annual pricing in any of the could be enough to actually businesses that structural across consolidated depart , whether
Speaker #1: And you've seen really, really nice customer reaction to that. We announced it first in Europe. And we'll continue to roll it out across the globe.
Speaker #4: 50 or 100 bips . framework
Lori Koch: Yeah. So the $2 billion is the total new product sales that are within the roundly $7 billion of sales that we reported. So it's a portion of replacement and a portion of growth. So we'll continue to try to shift that mix towards more growth versus replacement in the future. But as far as exciting innovations that are on the come, I think, one, for this year, we highlighted on the last call, and I'll highlight again just because it was such a sizable improvement, were the enhanced Tyvek garments. So we announced at a trade show late last year that we came out with a new model that has the best breathability and the best protection in the industry. And we've seen really, really nice customer reaction to that. We announced it first in Europe, and we'll continue to roll it out across the globe.
Lori Koch: Yeah. So the $2 billion is the total new product sales that are within the roundly $7 billion of sales that we reported. So it's a portion of replacement and a portion of growth. So we'll continue to try to shift that mix towards more growth versus replacement in the future. But as far as exciting innovations that are on the come, I think, one, for this year, we highlighted on the last call, and I'll highlight again just because it was such a sizable improvement, were the enhanced Tyvek garments. So we announced at a trade show late last year that we came out with a new model that has the best breathability and the best protection in the industry. And we've seen really, really nice customer reaction to that. We announced it first in Europe, and we'll continue to roll it out across the globe.
Speaker #4: we have a
Speaker #1: On the water side, we continue to advance the latest technology within the reverse osmosis side. So this year, we're expanding capacity at our Adina site to be able to produce the Gen 4, which would be the highest-end technology that would enable a significant total cost of ownership to our customers.
Speaker #3: do . mean , we've
Speaker #3: obviously the past two years have unwind of the price that we took sizable through the inflationary environment coming out of with Bank structural vary price lift .
Speaker #3: As a beginning, I mentioned at our
Speaker #3: but in the 2022 , that we 2023 timeframe that unwind . yes , there is
Speaker #3: there underneath volume , in some in is
Speaker #3: there underneath volume , in some in is
Speaker #1: So we're continuing to advance that. And we'll look to commercialize that in 2027. So those are just two of the highlights. But obviously, with 125 new products last year, it's happening kind of all across the
Speaker #1: portfolio. Got
Speaker #5: it. Thanks very much for the color.
Speaker #3: structural in most portfolio price our continue .
Speaker #4: You are next, question comes from the line of John Roberts with Mizuho. Please go ahead.
Lori Koch: On the water side, we continue to advance the latest technology within the reverse osmosis side. So this year, we're expanding capacity at our Edina site to be able to produce the Gen 4, which would be the highest-end technology that would enable a significant total cost of ownership to our customers. So we're continuing to advance that, and we'll look to commercialize that in 2027. So those are just two of the highlights. But obviously, with 125 new products last year, it's happening kind of all across the portfolio.
Lori Koch: On the water side, we continue to advance the latest technology within the reverse osmosis side. So this year, we're expanding capacity at our Edina site to be able to produce the Gen 4, which would be the highest-end technology that would enable a significant total cost of ownership to our customers. So we're continuing to advance that, and we'll look to commercialize that in 2027. So those are just two of the highlights. But obviously, with 125 new products last year, it's happening kind of all across the portfolio.
Speaker #4: Thanks for that . And of as you on something comment garments new margin would uplift that give versus ? legacy a product ? right it
Speaker #5: Good. Thank you. And congrats on a good start here. Could you provide some margin color on the four subsegments: water, health, building, and industrial?
Speaker #4: . the vitality We How much I replacement , is this , you know , through the advanced basis 30 point or 100 basis , or point uplift flat ?
Speaker #5: I'm not sure how much detail you want to provide there.
Speaker #4: And maybe with the specifically on that , but is there pricing something like
Speaker #1: Yes. We typically give color on the revenue side. Of our segments. But when you do look from a margin perspective, I mean, what I would add is you will see margin improvement, I would say, in both of our reportable segments as we move forward.
Speaker #1: And we'll also obviously get some margin expansion from a lower corporate cost as well. And that's really what's going to drive the 60 to 80 basis points of margin expansion in
Jeffrey Sprague: Got it. Thanks very much for the color.
John McNulty: Got it. Thanks very much for the color.
Speaker #4: what's
Speaker #4: the ahead
Speaker #4: What's the uplift average? Is it like—think about it.
Operator: Your next question comes from the line of John Roberts with Mizuho. Please go ahead.
Operator: Your next question comes from the line of John Roberts with Mizuho. Please go ahead.
Speaker #3: Yeah I'd You comment on
Speaker #3: Yeah I'd You comment on the not
Speaker #3: lift . of kind of at
Speaker #1: 2026. And
Speaker #3: But overall in the vitality index drive in 30% , we have the the of margin thinking those from
Speaker #3: But overall in the vitality index drive in 30% , we have the the of margin thinking those from products that are that
Speaker #5: then your Asia-Pacific sales were down 2% organic. Was that water supply chain contraction again? Or is there something else going on
Scott Davis: Good. Thank you and congrats on a good start here. Could you provide some margin color on the four subsegments: water, health, building, and industrial? I'm not sure how much detail you want to provide there.
John Roberts: Good. Thank you and congrats on a good start here. Could you provide some margin color on the four subsegments: water, health, building, and industrial? I'm not sure how much detail you want to provide there.
Speaker #5: there? No, it
Speaker #3: from those five years . rather as we
Speaker #3: are in
Speaker #1: wasn't water. It was primarily within the diversified side. We had a supply chain change in our shelter business that was the single largest item.
Speaker #4: you That's
Speaker #4: you That's
Antonella Franzen: Yes. We typically give color on the revenue side of our segments. But when you do look from a margin perspective, I mean, what I would add is you will see margin improvement, I would say, in both of our reportable segments as we move forward. And we'll also, obviously, get some margin expansion from a lower corporate cost as well. And that's really what's going to drive the 60 to 80 basis points of margin expansion in 2026.
Antonella Franzen: Yes. We typically give color on the revenue side of our segments. But when you do look from a margin perspective, I mean, what I would add is you will see margin improvement, I would say, in both of our reportable segments as we move forward. And we'll also, obviously, get some margin expansion from a lower corporate cost as well. And that's really what's going to drive the 60 to 80 basis points of margin expansion in 2026.
Speaker #1: Next You are with Wolfe
Speaker #1: So it was really just a change in the distributor joint venture relationship. So nothing permanently will push it into 2026. So nothing material. We expect a return to growth across all the regions, both in the quarter and the full year for
Speaker #1: .
Speaker #4: Great .
Speaker #4: much for taking my question . just take a step We portfolio . I is a focus
Speaker #4: much for taking my question . just take a step We portfolio . I is a focus know , CMD , but healthcare where are you the most
Speaker #4: much for taking my question . just take a step We portfolio . I is a focus know , CMD , but healthcare where are you the most margin as you go introduced outlook ?
Speaker #4: the Livio of your level . that would helpful . And then all the follow enthusiasm Thank you be
Speaker #4: growth . on the biopharma side ? Is Solutions med like if you could just device comment on your it pharma in terms of your product portfolio know this ?
Speaker #5: Great. 2026.
Speaker #5: you. You are next, question comes from
Scott Davis: Your Asia Pacific sales were down 2% organic. Was that water supply chain contraction again, or is there something else going on there?
John Roberts: Your Asia Pacific sales were down 2% organic. Was that water supply chain contraction again, or is there something else going on there?
Speaker #4: the line of Josh Spector with UBS. Please go ahead.
Speaker #6: Yeah. Hi. Good morning. I have two questions on water. Maybe one slightly related to the comment earlier on Asia is mid-single-digit growth in water.
Lori Koch: No, it wasn't water. It was primarily within the diversified side. We had a supply chain change in our shelter business that was the single largest item. So it was really just a change in the distributor joint venture relationship. So nothing permanently will push it into 2026. So nothing material. We expect a return to growth across all the regions, both in the quarter and the full year for 2026.
Lori Koch: No, it wasn't water. It was primarily within the diversified side. We had a supply chain change in our shelter business that was the single largest item. So it was really just a change in the distributor joint venture relationship. So nothing permanently will push it into 2026. So nothing material. We expect a return to growth across all the regions, both in the quarter and the full year for 2026.
Speaker #3: Yeah , it's really across all three . So , you know , both med from the packaging med device and biopharma the to contributing to all are know , kind of mid to high
Speaker #6: that when you're forecast, you're talking about For 26, China's lower than that. Can you go into some of the details on why and what you're seeing there?
Speaker #3: the , you nicely in the higher
Speaker #3: single
Speaker #3: single
Speaker #6: I mean, you and some other peers are seeing slower growth in China in general. And then secondly, does that help or hurt your mix in the overall
Speaker #3: universe . So if you device think about the enthusiastic majority of our longer term applications are back and look in the digit cardiovascular space , has an higher overall growth rate with respect to overall surgical procedures .
Speaker #6: segment? Yeah.
Scott Davis: Great. Thank you.
John Roberts: Great. Thank you.
Speaker #1: So we are seeing a slower start in China with respect to overall growth within the water business. And it's primarily stemming from just the reduced industrial production in the region.
Speaker #3: So all three of them are going to contribute nicely. Continue to do more in those to ensure that we can differentially invest and grow.
Operator: Your next question comes from the line of Josh Spector with UBS. Please go ahead.
Operator: Your next question comes from the line of Josh Spector with UBS. Please go ahead.
Speaker #1: So we'll start in the low single digits in China. In water, and then we'll ramp into the back half to get over all to that mid-single digit.
Josh Spector: Yeah. Hi. Good morning. I had two questions on water, maybe one slightly related to the comments earlier on Asia. Is that, when you're forecasting, you're talking about mid-single-digit growth in water for 2026? China's lower than that. Can you go into some of the details on why and what you're seeing there? I mean, you and some other peers are seeing slower growth in China in general. And then secondly, does that help or hurt your mix in the overall segment?
Josh Spector: Yeah. Hi. Good morning. I had two questions on water, maybe one slightly related to the comments earlier on Asia. Is that, when you're forecasting, you're talking about mid-single-digit growth in water for 2026? China's lower than that. Can you go into some of the details on why and what you're seeing there? I mean, you and some other peers are seeing slower growth in China in general. And then secondly, does that help or hurt your mix in the overall segment?
Speaker #4: And
Speaker #4: similar question for the business ,
Speaker #4: water you know , post split take a look at your the dust the portfolio , particular infiltration , water continue to
Speaker #1: And I think, as you had mentioned, our peers are seeing a similar dynamic. So it's really just a reflection of the industrial production malaise in China.
Speaker #4: Navarro is us , there . clearly a great It's business . But do you feel as though you're missing any Do you scale ?
Speaker #1: About half of our water is used in the industrial wastewater treatment or industrial utility water space. And so when industrial production is down, obviously, it would have an impact on that.
Speaker #4: a piece your Obviously you've added other things I'm years , when you like , what you think else do anything ? exchange over the further across frankly investor , to though there's business businesses to appreciation for
Speaker #4: If
Lori Koch: Yeah. So we are seeing a slower start in China with respect to overall growth within the water business. And it's primarily stemming from just the reduced industrial production in the region. So we'll start in the low single digits in China in water, and then we'll ramp into the back half to get overall to that mid-single digit. And I think, as you had mentioned, our peers are seeing a similar dynamic. So it's really just a reflection of the industrial production malaise in China. About half of our water is used in the industrial wastewater treatment or industrial utility water space. And so when industrial production is down, obviously, it would have an impact on that. As far as the mix, no material change in mix depending on where the regional growth is or margin.
Lori Koch: Yeah. So we are seeing a slower start in China with respect to overall growth within the water business. And it's primarily stemming from just the reduced industrial production in the region. So we'll start in the low single digits in China in water, and then we'll ramp into the back half to get overall to that mid-single digit. And I think, as you had mentioned, our peers are seeing a similar dynamic. So it's really just a reflection of the industrial production malaise in China. About half of our water is used in the industrial wastewater treatment or industrial utility water space. And so when industrial production is down, obviously, it would have an impact on that. As far as the mix, no material change in mix depending on where the regional growth is or margin.
Speaker #1: As far as the mix, no material change in mix depending on where the regional growth is. Or
Speaker #3: Yeah ,
Speaker #1: margin.
Speaker #6: Okay. Thank
Speaker #6: you. I'll leave it there.
Speaker #4: You are next, question comes from the line of Alexey Yefremov with KeyBank. Please go ahead.
Speaker #3: and from a we're nicely positioned there . We've mentioned the exchange , to start to build leading around water . So
Speaker #3: and from a we're nicely positioned there . We've mentioned the exchange , to start to build leading around water . So leading in ?
Speaker #3: and from a we're nicely positioned there . We've mentioned the exchange , to start to build leading around water . So leading in Nanofiltration .
Speaker #7: Hi. This is Paul on for Alexey. Can you discuss what you're currently seeing in auto trends right now? And maybe the cadence for your outlook for 2026?
Speaker #3: filtration would spaces be from a difficult perspective for we've got the leading continue we position . scout So and
Speaker #7: Thanks so
Speaker #7: much. Yeah.
Speaker #1: Overall, the expectation for auto builds from IHS is to be about flat. We would expect a slightly outperform that just based on our EV growth.
Speaker #3: the water space . expand in So Obviously will be in , like , the valuations there . They quite pricey . We've assets with some of our seen a few competitors tune to in the last few That had a valuation .
Speaker #1: And so we did see nice EV growth in 2025. And we'll continue to see nice EV growth in 2026. It'll vary by quarter. But overall, the full year is about flat.
Josh Spector: Okay. Thank you. I'll leave it there.
Josh Spector: Okay. Thank you. I'll leave it there.
Speaker #3: That would make for us , but we'll it continue to to see . We , just to trade regulatory continue the to to shore recently added us , water up our and assets in China .
Operator: Your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets. Please go ahead.
Operator: Your next question comes from the line of Aleksey Yefremov with KeyBanc Capital Markets. Please go ahead.
Speaker #1: And we'll be slightly up.
Speaker #3: chain in the Row has in highly in We didn't have an established footprint . asset We huge growth bought outside of China . gave us difficult establish Shanghai capacity that region for continue to in the be competitive and local given that customers .
Aleksey Yefremov: Hi. This is Paul on for Aleksey. Can you discuss what you're currently seeing in auto trends right now and maybe the cadence for your outlook for 2026? Thanks so much.
Aleksey Yefremov: Hi. This is Paul on for Aleksey. Can you discuss what you're currently seeing in auto trends right now and maybe the cadence for your outlook for 2026? Thanks so much.
Speaker #4: You are next, question comes from the line of Matthew Dale with Bank of America. Please go
Speaker #4: You are next, question comes from the line of Matthew Dale with Bank of America. Please go ahead. Yeah.
Speaker #3: membrane
Lori Koch: Yeah. Overall, the expectation for auto builds from IHS is to be about flat. We would expect a slightly outperform that just based on our EV growth. And so we did see nice EV growth in 2025, and we'll continue to see nice EV growth in 2026. It'll vary by quarter, but overall, the full year is about flat and will be slightly up.
Lori Koch: Yeah. Overall, the expectation for auto builds from IHS is to be about flat. We would expect a slightly outperform that just based on our EV growth. And so we did see nice EV growth in 2025, and we'll continue to see nice EV growth in 2026. It'll vary by quarter, but overall, the full year is about flat and will be slightly up.
Speaker #3: There .
Speaker #8: Morning, everyone. So clearly, the portfolio is shaken out a lot. But as we settle here, is there any hope to establish annual pricing initiatives in any of the businesses that could be enough to actually drive structural pricing gains across consolidated DuPont, whether that's 50 bips or 100 bips?
Speaker #4: Thank much .
Speaker #3: You're welcome to us to quarters.
Speaker #1: Andrews with high
Speaker #1: Stanley . Please
Speaker #1: .
Speaker #2: Thank you much . I ask on
Speaker #2: called out in the deck that surgical
Speaker #2: procedures very you're
Speaker #2: growth normal that an up favorable or about the versus same versus 25 ? then is sort of . Well represented entire cohort or or how should we about it think
Speaker #8: Do we have a framework
Speaker #8: there? We
Speaker #1: do. I mean, we've had, obviously, the past two years have been the unwind of the sizable price that we took through the inflationary environment coming out of COVID.
Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Please go ahead.
Operator: Your next question comes from the line of Matthew DeYoe with Bank of America. Please go ahead.
Speaker #1: But going forward, we would expect to see structural price lift. As Antonella mentioned at the beginning, in 2020, six, our 3% organic is primarily volume.
Speaker #3: Yeah , I
Speaker #3: it's a similar growth rate to what we saw in 25 minus dsoc that the happened . kind of drove up the overall healthcare year .
Speaker #3: it's a similar growth rate to what we saw in 25 minus dsoc that the happened . kind of drove up the overall healthcare in the first quarter .
Speaker #3: it's a similar growth rate to what we saw in 25 minus dsoc that the happened . kind of drove up the overall healthcare
Speaker #3: it's a similar growth rate to what we saw in 25 minus dsoc that the happened . kind of drove up the overall healthcare in the first quarter .
Michael Sison: Morning, everyone. So clearly, the portfolio is shaken out a lot. But as we settle here, is there any hope to establish annual pricing initiatives in any of the businesses that could be enough to actually drive structural pricing gains across consolidated DuPont, whether that's 50 bps or 100 bps? Do we have a framework there?
Michael Sison: Morning, everyone. So clearly, the portfolio is shaken out a lot. But as we settle here, is there any hope to establish annual pricing initiatives in any of the businesses that could be enough to actually drive structural pricing gains across consolidated DuPont, whether that's 50 bps or 100 bps? Do we have a framework there?
Speaker #1: But they're underneath that. There is some price in some of the businesses. We continue to expect to have to give back a little bit on the shelter side primarily.
Speaker #3: mentioned the areas that I growth for the are above kind of in rates , if you say general about 4% , surgical where we that average to be more overall market play , we That about we're is positioned on both the healthcare with the across that packaging on the spectrum and on procedure as Our Typekit end market to your also within the cardiovascular and device .
Speaker #1: Is that sizable price raise that we drove in the 2022, 2023 timeframe starts to unwind. But yes, there is opportunity to drive structural price in most of the businesses in our portfolio.
Speaker #1: Is that sizable price raise that we drove in the 2022, 2023 timeframe starts to unwind. But yes, there is opportunity to drive structural price in most of the businesses in our portfolio.
Lori Koch: We do. I mean, obviously, the past two years have been the unwind of the sizable price that we took through the inflationary environment coming out of COVID. But going forward, we would expect to see structural price lift. As Antonella mentioned at the beginning, in 2026, our 3% organic is primarily volume. But underneath that, there is some price in some of the businesses. We continue to expect to have to give back a little bit on the shelter side primarily as that sizable price raise that we drove in the 2022-2023 timeframe starts to unwind. But yes, there is opportunity to drive structural price in most of the businesses in our portfolio.
Lori Koch: We do. I mean, obviously, the past two years have been the unwind of the sizable price that we took through the inflationary environment coming out of COVID. But going forward, we would expect to see structural price lift. As Antonella mentioned at the beginning, in 2026, our 3% organic is primarily volume. But underneath that, there is some price in some of the businesses. We continue to expect to have to give back a little bit on the shelter side primarily as that sizable price raise that we drove in the 2022-2023 timeframe starts to unwind. But yes, there is opportunity to drive structural price in most of the businesses in our portfolio.
Speaker #8: Thanks for that. And as you comment on something like tieback with the new advanced garments, right? How much margin uplift would something like that give versus a legacy product?
Speaker #2: on 5% . balance sheet and allocation ,
Speaker #2: on 5% . balance sheet and
Speaker #2: on 5% . balance sheet and allocation , you
Speaker #8: And I guess maybe I don't know if you want to comment specifically on that. But is it a different one maybe? What is the average margin uplift?
Speaker #2: I well as to think cash . You've So side 715 million in there is billion one coming .
Speaker #8: If you were to look at the vitality index and you're thinking about replacement, is this through the index of 30 basis points or 100 basis points?
Speaker #2: of that then just already with of the 500 million ASR . So can refresh us you can on sort of what the minimum follow up level of cash you want to And then capital as you , as you move forward the year
Speaker #2: of that then just already with of the 500 million ASR . So can refresh us you can on sort of what the minimum follow up level of cash you want to And then capital as you , as you move forward the
Speaker #8: Or is it flat? What's the uplift look like? As we think
Speaker #8: about landscape. Yeah.
Speaker #2: generate more cash , is that obviously you're expecting nicely year . Okay . And of cash understanding the dual track of pursuing as well M&A as as well as share repurchases vascular , should we think about that sort of remaining proceeds .
Speaker #1: I'd rather not comment on the margin lift. That kind of at the product line level. But overall, in the vitality index, in the 30%, we have about 145 basis points of margin lift.
Michael Sison: Thanks for that. And as you comment on something like Tyvek with the new advanced garments, right, how much margin uplift would something like that give versus a legacy product? And I guess maybe I don't know if you want to comment specifically on that, but is it a different one maybe? What is the average margin uplift? If you were to look at the Vitality Index and you're thinking about replacement, is this through the index of 30 basis points or 100 basis points, or is it flat? What's the uplift look like as we think about layering together?
Michael Sison: Thanks for that. And as you comment on something like Tyvek with the new advanced garments, right, how much margin uplift would something like that give versus a legacy product? And I guess maybe I don't know if you want to comment specifically on that, but is it a different one maybe? What is the average margin uplift? If you were to look at the Vitality Index and you're thinking about replacement, is this through the index of 30 basis points or 100 basis points, or is it flat? What's the uplift look like as we think about layering together?
Speaker #1: From those products that are introduced in the past five years.
Speaker #2: divestiture to be sort conversion M&A ? free cash flow generation from this year to sort of be ratably allocated to to dividends and to repurchases , or is right way to about it You know , sort of
Speaker #8: Yeah. That's great. Thank you.
Speaker #4: You are next, question comes from the line of Chris Parkinson with Wolf Research. Please go ahead.
Speaker #5: Great. Thanks so much for taking my question. We just take a step back and look at your healthcare portfolio. I know this is a focus of your CMD.
Speaker #2: ?
Speaker #5: So let me
Speaker #5: So let me
Speaker #5: with your first
Speaker #5: balance sheet , we will carry
Speaker #5: around $1 billion in cash . So we bit were a little Yeah . that at the end of the year . Given the
Speaker #5: around $1 billion in cash . So we bit were a little Yeah . that at the end of the year . Given the
Speaker #5: But Laurie, where are you the most enthusiastic as you go through 26? And perhaps even the longer-term growth algo. Is it on the biopharma side?
Lori Koch: Yeah. I'd rather not comment on the margin lift at kind of at the product line level. But overall, in the Vitality Index, in the 30%, we have about 145 basis points of margin lift from those products that are introduced in the past five years.
Lori Koch: Yeah. I'd rather not comment on the margin lift at kind of at the product line level. But overall, in the Vitality Index, in the 30%, we have about 145 basis points of margin lift from those products that are introduced in the past five years.
Speaker #5: cash that spent on of for ASR of as you mentioned , we have flow generation 500 million . So year 26 to do than that , we do have CapEx to the 90% .
Speaker #5: Is it pharma solutions, med device? If you could just comment on your enthusiasm in terms of your product portfolio, Livio, that would be particularly helpful.
Speaker #5: And then I'll have a follow-up. Thank
Speaker #5: you. Yeah.
Speaker #5: in the door related to the transaction . As Laurie earlier , In I would say , you kind of capital addition to allocation , we view that in the eyes of a shareholder , in terms of what creates the most amount I nice cash wouldn't say there's a value .
Speaker #1: It's really across all three. So both med packaging, med device, and biopharma all are nicely contributing to the kind of mid to high single-digit range in 2026.
Michael Sison: That's great. Thank you.
Michael Sison: That's great. Thank you.
Operator: Your next question comes from the line of Chris Parkinson with Wolfe Research. Please go ahead.
Operator: Your next question comes from the line of Chris Parkinson with Wolfe Research. Please go ahead.
Chris Parkinson: Great. Thanks so much for taking my question. We just take a step back and look at your healthcare portfolio. I know this is a focus of your CMD. But Lori, where are you the most enthusiastic as you go through 2026 and perhaps even the longer-term growth algo? Is it on the biopharma side? Is it pharma solutions, med devices? If you could just comment on your enthusiasm in terms of your product portfolio, Liveo, that would be particularly helpful. And then I'll have a follow-up. Thank you.
Chris Parkinson: Great. Thanks so much for taking my question. We just take a step back and look at your healthcare portfolio. I know this is a focus of your CMD. But Lori, where are you the most enthusiastic as you go through 2026 and perhaps even the longer-term growth algo? Is it on the biopharma side? Is it pharma solutions, med devices? If you could just comment on your enthusiasm in terms of your product portfolio, Liveo, that would be particularly helpful. And then I'll have a follow-up. Thank you.
Speaker #1: They all participate nicely in the higher-end aspects of the med device universe. So if you think about the majority of our applications are more in the cardiovascular space, which has an overall higher growth rate with respect to overall surgical procedures.
Speaker #5: amount earmarked towards specific M&A deal or a amount specific earmarked mentioned repurchases . We'll So look at We don't both . some M&A we are at .
Speaker #5: Continue to a pipeline of what we do have—you'll see if it comes to fruition or not. They deploy capital in the best looking opportunities that you look forward to.
Speaker #1: So all three of them are going to contribute nicely. We'll continue to differentially invest in those businesses to ensure that we can continue to grow.
Speaker #5: clearly we will move
Speaker #5: Got it. And just a similar question for the water business. Now that all the dust is settled, post the split, when you think and look at your water portfolio infiltration in particular particular across NFRO, US, is there it's clearly a great business.
Speaker #5: .
Speaker #2: very
Lori Koch: Yeah. It's really across all three. So both med packaging, med device, and biopharma all are nicely contributing to the kind of mid to high single digit range in 2026. They all participate nicely in the higher-end aspects of the med device universe. So if you think about the majority of our applications, they're more in the cardiovascular space, which has an overall higher growth rate with respect to overall surgical procedures. So all three of them are going to contribute nicely. We'll continue to differentially invest in those businesses to ensure that we can continue to grow.
Lori Koch: Yeah. It's really across all three. So both med packaging, med device, and biopharma all are nicely contributing to the kind of mid to high single digit range in 2026. They all participate nicely in the higher-end aspects of the med device universe. So if you think about the majority of our applications, they're more in the cardiovascular space, which has an overall higher growth rate with respect to overall surgical procedures. So all three of them are going to contribute nicely. We'll continue to differentially invest in those businesses to ensure that we can continue to grow.
Speaker #1: Your next
Speaker #1: line of question comes Patrick Cunningham much from the Please go Citi . ahead .
Speaker #6: This Hi .
Speaker #6: This Hi . is Thank you Rachel . Leah .
Speaker #5: But do you feel as though you're missing any scale? Do you feel as though there's a piece of your portfolio? Obviously, you've added other things in IM exchange over the years.
Speaker #6: response , mentioned for regions continue to up you I think sales should be wise . year . of our in one Q so with trending favorably , can you PMIs just And color on response ?
Speaker #5: What else do you think you need to do, if anything, quite frankly, to further garner investor appreciation for that specific
Speaker #6: And that maybe what you're seeing provide terms This all organic sales growth in versus GDP with
Speaker #1: Yeah. I think from a technology perspective, we've got the leading technology across all the main components within water filtration. So leading in RO, leading in ion exchange, leading in US, and nano filtration.
Speaker #3: You kind I couldn't of quarter you were referencing . But to earlier comment , we do expect to see
Speaker #3: You kind I couldn't of quarter you were referencing . But to earlier comment , we do expect to see organic growth the regions , both in the
Speaker #3: You kind I couldn't of quarter you were referencing . But to earlier comment , we do expect to see organic growth the regions , both in the
Chris Parkinson: Got it. And a similar question for the water business. Now that all the dust is settled post the split, when you take a look at your water portfolio filtration, in particular, across NF, RO, UF, it's clearly a great business, but do you feel as though you're missing any scale? Do you feel as though there's a piece to your portfolio? Obviously, you've added other things in Ion Exchange over the years. What else do you think you need to do, if anything, quite frankly, to further garner investor appreciation for that specific business?
Chris Parkinson: Got it. And a similar question for the water business. Now that all the dust is settled post the split, when you take a look at your water portfolio filtration, in particular, across NF, RO, UF, it's clearly a great business, but do you feel as though you're missing any scale? Do you feel as though there's a piece to your portfolio? Obviously, you've added other things in Ion Exchange over the years. What else do you think you need to do, if anything, quite frankly, to further garner investor appreciation for that specific business?
Speaker #1: So we're nicely positioned there. We've mentioned the desire to start to build around water. So potentially going into spaces beyond filtration, just given filtration would be difficult from a regulatory perspective for us, given that we've got the leading position.
Speaker #3: . The kind hear which quarter of the first being at 2% organic in the full dropped off at being at 3% . Most improvement is of that the going to be in first quarter and in America , North year , just year improvement that we expect to see more on the shelter side .
Speaker #1: So we continue to scout. And look for opportunities to expand in the water space. Obviously, we'll be highly in tune to the valuations there.
Speaker #3: starting , you know , kind of shelter slightly recent then trending to even on the full year , based on So with given the majority of that lift are in North .
Speaker #3: shelter
Speaker #1: They can be quite pricey. We've seen a few assets with some of our competitors trade in the last few quarters that had a high valuation that would make it difficult for us.
Lori Koch: Yeah. I think from a technology perspective, we've got the leading technology across all the main components within water filtration. So leading in RO, leading in ion exchange, leading in UF, and nanofiltration. So we're nicely positioned there. We've mentioned the desire to start to build around water, so potentially going into spaces beyond filtration, just given filtration would be difficult from a regulatory perspective for us given that we've got the leading position. So we continue to scout and look for opportunities to expand in the water space. Obviously, we'll be highly in tune to the valuations there. They can be quite pricey. We've seen a few assets with some of our competitors trade in the last few quarters that had a high valuation that would make it difficult for us. But we'll continue to see.
Lori Koch: Yeah. I think from a technology perspective, we've got the leading technology across all the main components within water filtration. So leading in RO, leading in ion exchange, leading in UF, and nanofiltration. So we're nicely positioned there. We've mentioned the desire to start to build around water, so potentially going into spaces beyond filtration, just given filtration would be difficult from a regulatory perspective for us given that we've got the leading position. So we continue to scout and look for opportunities to expand in the water space. Obviously, we'll be highly in tune to the valuations there. They can be quite pricey. We've seen a few assets with some of our competitors trade in the last few quarters that had a high valuation that would make it difficult for us. But we'll continue to see.
Speaker #6: Got Yeah ,
Speaker #6: can Thank you . I just ? sort of
Speaker #1: But we'll continue to see. We recently added just to continue to shore up our supply chain in the water space and asset in China.
Speaker #6: for order across healthcare portfolio in general what ? ask
Speaker #1: RO has huge growth in China. We didn't have an established footprint. We bought an asset outside of Shanghai that gave us established membrane capacity in the region for us to continue to be competitive and local to our customers there.
Speaker #3: question I'll answer the broadly for company the because it
Speaker #3: about long lead
Speaker #3: that way . So
Speaker #3: about it's 80% of the the on the books . orders start each quarter about with 50% of the orders on the then we build have a there .
Speaker #5: Helpful as always. Thank you so much.
Speaker #3: Shelter is definitely the cycle on the longest cycle . I would be our businesses water shortest longer end . And everyone else fall in between books
Speaker #1: You're welcome.
Speaker #4: You are next, question comes from the line of Vincent Andrews with Morgan Stanley. Please go
Speaker #3: and our
Speaker #4: ahead. Thank you
Speaker #8: very much. I wanted to ask on healthcare. You called out in the deck that surgical procedures, you're expecting to be up mid-single digits this year.
Speaker #6: Great . Thank you so much for the color
Speaker #6: .
Lori Koch: We recently added, just to continue to shore up our supply chain in the water space, an asset in China. RO has huge growth in China. We didn't have an established footprint. We bought an asset outside of Shanghai that gave us established membrane capacity in the region for us to continue to be competitive and local to our customers there.
Lori Koch: We recently added, just to continue to shore up our supply chain in the water space, an asset in China. RO has huge growth in China. We didn't have an established footprint. We bought an asset outside of Shanghai that gave us established membrane capacity in the region for us to continue to be competitive and local to our customers there.
Speaker #8: Can you just give us a sense? Is that sort of the normal growth rate? And is that favorable or about the same versus 25?
Speaker #1: next
Speaker #1: Susan with Wells go Please Fargo . ahead would kind of .
Speaker #1: Susan with Wells go Please Fargo . ahead would kind of
Speaker #8: And then is your portfolio sort of well-represented across that entire cohort? Or how should we think about
Speaker #8: And then is your portfolio sort of well-represented across that entire cohort? Or how should we think about it? Yeah.
Speaker #4: Just a quick
Speaker #4: . Your . And flat . outlook differences between Any and Non-res in that model
Speaker #1: I would say it's a similar growth rate to what we saw in 25, minus the DSOP that happened in the first quarter that kind of drove up the overall healthcare growth for the year.
Chris Parkinson: Helpful advice. Thank you so much.
Chris Parkinson: Helpful advice. Thank you so much.
Speaker #5: Yes . So as Your
Operator: You're welcome. Your next question comes from the line of Vincent Andrews with Morgan Stanley. Please go ahead.
Operator: You're welcome. Your next question comes from the line of Vincent Andrews with Morgan Stanley. Please go ahead.
Speaker #5: expectations would be that Non-res would be 2026 , our in up single digit as well as repair , remodel , and that would be
Speaker #1: So we're nicely positioned. As I mentioned, in the areas that are driving kind of above the average surgical procedure rate. So if you say general surgeries, it's about 4% where we play.
Aleksey Yefremov: Thank you very much. I wanted to ask on healthcare. You called out in the deck that surgical procedures are expecting to be up mid-single digits this year. Can you just give us a sense? Is that sort of the normal growth rate, and is that favorable, about the same versus 2025? And then is your portfolio sort of well-represented across that entire cohort, or how should we think about it?
Aleksey Yefremov: Thank you very much. I wanted to ask on healthcare. You called out in the deck that surgical procedures are expecting to be up mid-single digits this year. Can you just give us a sense? Is that sort of the normal growth rate, and is that favorable, about the same versus 2025? And then is your portfolio sort of well-represented across that entire cohort, or how should we think about it?
Speaker #5: mid single digit range business of the on the .
Speaker #5: mid single digit range business of the on the .
Speaker #1: We expect that overall average to be more market-weighted to about 5%. So we're nicely positioned. On both the healthcare side, with the tieback packaging as well as on the spectrum and Donatello side on the device, our single largest end market there is also within the cardiovascular and vascular
Speaker #4: Got up . your outlook and it . your results ,
Speaker #4: continues follow to quick look a lot than the chemical folks is . Are you still You know to , you is it still possible change to looking designation ?
Speaker #4: continues follow to quick look a lot than the chemical folks is . Are you still You know to , you is it still possible change to looking designation
Speaker #4: your know , that work ? particularly the industry
Lori Koch: Yeah. I would say it's a similar growth rate to what we saw in 2025 minus the DSOC that happened in the first quarter that kind of drove up the overall healthcare growth for the year. So we're nicely positioned, as I mentioned, in the areas that are driving kind of above the average surgical procedure rate. So if you say general surgeries, it's about 4%. Where we play, we expect that overall average to be more market-weighted to about 5%. So we're nicely positioned on both the healthcare side with the Tyvek packaging as well as on the Spectrum and Donatelle side on the device. Our single largest end market there is also within the cardiovascular and vascular space.
Lori Koch: Yeah. I would say it's a similar growth rate to what we saw in 2025 minus the DSOC that happened in the first quarter that kind of drove up the overall healthcare growth for the year. So we're nicely positioned, as I mentioned, in the areas that are driving kind of above the average surgical procedure rate. So if you say general surgeries, it's about 4%. Where we play, we expect that overall average to be more market-weighted to about 5%. So we're nicely positioned on both the healthcare side with the Tyvek packaging as well as on the Spectrum and Donatelle side on the device. Our single largest end market there is also within the cardiovascular and vascular space.
Speaker #1: space. Okay.
Speaker #4: does
Speaker #8: And then just to follow up on the balance sheet and capital allocation, the end of the year within 715 million in cash, you've got the billion one coming in.
Speaker #4: I think your been much more , more how than , my steady group .
Speaker #5: So when clearly at Yeah . look the
Speaker #8: Earlier, you spoke to, well, we've kind of spent some of that billion one already. With the 500 million ASR. So can you just refresh us on sort of what the minimum level of cash is that you want to carry?
Speaker #5: performance , our company look at our results have portfolio when you not chemical company
Speaker #5: performance , our company look at our results have portfolio when you not chemical company So that of you , we specialty make some progress decline in mirroring you take a classification .
Speaker #8: And then as you move forward through the year, and generate more cash, obviously, expecting another very strong year of cash conversion. Understanding sort of the dual track of pursuing M&A as well as shary purchases.
Speaker #5: But your point , what I would tell you is our first priority is just to continue to execute
Speaker #5: continue to move forward in terms I would tell given of trying to get the code changed to more appropriately portfolio that we have your today .
Speaker #8: Should we think about that sort of remaining proceeds from the divestiture to be sort of earmarked for M&A? But the sort of free cash flow generation from this year to sort of be ratably allocated to CapEx, to dividends, and to repurchases?
Speaker #4: . performance is
Aleksey Yefremov: Okay. And then just to follow up on the balance sheet and capital allocation, the end of the year with, I think, $715 million in cash, you've got the $1 billion coming in. Earlier, you spoke to, "Well, we've kind of spent some of that $1 billion already with the $500 million ASR." So can you just refresh us on sort of what the minimum level of cash is that you want to carry?
Aleksey Yefremov: Okay. And then just to follow up on the balance sheet and capital allocation, the end of the year with, I think, $715 million in cash, you've got the $1 billion coming in. Earlier, you spoke to, "Well, we've kind of spent some of that $1 billion already with the $500 million ASR." So can you just refresh us on sort of what the minimum level of cash is that you want to carry?
Speaker #1: question comes line last of Viswanathan with
Speaker #1: question comes line last of Viswanathan with RBC Markets .
Speaker #1: from the .
Speaker #7: Great . Thanks for taking my question . I just wanted to I , clarify on both the
Speaker #8: Or is that not the right way to think about it?
Speaker #7: and water .
Speaker #1: Yeah. So let me start with your first question. So typically, on the balance sheet, we will carry around a billion dollars in cash. So we were a little bit below that.
Speaker #7: see Capital , you know ,
Speaker #7: see Capital , you know , within Our one of your competitors packaging referenced some of
Aleksey Yefremov: And then as you move forward through the year and generate more cash, obviously expecting another very strong year of cash conversion, understanding sort of the dual track of pursuing M&A as well as share repurchases, should we think about that sort of remaining proceeds from the divestiture to be sort of earmarked for M&A, but the sort of free cash flow generation from this year to sort of be ratably allocated to CapEx, to dividends, and to repurchases? Or is that not the right way to think about it?
Aleksey Yefremov: And then as you move forward through the year and generate more cash, obviously expecting another very strong year of cash conversion, understanding sort of the dual track of pursuing M&A as well as share repurchases, should we think about that sort of remaining proceeds from the divestiture to be sort of earmarked for M&A, but the sort of free cash flow generation from this year to sort of be ratably allocated to CapEx, to dividends, and to repurchases? Or is that not the right way to think about it?
Speaker #1: At the end of the year, given the cash that we spent on the ASR of 500 million. So as you mentioned, we will have a nice cash flow generation year in 2026.
Speaker #7: the Arun Please maybe downstream healthcare also , you know , speaking about that in different regions . So guess you're not seeing that robust outlook for healthcare .
Speaker #1: So we do expect our free cash flow conversion in '26 to be greater than 90%. In addition to that, we do have the proceeds that are coming in the door related to the Aramidge transaction.
Speaker #7: Is that correct
Speaker #7: Is that correct ?
Speaker #3: I mean , Correct . we the was behind us Destock in the first quarter of continue 2025 . normalized So across we inventory both those levels businesses
Speaker #3: I mean , Correct . we the was behind us Destock in the first quarter of continue 2025 . normalized So across we inventory
Speaker #1: As Lori kind of mentioned earlier, I would say in terms of capital allocation, we view that in the eyes of a shareholder in terms of what creates the most amount of value.
Speaker #7: a that being the case .
Speaker #1: So I wouldn't say there's a specific amount earmarked towards an M&A deal or a specific amount earmarked towards share repurchases. We'll continue to look at both.
Antonella Franzen: Yeah. So let me start with your first question. So typically, on the balance sheet, we would carry around $1 billion in cash. So we were a little bit below that at the end of the year given the cash that we spent on the ASR of $500 million. So as you mentioned, we will have a nice cash flow generation year in 2026. So we do expect our free cash flow conversion in 2026 to be greater than 90%. In addition to that, we do have the proceeds that are coming in the door related to the arrow image transaction. As Lori kind of mentioned earlier, I would say in terms of capital allocation, we view that in the eyes of a shareholder in terms of what creates the most amount of value.
Antonella Franzen: Yeah. So let me start with your first question. So typically, on the balance sheet, we would carry around $1 billion in cash. So we were a little bit below that at the end of the year given the cash that we spent on the ASR of $500 million. So as you mentioned, we will have a nice cash flow generation year in 2026. So we do expect our free cash flow conversion in 2026 to be greater than 90%. In addition to that, we do have the proceeds that are coming in the door related to the arrow image transaction. As Lori kind of mentioned earlier, I would say in terms of capital allocation, we view that in the eyes of a shareholder in terms of what creates the most amount of value.
Speaker #7: I missed this , Sorry if but
Speaker #7: M&A maybe across those If there are both of opportunities . of in that and where trajectory ? you Thanks you are kind
Speaker #1: We do have a pipeline of some M&A that we are looking at. Ultimately, you'll see if they come true fruition or not. But clearly, we will continue to deploy capital in the best interest of our shareholders as we move forward.
Speaker #1: We do have a pipeline of some M&A that we are looking at. Ultimately, you'll see if they come true fruition or not. But clearly, we will continue to deploy capital in the best interest of our shareholders as we move
Speaker #3: Yeah , sure . We
Speaker #3: continue to scout opportunities in
Speaker #3: continue to scout opportunities in spaces . businesses ? I would both pipeline is more on the robust healthcare to see side , just say the
Speaker #3: given the fragmentation that exists as well as Just the a little valuations are lower in that we area . your So continue to at given that both look hard players are busy .
Speaker #8: Thank you very
Speaker #8: much. You are next, question comes from the
Speaker #3: on the med device looking side We've we've to , similar
Speaker #4: line of Patrick Cunningham with Citi. Please go ahead.
Speaker #3: did with spectrum . And Donatella . continue to the build suite of offerings to So we our total customers building out a , really our mention relationships with viewing a solutions partner .
Speaker #5: Hi. This is Rachel Leo for Patrick. So I think in an earlier response you mentioned all regions should be up organic sales-wise. This year and in one queue.
Antonella Franzen: So I wouldn't say there's a specific amount earmarked towards an M&A deal or a specific amount earmarked towards share repurchases. We'll continue to look at both. We do have a pipeline of some M&A that we are looking at. Ultimately, you'll see if they come to fruition or not. But clearly, we will continue to deploy capital in the best interest of our shareholders as we move forward.
Antonella Franzen: So I wouldn't say there's a specific amount earmarked towards an M&A deal or a specific amount earmarked towards share repurchases. We'll continue to look at both. We do have a pipeline of some M&A that we are looking at. Ultimately, you'll see if they come to fruition or not. But clearly, we will continue to deploy capital in the best interest of our shareholders as we move forward.
Speaker #3: an application And to look
Speaker #5: So with recent PMIs trending more favorably, can you just provide more color on that response and maybe what you're seeing in terms of organic sales growth versus
Speaker #7: lot Thanks a
Speaker #7: lot Thanks a
Speaker #7: lot Thanks a
Speaker #1: Ladies and to . an gentlemen , I
Speaker #1: the will now
Speaker #5: GDP? You kind
Speaker #1: for comments
Speaker #1: for comments
Speaker #1: of dropped off at the end, so I couldn't hear which quarter you were referencing. But to the earlier comment, we do expect to see organic growth across all regions both in the first quarter and in the full year.
Speaker #3: everyone for of our a and
Speaker #3: everyone for of our gentlemen ,
Speaker #3: call for your
Chris Parkinson: Thank you very much.
Chris Parkinson: Thank you very much.
Speaker #3: a copy transcript But we will be
Operator: Your next question comes from the line of Patrick Cunningham with Citi. Please go ahead.
Operator: Your next question comes from the line of Patrick Cunningham with Citi. Please go ahead.
Speaker #3: on DuPont's . investor website . This concludes them call today's
Speaker #3: on DuPont's . investor website . This
Speaker #1: and your thank you for
Patrick Cunningham: Hi. This is Rachel Leoff for Patrick. So I think in an earlier response, you mentioned all regions should be up organic sales-wise this year and in Q1. So with recent PMIs trending more favorably, can you just provide more color on that response and maybe what you're seeing in terms of organic sales growth versus GDP?
Patrick Cunningham: Hi. This is Rachel Leoff for Patrick. So I think in an earlier response, you mentioned all regions should be up organic sales-wise this year and in Q1. So with recent PMIs trending more favorably, can you just provide more color on that response and maybe what you're seeing in terms of organic sales growth versus GDP?
Speaker #1: The improvement, kind of the first quarter being at 2% organic and the full year being at 3%. Most of that improvement is going to be in North America just based on the improvement that we expect to see on the shelter side.
Speaker #1: now
Speaker #1: So with shelter starting kind of slightly negative and then trending to even on the full year, you'll see that lift given the majority of the end markets in shelter are in North America.
Speaker #5: Got it. Thank you. And can I just ask what sort of level of visibility you have for order books across the healthcare portfolio in
Lori Koch: You kind of dropped off at the end, so I couldn't hear which quarter you were referencing. But to the earlier comment, we do expect to see organic growth across all regions both in the first quarter and in the full year. The improvement, kind of the first quarter being at 2% organic and the full year being at 3%, most of that improvement is going to be in North America just based on the improvement that we expect to see on the shelter side. So with shelter starting kind of slightly negative and then trending to even on the full year, you'll see that lift given the majority of the end market in shelter are in North America.
Lori Koch: You kind of dropped off at the end, so I couldn't hear which quarter you were referencing. But to the earlier comment, we do expect to see organic growth across all regions both in the first quarter and in the full year. The improvement, kind of the first quarter being at 2% organic and the full year being at 3%, most of that improvement is going to be in North America just based on the improvement that we expect to see on the shelter side. So with shelter starting kind of slightly negative and then trending to even on the full year, you'll see that lift given the majority of the end market in shelter are in North America.
Speaker #5: general? Yeah.
Speaker #1: I'll answer the question broadly for the company because it's a bit about we don't have a long lead time, put it that way. So we start each month with about 80% of the orders on the books.
Speaker #1: And we start each quarter with about 50% of the orders on the books. And then we build from there. Shelter is definitely the shortest cycle.
Speaker #1: On the longest cycle, I would say it would be our aerospace businesses and our water business would be on the longer end. And everyone else would kind of fall in between.
Patrick Cunningham: Got it. Thank you. And can I just ask what sort of level of visibility you have for order books across the healthcare portfolio in general?
Patrick Cunningham: Got it. Thank you. And can I just ask what sort of level of visibility you have for order books across the healthcare portfolio in general?
Speaker #5: Great. Thank you so much for the
Speaker #5: color. You are next, question comes from the line of
Speaker #4: Michael Sison with Wells Fargo. Please go ahead.
Lori Koch: Yeah. I'll answer the question broadly for the company because it's a bit about we don't have a long lead time, put it that way. So we start each month with about 80% of the orders on the books, and we start each quarter with about 50% of the orders on the books, and then we build from there. Shelter is definitely the shortest cycle. On the longest cycle, I would say it would be our aerospace businesses and our water business would be on the longer end, and everyone else would kind of fall in between.
Lori Koch: Yeah. I'll answer the question broadly for the company because it's a bit about we don't have a long lead time, put it that way. So we start each month with about 80% of the orders on the books, and we start each quarter with about 50% of the orders on the books, and then we build from there. Shelter is definitely the shortest cycle. On the longest cycle, I would say it would be our aerospace businesses and our water business would be on the longer end, and everyone else would kind of fall in between.
Speaker #5: Hey. Good morning. Next quarter and outlook. Just a quick one on US construction. Your outlook is flat. Any differences between non-REZ, REZ, and repair and model in that outlook?
Speaker #1: Yes. So as we look into 2026, our expectations would be that non-REZ would be up in the low single-digit range as well as repair and model.
Speaker #1: And that would be offset by a low to mid-single-digit decline on the REZ side of the
Patrick Cunningham: Great. Thank you so much for the color.
Patrick Cunningham: Great. Thank you so much for the color.
Speaker #1: business. Got
Speaker #5: it. And then quick follow-up. Your outlook and your results, particularly the organic growth continues to look a lot better than the chemical folks. Are you still looking to is it still possible to change your industry designation?
Operator: Your next question comes from the line of Michael Sison with Wells Fargo. Please go ahead.
Operator: Your next question comes from the line of Michael Sison with Wells Fargo. Please go ahead.
Michael Sison: Hey. Good morning. Next quarter and outlook. Just a quick one on US construction. Your outlook is flat. Any differences between non-REZ, REZ, and repair and remodel in that outlook?
Michael Sison: Hey. Good morning. Next quarter and outlook. Just a quick one on US construction. Your outlook is flat. Any differences between non-REZ, REZ, and repair and remodel in that outlook?
Speaker #5: And how does that work given I think your results have been much more steady than my group?
Antonella Franzen: Yes. So as we look into 2026, our expectations would be that non-REZ would be up in the low single digit range as well as repair and remodel, and that would be offset by a low to mid-single digit decline on the REZI side of the business.
Antonella Franzen: Yes. So as we look into 2026, our expectations would be that non-REZ would be up in the low single digit range as well as repair and remodel, and that would be offset by a low to mid-single digit decline on the REZI side of the business.
Speaker #1: Yeah. So when you take a look, clearly, at the portfolio, our portfolio is not a chemical company portfolio. And to your point, when you look at our performance, our performance is not mirroring that of a specialty chemical company either.
Speaker #1: So I would tell you we continue to make some progress in terms of the GICS classification. But what I would tell you is our first priority is just to continue to execute.
Michael Sison: Got it. Then, quick follow-up. Your outlook and your results, particularly the organic growth, continues to look a lot better than the chemical folks. Are you still looking to, is it still possible to change your industry designation, and how does that work given I think your results have been much more steady than my group?
Michael Sison: Got it. Then, quick follow-up. Your outlook and your results, particularly the organic growth, continues to look a lot better than the chemical folks. Are you still looking to, is it still possible to change your industry designation, and how does that work given I think your results have been much more steady than my group?
Speaker #1: But we will continue to move forward in terms of trying to get the GICS code changed to more appropriately reflect the portfolio that we have today.
Speaker #5: Thank you.
Speaker #4: Our last question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.
Antonella Franzen: Yeah. So when you take a look clearly at the portfolio, our portfolio is not a chemical company portfolio. And to your point, when you look at our performance, our performance is not mirroring that of a specialty chemical company either. So I would tell you we continue to make some progress in terms of the GICS classification. But what I would tell you is our first priority is just to continue to execute. But we will continue to move forward in terms of trying to get the GICS code changed to more appropriately reflect the portfolio that we have today.
Antonella Franzen: Yeah. So when you take a look clearly at the portfolio, our portfolio is not a chemical company portfolio. And to your point, when you look at our performance, our performance is not mirroring that of a specialty chemical company either. So I would tell you we continue to make some progress in terms of the GICS classification. But what I would tell you is our first priority is just to continue to execute. But we will continue to move forward in terms of trying to get the GICS code changed to more appropriately reflect the portfolio that we have today.
Speaker #6: Great. Thanks for taking my question. I just wanted to, I guess, clarify on both the healthcare and water. So did you see any destocking there?
Speaker #6: We did see maybe one of your competitors within healthcare packaging reference some of that. And then similarly on water, maybe some of the downstream players are also speaking about that in different regions.
Speaker #6: So I guess you're not seeing that given your robust outlook for healthcare? Is that correct?
Michael Sison: Thank you.
Michael Sison: Thank you.
Operator: Our last question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.
Operator: Our last question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.
Speaker #1: Correct. Yeah. I mean, the destock was behind us in the first quarter of 2025. So we continue to see normalized inventory levels across both those businesses.
Arun Viswanathan: Great. Thanks for taking my question. I just wanted to, I guess, clarify on both healthcare and water. So did you see any destocking there? We did see maybe one of your competitors within healthcare packaging reference some of that. And then similarly, on water, maybe some of the downstream players are also speaking about that in different regions. So I guess you're not seeing that given your robust outlook for healthcare. Is that correct?
Arun Viswanathan: Great. Thanks for taking my question. I just wanted to, I guess, clarify on both healthcare and water. So did you see any destocking there? We did see maybe one of your competitors within healthcare packaging reference some of that. And then similarly, on water, maybe some of the downstream players are also speaking about that in different regions. So I guess you're not seeing that given your robust outlook for healthcare. Is that correct?
Speaker #6: Just given that being the case, sorry if I missed this, but did you also mention maybe M&A across both of those businesses if there are opportunities and where you are kind of in that trajectory?
Speaker #6: Thanks.
Speaker #1: Yeah. Sure. No, we continue to scout opportunities in both spaces. I would say the pipeline is more robust on the healthcare side just given the fragmentation that exists as well as the valuations are a little lower in that area.
Speaker #1: So we continue to look hard at both. We've been busy looking on the med device side similar to the acquisitions that we did with Spectrum and Donatel as we continue to build out a total suite of offerings to our customers.
Lori Koch: Correct. Yeah. I mean, the destock was behind us in Q1 2025. So we continue to see normalized inventory levels across both those businesses.
Lori Koch: Correct. Yeah. I mean, the destock was behind us in Q1 2025. So we continue to see normalized inventory levels across both those businesses.
Arun Viswanathan: Just given that being the case, sorry if I missed this, but did you also mention maybe M&A across both of those businesses if there are opportunities and where you are kind of in that trajectory? Thanks.
Arun Viswanathan: Just given that being the case, sorry if I missed this, but did you also mention maybe M&A across both of those businesses if there are opportunities and where you are kind of in that trajectory? Thanks.
Speaker #1: Really building our relationships with them and then viewing us as a solutions partner and an application development partner. But we continue to look.
Speaker #6: Thanks a
Speaker #6: lot. Ladies and
Lori Koch: Yeah. Sure. No, we continue to scout opportunities in both spaces. I would say the pipeline is more robust on the healthcare side just given the fragmentation that exists as well as the valuations are a little lower in that area. So we continue to look hard at both. We've been busy looking on the med device side similar to the acquisitions that we did with Spectrum and Donatelle as we continue to build out a total suite of offerings to our customers, really building our relationship with them and them viewing us as a solutions partner and an application development partner. But we continue to look.
Lori Koch: Yeah. Sure. No, we continue to scout opportunities in both spaces. I would say the pipeline is more robust on the healthcare side just given the fragmentation that exists as well as the valuations are a little lower in that area. So we continue to look hard at both. We've been busy looking on the med device side similar to the acquisitions that we did with Spectrum and Donatelle as we continue to build out a total suite of offerings to our customers, really building our relationship with them and them viewing us as a solutions partner and an application development partner. But we continue to look.
Speaker #4: gentlemen, I will now turn the conference back over to Anne Giancristoforo for closing
Speaker #4: comments. Great.
Speaker #1: Thank you, everyone, for joining our call. For your reference, a copy of our transcript will be posted on DuPont's investor website. This concludes today's call.
Michael Sison: Thanks a lot.
Michael Sison: Thanks a lot.
Operator: Ladies and gentlemen, I will now turn the conference back over to Anne Giancristofaro for closing comments.
Operator: Ladies and gentlemen, I will now turn the conference back over to Anne Giancristofaro for closing comments.
Ann Giancristofaro: Great. Thank you, everyone, for joining our call. For your reference, a copy of our transcript will be posted on DuPont's investor website. This concludes today's call.
Ann Giancristofaro: Great. Thank you, everyone, for joining our call. For your reference, a copy of our transcript will be posted on DuPont's investor website. This concludes today's call.
Operator: Ladies and gentlemen, thank you for your participation, and you may now disconnect.
Operator: Ladies and gentlemen, thank you for your participation, and you may now disconnect.
