Q1 2026 Ingersoll Rand Inc Earnings Call

April 29, 2026

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. I would now like to turn the conference over to Matthew Fort, Vice President, Investor Relations. You may begin.

Speaker #1: Illinois. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker #1: I would now like to turn the conference over to Matthew Fort, Vice President, Investor Relations. You may begin.

Speaker #2: Thank you. And welcome to the Ingersoll Rand 2026 first-quarter earnings call. I'm Matthew Fort, Vice President of Investor Relations. And joining me this morning are Vicente Reynal, Chairman and CEO, and Vic Kini, Chief Financial Officer.

Matthew Fort: Thank you. Welcome to the Ingersoll Rand 2026 Q1 Earnings Call. I'm Matthew Fort, Vice President of Investor Relations. Joining me this morning are Vicente Reynal, Chairman and CEO, and Vikram Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday afternoon. We will reference these during the call. Both are available on the investor relations section of our website. In addition, a replay of this conference will be available later today. Before we start, I wanna remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide 2 for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures.

Matthew Fort: Thank you. Welcome to the Ingersoll Rand 2026 Q1 Earnings Call. I'm Matthew Fort, Vice President of Investor Relations. Joining me this morning are Vicente Reynal, Chairman and CEO, and Vik Kini, Chief Financial Officer. We issued our earnings release and presentation yesterday afternoon. We will reference these during the call. Both are available on the investor relations section of our website. In addition, a replay of this conference will be available later today. Before we start, I wanna remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide two for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures.

Speaker #2: We issued our earnings release and presentation yesterday afternoon, and we will reference these during the call. Both are available on the Investor Relations section of our website.

Speaker #2: In addition, a replay of this conference will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward-looking in nature and are subject to the risks and uncertainties discussed in our previous SEC filings.

Speaker #2: Which you should read in conjunction with the information provided on this call. Please review the forward-looking statements on slide 2 for more details. In addition, in today's remarks, we will refer to certain non-GAAP financial measures.

Speaker #2: You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release.

Matthew Fort: You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website. On today's call, we will review our company and segment financial highlights and provide an update to our full year 2026 guidance. For today's Q&A session, we ask that each caller keep to 1 question and 1 follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Matthew Fort: You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP in our slide presentation and in our earnings release, both of which are available on the investor relations section of our website. On today's call, we will review our company and segment financial highlights and provide an update to our full year 2026 guidance. For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Speaker #2: Both of which are available on the Investor Relations section of our website. On today's call, we will review our company and segment financial highlights and provide an update to our full year 2026 guidance.

Speaker #2: For today's Q&A session, we ask that each caller keep to one question and one follow-up to allow time for other participants. At this time, I will turn the call over to Vicente.

Speaker #3: Thanks, Matthew. Good morning, everyone. And thank you for joining us today. Beginning on slide 3, the first quarter represented a solid start to 2026, especially given the continued complexity of the global operating landscape in the markets where we play.

Vicente Reynal: Thanks, Matthew. Good morning, everyone, and thank you for joining us today. Beginning on slide 3, Q1 represented a solid start to 2026, especially given the continued complexity of the global operating landscape in the markets where we play. Adjusted EPS grew high single digits, with revenue and adjusted EBITDA finishing in line with expectations. This performance reflects the durability of our portfolio and the consistency of our execution. Conditions remain mixed, but we're seeing continued improvements across several end markets and in short cycle activity. Our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, focused on differentiated technology and services that strengthen our portfolio and enhances our organic growth profile.

Vicente Reynal: Thanks, Matthew. Good morning, everyone, and thank you for joining us today. Beginning on slide three, Q1 represented a solid start to 2026, especially given the continued complexity of the global operating landscape in the markets where we play. Adjusted EPS grew high single digits, with revenue and adjusted EBITDA finishing in line with expectations. This performance reflects the durability of our portfolio and the consistency of our execution. Conditions remain mixed, but we're seeing continued improvements across several end markets and in short cycle activity. Our disciplined approach to M&A continues to be a key driver of our success. Our acquisition pipeline remains robust, focused on differentiated technology and services that strengthen our portfolio and enhances our organic growth profile.

Speaker #3: Adjusted EPS grew high single digits. With revenue and adjusted EBITDA finishing in line with expectations. This performance reflects the durability of our portfolio, and the consistency of our execution.

Speaker #3: Conditions remain mixed, but we're seeing continued improvements across several end markets and in short-cycle activity. Our discipline approach to M&A continues to be a key driver of our success.

Speaker #3: Our acquisition pipeline remains robust, focused on differentiated technologies and services that strengthen our portfolio and enhance our organic growth profile. Finally, IRX remains a key differentiator, allowing us to remain agile and stay focused on what we can control including operational execution, discipline pricing, and capital allocation.

Vicente Reynal: Finally, IRX remains a key differentiator, allowing us to remain agile and stay focused on what we can control, including operational execution, disciplined pricing, and capital allocation. On slide 4, our inorganic growth strategy remains a core element of our overall strategy, and the pipeline remains robust. This is supported by our value creation flywheel, which is the core engine of our performance, generating durable free cash flow, which further enables consistent high return capital deployment. We're pleased to announce the signing of Fox SRL, which is expected to close at the end of this month. As a leading manufacturer of hydropneumatic accumulators and pulsation dampeners, Fox enhances our pump technology by utilizing dampeners to absorb pressure pulses. This protects downstream pipes and equipment, helping customers reduce downtime and maintenance costs, and thereby increasing the return on investment offered by our solutions.

Vicente Reynal: Finally, IRX remains a key differentiator, allowing us to remain agile and stay focused on what we can control, including operational execution, disciplined pricing, and capital allocation. On slide four, our inorganic growth strategy remains a core element of our overall strategy, and the pipeline remains robust. This is supported by our value creation flywheel, which is the core engine of our performance, generating durable free cash flow, which further enables consistent high return capital deployment. We're pleased to announce the signing of Fox SRL, which is expected to close at the end of this month. As a leading manufacturer of hydropneumatic accumulators and pulsation dampeners, Fox enhances our pump technology by utilizing dampeners to absorb pressure pulses. This protects downstream pipes and equipment, helping customers reduce downtime and maintenance costs, and thereby increasing the return on investment offered by our solutions.

Speaker #3: On slide 4, our inorganic growth strategy remains a core element of our overall strategy and the pipeline remains robust. This is supported by our value creation flywheel, which is a core engine of our performance.

Speaker #3: Generating durable free cash flow, which further enables consistent high return capital deployment. We're pleased to announce the signing of Fox SRL, which is expected to close at the end of this month.

Speaker #3: As a leading manufacturer of hydro-pneumatic accumulators and pulsation dampeners, Fox enhances our pump technology by utilizing dampeners to absorb pressure pulses. This protects downstream pipes and equipment, helping customers reduce downtime and maintenance costs and thereby increasing the return on investment offered by our solutions.

Speaker #3: Today, we have over 200 companies in our funnel. With 10 transactions currently at the LOI stage. More than 90% of these opportunities remain internally sourced.

Vicente Reynal: Today, we have over 200 companies in our funnel, with 10 transactions currently at the LOI stage. More than 90% of these opportunities remain internally sourced, which reflect the strength of our operating model and deep industry relationships. We continue to expect 400 to 500 basis points of annualized inorganic revenue to be acquired in 2026, and we have a few additional deals expected to close in the coming months. Our approach to M&A remains unchanged, which is disciplined valuation, strategic fit, and a focus on bolt-on acquisitions that strengthen our core technologies or expand into attractive adjacencies. Now I will hand it over to Vik, who will share an update on our financial performance for Q1.

Speaker #3: Which reflects the strength of our operating model and deep industry relationships. We continue to expect 400 to 500 basis points of annualized inorganic revenue to be acquired in 2026.

Speaker #3: And we have a few additional deals expected to close in the coming months. Our approach to M&A remains unchanged, which is discipline valuation, strategic fit, and a focus on bolt-on acquisitions that strengthen our core technologies or expand into attractive adjacencies.

Speaker #3: Now, I will hand it over to Vic, who will share an update on our financial performance for the first quarter.

Speaker #2: Thanks, Vicente. Starting on slide 5, orders finished up 5% year over year, resulting in a book-to-bill of $1.07, which is consistent with normal seasonality.

Vikram Kini: Thanks, Vicente. Starting on slide 5, orders finished up 5% year over year, resulting in a book-to-bill of 1.07, which is consistent with normal seasonality. Worth noting, we did see a delay in orders of approximately $40 million, which was driven by a few long cycle projects. This delay was primarily driven by the conflict in the Middle East. We believe that the impact is transitory, and we expect these orders to be recovered in the balance of 2026. As a matter of fact, we have already recovered approximately a third of these orders in the month of April. Excluding that delay, organic orders would have finished approximately flat year over year. Total revenue grew 8% year over year, finishing in line with expectations.

Vik Kini: Thanks, Vicente. Starting on slide five, orders finished up 5% year-over-year, resulting in a book-to-bill of 1.07, which is consistent with normal seasonality. Worth noting, we did see a delay in orders of approximately $40 million, which was driven by a few long cycle projects. This delay was primarily driven by the conflict in the Middle East. We believe that the impact is transitory, and we expect these orders to be recovered in the balance of 2026. As a matter of fact, we have already recovered approximately a third of these orders in the month of April. Excluding that delay, organic orders would have finished approximately flat year over year. Total revenue grew 8% year-over-year, finishing in line with expectations.

Speaker #2: Worth noting, we did see a delay in orders of approximately $40 million which was driven by a few long cycle projects. This delay was primarily driven by the conflict in the Middle East.

Speaker #2: We believe that the impact is transitory and we expect these orders to be recovered in the balance of 2026. As a matter of fact, we have already recovered approximately a third of these orders in the month of April.

Speaker #2: Excluding that delay, organic orders would have finished approximately flat year over year. Total revenue grew 8% year over year, finishing in line with expectations.

Speaker #2: For the first quarter, adjusted EBITDA also finished in line with expectations at $469 million with an adjusted EBITDA margin of 25.4%. The year-over-year margin pressure was primarily driven by the flow-through on organic volume declines, the dilutive impact from tariffs, and continued strategic investments for commercial growth.

Matthew Fort: For Q1, adjusted EBITDA also finished in line with expectations at $469 million, with an adjusted EBITDA margin of 25.4%. The year-over-year margin pressure was primarily driven by the flow-through on organic volume declines, the dilutive impact from tariffs, and continued strategic investments for commercial growth. Corporate costs were $38 million. Our Q1 adjusted tax rate was 19.8%, and adjusted earnings per share was $0.77 for the quarter, up 7% year over year. On the next slide, free cash flow for Q1 was $163 million, finishing largely in line with expectations and normal working capital seasonality. With nearly $4 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high return opportunities.

Vik Kini: For Q1, adjusted EBITDA also finished in line with expectations at $469 million, with an adjusted EBITDA margin of 25.4%. The year-over-year margin pressure was primarily driven by the flow-through on organic volume declines, the dilutive impact from tariffs, and continued strategic investments for commercial growth. Corporate costs were $38 million. Our Q1 adjusted tax rate was 19.8%, and adjusted earnings per share was $0.77 for the quarter, up 7% year-over-year. On the next slide, free cash flow for Q1 was $163 million, finishing largely in line with expectations and normal working capital seasonality. With nearly $4 billion in total liquidity, our balance sheet remains a strategic asset, enabling continued investment in high return opportunities.

Speaker #2: Corporate costs were $38 million, our Q1 adjusted tax rate was 19.8%, and adjusted earnings per share was 77 cents for the quarter, up 7% year over year.

Speaker #2: On the next slide, free cash flow for the first quarter was $163 million, finishing largely in line with expectations and normal working capital seasonality.

Speaker #2: With nearly $4 billion in total liquidity, our balance sheet remains a strategic asset enabling continued investment in high Our leverage remains well below two times providing us with flexibility to continue to deploy capital effectively throughout 2026 and beyond.

Matthew Fort: Our leverage remains well below 2 times, providing us with flexibility to continue to deploy capital effectively throughout 2026 and beyond. Our capital allocation strategy remains unchanged, which prioritizes M&A, while also maintaining our commitment to share repurchases and quarterly dividends. Now I'll hand the call over to Vicente, who will review our segment results as well as full year guidance.

Vik Kini: Our leverage remains well below 2x, providing us with flexibility to continue to deploy capital effectively throughout 2026 and beyond. Our capital allocation strategy remains unchanged, which prioritizes M&A, while also maintaining our commitment to share repurchases and quarterly dividends. Now I'll hand the call over to Vicente, who will review our segment results as well as full year guidance.

Speaker #2: Our capital allocation strategy remains unchanged which prioritizes M&A while also maintaining our commitment to share repurchases and quarterly dividends. Now, I'll hand the call over to Vicente who will review our segment results as well as full-year guidance.

Speaker #3: Thank you, Vic. On slide 7, IPS orders finished up 5% for the first quarter. Book-to-bill for the quarter was 1.08 times. Organic orders for the quarter were down 3%.

Vicente Reynal: Thank you, Vik. On slide 7, ITS orders finished up 5% for Q1. Book-to-bill for the quarter was 1.08 times. Organic orders for the quarter were down 3%. Excluding the impact of delayed orders, which Vik mentioned, organic orders finished approximately flat. Important to note that on a 2-year stack, organic orders are up 1%. On a total segment basis, revenue grew 7% year over year. Adjusted EBITDA margin finished at 26.7%, which was down year over year, largely driven by the flow-through on organic volume declines, the dilutive impact of Fox, and continued commercial investments for growth. On a reported basis, every ITS product line grew orders except the power tools and lifting. On an organic basis, let me provide some additional color on orders by product line.

Vicente Reynal: Thank you, Vik. On slide seven, ITS orders finished up 5% for Q1. Book-to-bill for the quarter was 1.08x. Organic orders for the quarter were down 3%. Excluding the impact of delayed orders, which Vik mentioned, organic orders finished approximately flat. Important to note that on a two-year stack, organic orders are up 1%. On a total segment basis, revenue grew 7% year-over-year. Adjusted EBITDA margin finished at 26.7%, which was down year-over-year, largely driven by the flow-through on organic volume declines, the dilutive impact of Fox, and continued commercial investments for growth. On a reported basis, every ITS product line grew orders except the power tools and lifting. On an organic basis, let me provide some additional color on orders by product line.

Speaker #3: Excluding the impact of delayed orders which Vic mentioned, organic orders finished approximately flat. Important to note that on a two-year stack, organic orders are up 1%.

Speaker #3: On a total segment basis, revenue grew 7% year over year. Adjusted EBITDA margin finished at 26.7%. Which was down year over year, largely driven by the flow-through on organic volume declines, the dilutive impact of tariffs, and continued commercial investments for growth.

Speaker #3: On a reported basis, every IPS product line grew orders except the power tools and lifting. On an organic basis, let me provide some additional color on orders by product line.

Speaker #3: Compressors were down year over year, driven by the previously noted timing on the large projects. The blower and vacuum business continues to perform well and was up year over year.

Vicente Reynal: Compressors were down year over year, driven by the previously noted timing on the large projects. The blower and vacuum business continues to perform well and was up year over year. Power tools and lifting was down year over year, driven by the lifting business. We remain encouraged by the core tool business growing organically mid-single digits, driven by launches in new product technologies as well as growth in the short cycle momentum that we're seeing. From a regional perspective, here are a few highlights on organic orders. We saw stabilized compressor activity in the US, and we continue to see encouraging order trends across many of our compressor categories. Additionally, China continues to outperform the underlying market, delivering another quarter of positive organic order growth.

Vicente Reynal: Compressors were down year-over-year, driven by the previously noted timing on the large projects. The blower and vacuum business continues to perform well and was up year over year. Power tools and lifting was down year over year, driven by the lifting business. We remain encouraged by the core tool business growing organically mid-single digits, driven by launches in new product technologies as well as growth in the short cycle momentum that we're seeing. From a regional perspective, here are a few highlights on organic orders. We saw stabilized compressor activity in the US, and we continue to see encouraging order trends across many of our compressor categories. Additionally, China continues to outperform the underlying market, delivering another quarter of positive organic order growth.

Speaker #3: Power tools and lifting was down year over year, driven by the lifting business. And we remain encouraged by the core tool business growing organically mid-single digits driven by launches in new product technologies, as well as growth in the short cycle momentum that we're seeing.

Speaker #3: From a regional perspective, here are a few highlights on organic orders. We saw stabilized compressor activity in the US and we continue to see encouraging order trends across many of our compressor categories.

Speaker #3: Additionally, China continues to outperform the underlying market. Delivering another quarter of positive organic order growth. In our innovation in action section, we're excited to share a large win in carbon capture.

Vicente Reynal: In our innovation in action section, we're excited to share a large win in carbon capture, where Ingersoll Rand was selected to provide a combined vacuum and blower application for an innovative carbon capture technology which utilizes a proprietary gas separation process. This technology is applicable across a wide range of applications, including transportation like rail, power generation for data centers, as well as industrial engines. Although this innovation is still in its early stages, we're encouraged by the positive outcome demonstrated through the integration of our connected technologies. Turning to slide 8, Q1 orders in PST were up 6% year over year with a book-to-bill of 1.04 times. Organic orders saw a modest increase of 1%. Our life science business maintained robust growth with a double-digit increase in orders, while the remainder of PST business was impacted by the timing of some large projects.

Speaker #3: Where Ingersoll Rand was selected to provide a combined vacuum and blower application, for an innovative carbon capture technology which utilizes a proprietary gas separation process.

Speaker #3: This technology is applicable across a wide range of applications including transportation like rail, power generation for data centers, as well as industrial engines. Although these innovations are still in its early stages, we're encouraged by the positive outcome demonstrated through the integration of our connected technologies.

Speaker #3: Turning to slide 8, Q1 orders in PST were up 6% year over year, with a book-to-bill of 1.04 times. Organic orders saw a modest increase of 1%.

Speaker #3: Our life science business maintained robust growth, with a double-digit increase in orders. While the remainder of PST business was impacted by the timing of some large projects.

Speaker #3: In precision technology business, the short cycle book and ship business continued to see organic order growth. First quarter organic revenue finished up 4%. With both precision technologies and life science technologies businesses delivering positive organic revenue growth in the quarter.

Vicente Reynal: In Precision and Science Technologies business, the short cycle book-and-ship business continued to see organic order growth. Q1 organic revenue finished up 4%, with both Precision and Science Technologies and Life Science Technologies businesses delivering positive organic revenue growth in the quarter. PST delivered adjusted EBITDA of $122 million, which was up 15% year-over-year. Adjusted EBITDA margins improved 120 basis points year-over-year, reflecting continued strong operational execution. For our PST innovation in action, we are highlighting a great win for our Life Science business, which integrates core ITS product technologies into ILC Dover's end-to-end bulk powder system solution. ILC Dover developed a comprehensive, fully integrated bulk powder system, which includes hardware, containment, and mixing in collaboration with our own vacuum technology for a leading pharmaceutical manufacturer.

Speaker #3: PST delivered adjusted EBITDA of $122 million which was up 15% year over year. Adjusted EBITDA margins improved 120 basis points year over year, reflecting continued strong operational execution.

Speaker #3: For our PST innovation in action, we're highlighting a great win for our life science business which integrates core IPS product technologies into ILC dovers end-to-end bulk powder system solutions.

Speaker #3: ILC dover developed a comprehensive fully integrated bulk powder system which includes hardware, containment, and mixing in collaboration with our own vacuum technology for a leading pharmaceutical manufacturer.

Speaker #3: This end-to-end design assembly and installation utilized both ILC dover powder solution as well as our Ingersoll Rand Elmo Richley vacuum pumps for powder conveyance.

Vicente Reynal: This end-to-end design, assembly, and installation utilized both ILC Dover powder solution as well as our Ingersoll Rand Elmo Rietschle vacuum pumps for powder conveyance. As we move to slide 9, we are reaffirming our full year guidance for 2026. Total company revenue is expected to grow between 2.5% and 4.5%, driven by organic growth of 1% at the midpoint, growth from M&A of approximately 2%, which includes the carryover impact from all transactions completed, as well as the recently announced signed transaction of Fox. Finally, we expect FX to be a tailwind of approximately 0.5%. Total adjusted EBITDA for the company is expected to be in the range of $2.13 billion and $2.19 billion.

Speaker #3: As we move to slide 9, we are reaffirming our full-year guidance for 2026. Total company revenue is expected to grow between 2.5 and 4.5 percent.

Speaker #3: Driven by organic growth of 1% at the midpoint, growth from M&A of approximately 2% which includes the carryover impact from all transactions completed, as well as the recently announced signed transaction of funds.

Speaker #3: And finally, we expect effects to be a tailwind of approximately half a percent. Total adjusted EBITDA for the company is expected to be in the range of 2.13 billion dollars and 2.19 billion dollars.

Speaker #3: Corporate costs are planned at 170 million dollars and are expected to be incurred evenly per quarter throughout the remainder of the year. Adjusted EPS is projected to fall within the range of $3.45 and $3.57 which is approximately 5% growth at the midpoint.

Vicente Reynal: Corporate costs are planned at $170 million and are expected to be incurred evenly per quarter throughout the remainder of the year. Adjusted EPS is projected to fall within the range of $3.45 and $3.57, which is approximately 5% growth at the midpoint. We anticipate our adjusted tax rate to be roughly 23%. Net interest expense to be about $230 million, and share count to be approximately 394 million. Free cash flow to adjusted net income conversion is expected to be approximately 95%. The pacing of revenue, adjusted EBITDA, and adjusted EPS is expected to be consistent with what we have seen in prior years as outlined on the table. We continue to monitor the changes in tariffs carefully, including the recent changes in Section 232 tariffs.

Speaker #3: We anticipate our adjusted tax rate to be roughly 23%. Net interest expense to be about $230 million and share count to be approximately $394 million.

Speaker #3: Free cash flow to adjusted net income conversion is expected to be approximately adjusted EBITDA and adjusted EPS is expected to be consistent with what we have seen in prior years as outlined on the table.

Speaker #3: We continue to monitor the changes in tariffs carefully including the recent changes in Section 232 tariffs. We remain nimble and continue to pivot adjusting our mitigation actions to best minimize the effect of tariffs as well as inflation.

Speaker #1: With interest expense to be about $230 million. And share count to be approximately 394 million. Free cash flow to adjusted net income conversion is expected to be approximately 95%.

Vicente Reynal: We remain nimble and continue to pivot, adjusting our mitigation actions to best minimize the effect of tariffs as well as inflation. As a result, we do not currently expect any net tariff and inflation impact to our full-year guidance. Additionally, as I mentioned earlier in the call, most deferred orders from the Middle East are tied to long-cycle projects. We anticipate order recovery throughout the year and with strong execution from the team, expect no impact on full-year revenue or adjusted EBITDA at this time. Finally, on slide 10, as we conclude this segment of the call, I believe our performance in 2025, our solid start in 2026 with a book-to-bill above 1, and the improvement in the short-cycle business set us up well for continued success throughout the remainder of 2026. We remain agile to effectively navigate the complex global environment.

Speaker #1: table. We continue to We continue to monitor changes in monitor the changes in tariffs shares and. Including the carefully including the recent changes in recent changes to section Section 232 tariffs.

Speaker #3: And as a result, we do not currently expect any net tariff and inflation impact to our full-year guidance. Additionally, as I mentioned earlier in the call, most deferred orders from the Middle East are tied to long cycle projects.

Speaker #1: The phasing of revenue adjusted EBITDA and adjusted EPS is expected to be consistent with what we We have seen in prior have. As years as outlined on the outlined in the paper.

Speaker #1: And as a as. And as a result, we do result, we do not currently not currently expect any expect any net tariff and new shares inflation impacts inflation impact to our full-year for a full year guidance.

Vicente Reynal: We have seen in prior years, as outlined on the table. We continue to monitor the changes in tariffs carefully, including the recent changes in Section 232 tariffs. We remain nimble and continue to be both adjusting our mitigation actions to best minimize the effect of tariffs as well as inflation. As a result, we do not currently expect any net tariff and inflation impact for our full-year guidance. Additionally, as I mentioned earlier in the call, most of our orders from the Middle East are tied to long-cycle projects. We anticipate order recovery throughout the year and with strong execution from the team, expect no impact on full-year revenue or adjusted EBITDA at this time.

Speaker #3: We anticipate order recovery throughout the year and with strong execution from the team expect no impact on full-year revenue or adjusted EBITDA at this time.

Speaker #1: 286. We remain We remain nimble and continue to nimble and continue to be able to adjust pivot adjusting our in our mitigation and mitigation actions to best minimize the best minimize the impact on effect of tariffs as well shares as well as inflation.

Speaker #1: We product. We anticipate slow anticipate order recovery throughout the recovery throughout the year and year and with strong execution from with the coming section 115.

Speaker #3: Finally, on slide 10, as we conclude this segment of the call, I believe our performance in 2025 are solid start in 2026 with a book-to-bill above 1 and the improvement in the short cycle business setups up well for continued success throughout the remainder of 2026.

Speaker #1: the team expect no Expect no impact on impact on full-year revenue or full-year revenue or adjusted EBITDA on adjusted EBITDA at this this year.

Speaker #1: time. Finally, on slide Finally, Vicente, as we 10, as we conclude this segment of conclude this segment of the call, I the call, I believe our believe our performance in performance in 2025 are 2025 are solid start in solid start in 2026 with the 2026 and look to build upon book-to-bill above 1 them and improvement in and the improvement in the short cycle the short-term position business setups up setup.

Speaker #1: ahead. Additionally, as I Additionally, as I mentioned earlier in the mentioned earlier, most call, most deferred different orders from the Middle orders from the Middle East are tied to long East are tied to one type of cycle projects.

Speaker #3: We remain agile to effectively navigate the complex global environment. Through disciplined execution, ample liquidity, and a strong balance sheet, we continue to differentiate Ingersoll Rand as an investment.

Vicente Reynal: Through disciplined execution, ample liquidity, and a strong balance sheet, we continue to differentiate Ingersoll Rand as an investment. Our approach to capital allocation remains unchanged, leveraging our strong free cash flow to drive durable earnings growth and create long-term shareholder value. IRX remains the backbone of the organization, enabling operational execution. Finally, most important, I would like to thank our employees for the ongoing dedication and commitment to embracing our ownership mindset. Thank you for your help in delivering another strong quarter. With that, I will hand the call back to the operator and open it for Q&A.

Speaker #3: Our approach to capital allocation remains unchanged. Leveraging our strong free cash flow to drive durable earnings growth and create long-term shareholder value. IRX remains the backbone of the organization.

Vicente Reynal: Finally, on slide 10, as we conclude this segment of the call, I believe our performance in 2025, our solid start in 2026 with the book-to-bill above 1, and improvement in the short-cycle business setups bode well for continued success throughout the remainder of 2026. We remain agile to effectively navigate the complex global environment. Through disciplined execution, ample liquidity, and a strong balance sheet, we continue to differentiate Ingersoll Rand as an investment. Our approach to capital allocation remains unchanged, leveraging our strong free cash flow to drive durable earnings growth and create long-term shareholder value. IRX remain the backbone of the organization, enabling operational execution. Finally, and most important, I would like to thank our employees for the ongoing dedication and commitment to embracing our ownership mindset. Thank you for your help in delivering another strong quarter.

Speaker #1: Through environment. Through disciplined disciplined execution, ample execution, ample liquidity, and a liquidity, and a strong balance sheet, strong balance sheet, we continue to we continue to differentiate Ingersoll differentiate different brands and Rand as an investors.

Speaker #3: Enabling operational execution. Finally and most important, I would like to thank our employees for the ongoing dedication and commitment to embracing our ownership mindset.

Speaker #1: Up well with well for continued success throughout the these successes throughout the remainder of remainder of 2026. We 2026. We remain agile to remain agile to effectively effectively navigate the complex global navigate the complex global environment.

Speaker #1: value. IRX remains the IRX remains the backbone of the backbone of the organization, organization enabling enabling operational operational execution. Finally and execution. Finally, I'd like to mention I'd like most important, I would like to thank our to thank our joining.

Speaker #3: Thank you for help in delivering another strong quarter. And with that, I will hand the call back to the operator and open it for Q&A.

Speaker #1: employees for the ongoing dedication and Ongoing dedication and resilience to commitment to embracing our ownership embracing our ownership concept. mindset. Thank you for your Thank you for help in delivering our help in delivering another strong our orders.

Speaker #1: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. In the interest of time, please limit yourself to one question and rejoin the queue as needed. Thank you. Your first question comes from Michael Halloran with Baird. Your line is open.

Speaker #1: Our investment. Our approach to capital allocation approach. Capitalization remains remains unchanged. Leveraging unchanged. Leveraging our strong free our strong free cash flow to drive cash flow to drive durable earnings durable earnings growth and growth and create create long-term shareholder long-term order value.

Speaker #1: In the interest of time, please limit yourself to one question and rejoin the queue if needed. Thank you. Your first question comes from Mike Halloran with Baird.

Speaker #2: Thank

Speaker #1: Your line is open.

Speaker #2: In the interest of time, please limit interest of time, please limit yourself to one yourself to one question and rejoin question every 30 seconds needed.

Speaker #2: Hi. Good morning, everyone.

Michael Halloran: Hi, good morning, everyone.

Speaker #2: the queue if needed. Thank Thank you. you. Your first Your first question comes question comes from Mike from Mike Halloran with Halloran with Baird.

Speaker #3: Good morning, Mike.

Vicente Reynal: Good morning.

Michael Halloran: Maybe we could just start on what you're seeing on short cycle versus long cycle side of the business. On the short cycle side, are you seeing sequential acceleration? Are you seeing signs of improvement in demand normalizing? On the long cycle side, maybe just talk about what you're seeing outside of the Middle East, where you talked about the project delays, and if you're seeing delays more systemically, or what the customers are saying, or if there's any signs that that side of the business might be improving.

Speaker #2: Maybe we could just start on what you're seeing on short cycle versus long cycle side of the business. On the short cycle side, are you seeing sequential acceleration?

Vicente Reynal: With that, I will hand the call back to the operator and open it for Q&A.

Speaker #1: And with quarter. And with that, I will hand the that, we'll hand the call back to you, call back to the operator and open it for Freder, and we'll get to the Q&A.

Speaker #2: Your line is Baird. Your line is open.

Speaker #2: open.

Speaker #1: Q&A.

Speaker #3: Hi. Good morning, everyone. everyone.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. In the interest of time, please limit yourself to one question and rejoin the queue if needed. Thank you. Your first question comes from Michael Halloran with Baird. Your line is open.

Speaker #2: Thank you. If you would you. If you would like to ask a like to ask any questions, please press question, please press star one on your 01 for the telephone keypad.

Speaker #4: Mike.

Speaker #2: Are you seeing signs of improvement in demand normalizing? And then on the long cycle side, maybe just talk about what you're seeing outside of the Middle East where you talked about the project delays.

Speaker #3: Maybe we could just start on what you're seeing Start on interesting and short-term on short cycle versus long versus long-term side of the cycle side of the business.

Speaker #2: If telephone keypad. If you would like to withdraw your you would like to inquire, please question, simply press star one press 01 again. In the again.

Speaker #3: On business. On the short-term the short cycle side, are side, we seem to you seeing sequential have some acceleration and see acceleration? Are you seeing signs signs of of improvement in improvement and demand normalizing?

Speaker #2: And if you're seeing delays more systemically, or what the customers are saying, or if there's any signs that that side of the business might be improving.

Speaker #3: And then on normalizing. And then on the long-term the long cycle side, maybe just talk about what side, we talk about what we're seeing outside you're seeing outside of the Middle East where of the Middle East.

Michael Halloran: Hi, good morning, everyone. Wonder, maybe we could just start on what you're seeing on short cycle versus long cycle side of the business. On the short cycle side, are you seeing sequential acceleration? Are you seeing signs of improvement in demand normalizing? On the long cycle side, maybe just talk about what you're seeing outside of the Middle East, where you talked about the project delays, and if you're seeing delays more systemically, or what the customers are saying, or if there's any signs that that side of the business might be improving.

Mike Halloran: Hi, good morning, everyone. Wonder, maybe we could just start on what you're seeing on short cycle versus long cycle side of the business. On the short cycle side, are you seeing sequential acceleration? Are you seeing signs of improvement in demand normalizing? On the long cycle side, maybe just talk about what you're seeing outside of the Middle East, where you talked about the project delays, and if you're seeing delays more systemically, or what the customers are saying, or if there's any signs that that side of the business might be improving.

Speaker #3: Hi, good morning,

Speaker #4: Good morning, Good morning, Mike.

Speaker #3: Yeah, sure, Michael. So Mike, on the short cycle, looking specifically at the US, we're seeing signs of stabilization and improvement, which is definitely consistent with the ISM moving back to above 50 now for the past few quarters.

Vicente Reynal: Yeah, sure, Michael. So Mike, on the short cycle, looking specifically at the US, we're seeing signs of stabilization and improvement, which is definitely consistent with the ISM moving back to above 50 now for the past few quarters. I'll say that, you know, compressor activity in the US stabilized during the quarter as well, and we're seeing encouraging order trend across several compressor categories. In addition, the short-cycle businesses continue to improve. We mentioned on the prepared remarks, you know, the core tool business is growing organically at mid-single-digit rates. That's a good indicator for us to see on that short cycle.

Speaker #3: Hey, Mike.

Speaker #3: improving.

Speaker #4: Yeah, sure, Michael. Mike. So So Mike, on the short finally, on the short cycle, cycle, looking specifically at looking specifically at the US, the US, we're seeing signs seeing signs of of stabilization and stabilization and improvement, which is improvement, which is definitely consistent quite consistent with with the ISM moving back ISS and Matthew about 15 to above 50 now hours of the past for the past few quarters.

Speaker #3: I'll say that compressor activity in the US stabilized during the quarter as well. And we're seeing encouraging order trend across several compressor categories. In addition, the short cycle businesses continue to improve.

Speaker #3: We talked about the project you talked about the project delays. And if delays and reduced you're seeing delays more delays. Chemically, systemically, or what the customers are we're looking at options of saying your saying or if there's any company would need any time to add signs that that side of the business might be some of the business might be improving.

Speaker #3: We mentioned on the prepared remarks core tool business is growing organically, admitting digit rate. That's a good indicator for us to see on that short cycle.

Vicente Reynal: Sure, Michael. Michael, on the short cycle, looking specifically at the US, we're seeing signs of stabilization and improvement, which is definitely consistent with the ISM moving back to above 50 now for the past few quarters. I'll say that, you know, compressor activity in the US stabilized during the quarter as well, and we're seeing encouraging order trend across several compressor categories. In addition, the short-cycle businesses continue to improve. We mentioned on the prepared remarks, you know, core tool business is growing organically at mid-single-digit rates. That's a good indicator for us to see on that short cycle.

Speaker #4: Yeah, sure,

Speaker #4: And we're well. And we're facing very seeing encouraging order big order trend across trend across several compressor several different categories. In categories. In addition, addition, the short cycle businesses continue to the we improve.

Speaker #4: We mentioned on the fair, the prepared remarks margin for the two core tool business is growing organically—business from organically, at least—admitting digit rate.

Speaker #3: And then on the within the PST side, in the precision technology, we saw book and turn or short cycle business grow organically which also lines up really well with what we're seeing and actually continue improvement as we went through the quarter.

Vicente Reynal: On the within the PST side, in the precision technology, we saw book-to-bill or short-cycle business grow organically, which also lines up really well with what we're seeing and actually continuing improvement as we went through the quarter and here into April. In terms of the long cycle, you know, we categorize the longer cycle funnel activity as remaining stable, as well. As we think about continued rising energy prices in Europe, we see these as a potential longer-term tailwind, given the nature of our products and the value that we create for our customers in terms of delivering energy efficiency products and services.

Speaker #4: quarter. I'll say that the I'll say that compressor activity in comparison activity in the the US stabilized US stabilized in the summer as during the quarter as well.

Speaker #4: And then on the within the CSP the PST side, in the precision side, the technology, we technology, we saw book and saw a return turn or short cycle business grow of organically, which organically which also lines up also meant that it really well with what we're was seen and seeing and actually continue actually continued improvement as we improvement as we went through the went through the quarter.

Speaker #3: And here into April. In terms of the long cycle, we categorize the longer cycle funnel activity as remaining stable as well. And as we think about continuing rising energy prices in Europe, we see these as a potential longer-term tailwind given the nature of our products and the value that we create for our customers.

Speaker #4: Right? That's a good That's a good indicator for us indicator for us to stay on to see on that short that short cycle. And then on cycle.

Vicente Reynal: Then on the within the PST side, in the precision technology, we saw book and turn or short-cycle business grow organically, which also lines up really well with what we're seeing and actually continue improvement as we went through the quarter and here into April. In terms of the long cycle, you know, we categorize the longer cycle funnel activity as remaining stable as well. As we think about continued rising energy prices in Europe, we see these as a potential longer-term tailwind, given the nature of our products and the value that we create for our customers in terms of delivering energy efficiency products and services.

Speaker #3: In terms of delivering energy efficiency products and services. As we indicated before, what we're seeing right now is kind of customers and APCs taking a little bit of time more to decision-making and finalizing POs, which is consistent to what we have said before in terms of the elongation of the funnel.

Vicente Reynal: As we indicated before, what we're seeing right now is kind of customers and EPCs taking a little bit more time to decision-making and finalizing POs, which is consistent to what we had said before in terms of the elongation of the funnel and the overall decision-making. However, you know, projects are not canceled or anything of that nature. We feel this is just a bit of a timing aside in terms of the elongation of the decision that has not decreased. As we have mentioned previously, specifically to the Middle East, we have seen some of these longer cycle projects being delayed, but we expect that to come back over the course of 2026.

Speaker #4: And quarter. And here here in April. into April. In terms of the In terms of the long long cycle, yeah, we can cycle, we categorize the longer cycle funnel summarize the overall activity as continuing to activity as remaining be stable.

Speaker #3: And the overall decision-making. However, projects are not canceled or anything of that nature. So we feel this is just a bit of a timing side in terms of the elongation of the decision that has not decreased.

Speaker #4: As stable as well. well, and then And as we think about as we think about the right price continuing rising energy prices in in Europe, we see Europe, we see these as a potential the potential longer-term delay due to longer-term tailwind given the nature of our products and the nature of our product and the value the value that we create for our of our customers.

Speaker #3: And as we have mentioned previously, the specific to the Middle East, we have seen some of these longer cycle projects being delayed. But we expect that to come back over the course of 2026.

Speaker #4: In terms of customers. In terms of delivering delivery energy in energy efficiency products and the smaller services. As we indicated countries. As we indicated, all of before, what we're seeing right what we're seeing right now now is kind of customers and APCs taking a little bit of time more to decision-making and is, which is finalizing POs, which is consistent to what we consistent with what we have said before in terms of the elongation of the anticipated in the fall.

Speaker #4: So we of the nature we feel this is feel this is just a bit of a just a bit of a timing slide in timing side in terms of the terms of the elongation of the position that elongation of the decision that has has not not decreased.

Vicente Reynal: As we indicated before, what we're seeing right now is kind of customers and EPCs taking a little bit of time more to decision-making and finalizing POs, which is consistent to what we have said before in terms of the elongation of the funnel and the overall decision-making. However, you know, projects are not canceled or anything of that nature. We feel this is just a bit of a timing side in terms of the elongation of the decision that has not decreased. As we have mentioned previously, specific to the Middle East, we have seen some of these longer cycle projects being delayed, but we expect that to come back over the course of 2026.

Speaker #3: And as Vic mentioned on the prepared remarks already, a third of those projects have come in and booked here in the month of April.

Vicente Reynal: As Vic mentioned on the prepared remarks, already a third of those projects have come in and booked here in the month of April.

Speaker #4: And the funnel and the overall overall. decision-making. However, projects are However, projects are not not canceled or canceled or anything anything of that nature.

Michael Halloran: Yeah, thanks for that. Maybe the follow-up is just put that in the context of how you're thinking about the guidance for this year. You know, how much of that is embedded sequentially? Are you embedding some level of improvement as we work through the year? As we think about how the orders are gonna cadence out, I know you guys don't give specific guidance here, but how should that work out through the year when you consider comps, the timings of the projects, some sequential improvement as we're thinking about the short cycle side of things?

Speaker #2: Thanks for that. And then maybe the follow-up is just put that in the context of how you're thinking about the guidance for this year.

Speaker #2: How much of that is embedded sequentially? Are you embedding some level of improvement as we work through the year? And as we think about how the orders are going to cadence out, I know you guys don't give specific guidance here.

Speaker #3: And thanks for that. And then maybe the

Speaker #4: decreased. And if you have any And as we have mentioned previously, the specific to the specific Middle East, we have seen some capabilities, we are thinking longer-term of these longer cycle projects being delayed, project delays, but we expect that but we expect that to come back over to come back over the course of the course of 2026.

Speaker #2: But how should that work out through the year when you consider comps, the timings of the projects, some sequential improvement as we're thinking about the short cycle side of things?

Speaker #4: 2026. And And as Vic mentioned as on the prepared remarks already, a third of those remarked, projects have a projects have come in and booked here in the month of April.

Vicente Reynal: As Vic mentioned on the prepared remarks, already a third of those projects have come in and booked here in the month of April.

Speaker #3: As we think about how the orders are going to cater, and I know, I know you guys don't give— you've got some guidance, specific guidance here.

Speaker #4: 3.5-year

Speaker #3: Yeah. Mike, as we think about delivering the full year organic revenue guide, our expectations for organic growth and the cadence through the year has not changed from the original guidance.

Vicente Reynal: Yeah. Mike, as we think about delivering the full year organic revenue guide, our expectations for organic growth and the cadence through the year has not changed from the original guidance. As you have seen on the, you know, the midpoint of our guide, we're expecting about 1% full year organic growth, and when we provided our original guidance, we indicated slightly negative organic growth in Q1 and then low single-digit growth for Q2 to Q4. Q1 kind of came in as we expected and even actually, if you were to exclude the Middle East push-outs, it kind of came even better than what we expected.

Michael Halloran: Yeah, thanks for that. Then maybe to follow up and just put that in the context of how you're thinking about the guidance for this year. You know, how much of that is embedded sequentially? Are you embedding some level of improvement as we work through the year? As we think about how the orders are gonna cadence out, and I know you guys don't give specific guidance here, but how should that work out through the year when you consider comps, the cadence of the projects, some sequential improvement as we're thinking about the short cycle side of things?

Mike Halloran: Yeah, thanks for that. Then maybe to follow up and just put that in the context of how you're thinking about the guidance for this year. You know, how much of that is embedded sequentially? Are you embedding some level of improvement as we work through the year? As we think about how the orders are gonna cadence out, and I know you guys don't give specific guidance here, but how should that work out through the year when you consider comps, the cadence of the projects, some sequential improvement as we're thinking about the short cycle side of things?

Speaker #3: Maybe the follow-up is just put that in the context of how you're thinking about the guidance for this follow-up year. How much of here.

Speaker #3: How would that is embedded that sequentially? Are you embedding some level of improvement as sequentially improve this we work through the year? And year?

Speaker #4: Yeah. Mike, as we think about delivering Yeah. As we think about delivering a full-year organic the full year organic revenue revenue guide, our expectations for guide, our expectations for organic growth and the organic growth cadence through the year has here has not changed not changed from the original from guidance.

Speaker #3: If you as you have seen, the midpoint of our guide, we're expecting about 1% full year organic growth. And when we provided our original guidance, we indicated slightly negative organic growth in Q1.

Speaker #3: here, but how should that But how should that work out through the year work out for the year? The when you consider comps, the timings comps, the timing of the of the projects, some project, the sequential sequential improvement as we're thinking about the short cycle side of things?

Speaker #3: And then low single-digit growth for Q2 to Q4. Q1 kind of came in as we expected. And even actually, if you were to exclude the Middle East push-outs kind of came even better than what we expected.

Speaker #4: If you look at 2025, and as you have seen at the midpoint of our guide—if you've seen some of our guidance—we're expecting about 1% full-year organic growth.

Speaker #4: And when we provided we provide our original guidance, we indicated slightly negative organic growth in Q1. And the and then low single-digit growth then for Q2 to for Q4.

Speaker #3: improvement.

Vicente Reynal: Yeah. Mike, as we think about delivering the full-year organic revenue guide, our expectations for organic growth and the cadence through the year has not changed from the original guidance. As you have seen on the, you know, the midpoint of our guide, we're expecting about 1% full year organic growth. When we provided our original guidance, we indicated slightly negative organic growth in Q1 and then low single-digit growth for Q2 to Q4. Q1 kind of came in as we expected and even actually, if you were to exclude the Middle East pushouts, it kind of came even better than what we expected.

Speaker #3: So as we think about our second-half guide, that implies low single-digit organic growth, which is supported by a very good solid backlog growth from 2025 where a full year book-to-bill was above one.

Vicente Reynal: You know, as we think about our H2 guide that implies low single-digit organic growth, which is supported by a very good solid backlog growth from 2025, where our full year book-to-bill was above 1. Q1 here in 2026, again, book-to-bill above 1.07. As we mentioned here before, the ongoing momentum in the short cycle activity, which we have seen in both segments, you know, provides a good setup as we go into H2. You know, ongoing commercial investments for growth, including a very focus on penetrating markets. Then as we all know, you know, the prior year comps will continue to moderate, particularly in ITS as we kind of move into H2.

Speaker #4: Q1 kind of came in as we expected. And even actually, if you were to exclude the Q1, the Middle East portion Middle East push-outs, it of can even better kind of came even better than what we expected.

Speaker #3: Q1 here in 2026, again, book-to-bill above one, 1.07. As we mentioned here before, the ongoing momentum in the short cycle activity which we have seen in both segments provides a good setup as we go into the second half.

Speaker #4: than expected. So So as we think as we think about our second-half about the guide, that implies guide, it implies organic low single-digit organic growth, which is supported growth, which is supported by a by a very very good solid backlog growth good micro growth from from 2025 2025.

Vicente Reynal: You know, as we think about our H2 guide that implies low single-digit organic growth, which is supported by a very, you know, good solid backlog growth from 2025, where our full year book-to-bill was above 1. Q1 here in 2026, again, book-to-bill above 1.07. As we mentioned here before, the ongoing momentum in the short cycle activity, which we have seen in both segments, you know, provides a good setup as we go into the H2. You know, ongoing commercial investments for growth, including a very focus on the penetrating markets. Then as we all know, you know, the prior year comps will continue to moderate, particularly in ITS as we kind of move into the H2.

Speaker #4: As we 1.07. We mentioned here mentioned here before, the ongoing momentum in the short cycle activity which we have seen in both before the segments provides assessment a good setup as we go into provides as we go the second half.

Speaker #3: Ongoing commercial investments for growth, including a very focus on under-penetrated markets and then as we all know, the prior year comps will continue to moderate, particularly in ITS as we kind of move into the second half.

Speaker #4: A where a full year book-to-bill was full-year of above one. Q1 one. here in 2026, again, Q1, again, both available book-to-bill above one, 1.07.

Speaker #2: Thank you. Appreciate it.

Michael Halloran: Thank you. Appreciate it.

Speaker #3: Thank you.

Vicente Reynal: Thank you.

Speaker #1: Your next question comes from Julian Mitchell with Barclays. Your line is open.

Operator: Your next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker #4: half.

Speaker #3: Thank you. Appreciate you. Appreciate it. it.

Speaker #4: Hi. Good morning. I know you've given the cutter on sort of first half, second half splits on revenue and earnings and so forth in the deck.

Julian Mitchell: Hi. Good morning. I know you've given the color on H1, H2 splits on revenue and earnings and so forth in the deck, but just wondered if you could perhaps home in a little bit on what you're anticipating for Q2. You know, just backing the numbers out, it looks like kind of organic sales company-wide may be flattish year on year in Q2, and then the EBITDA margin is down, I don't know, 50 to 100 BPS year on year in the quarter. I just wondered if those are roughly accurate and any kind of segment color for what you're seeing in the current quarter.

Speaker #4: Thank Thank you. you.

Speaker #4: into ongoing personal Ongoing commercial investments investment for growth, for growth, including a very including the very focus focused on under-penetrated on. And markets and then as then as we all we all know, the prior know, the prior year comes will continue to moderate, particularly in IPS as we kind of move into the second year

Speaker #4: But just wondered if you could perhaps hone in a little bit on what your anticipating for the second quarter? Just backing the numbers out, it looks like kind of organic sales company-wide, maybe flattish year-on-year in Q2.

Speaker #2: open.

Speaker #5: Hi. Good morning. I know you've morning. I know you've given the color on given the kind sort of first half, second half splits of answer based on the revenue and on revenue and earnings and so forth earnings and so forth and the debt.

Speaker #4: And then the EBITDA margin is down, I don't know, 50 to 100 bips year-on-year in the quarter. I just wondered if those are roughly accurate and any kind of segment color for what you're seeing in the current quarter.

Vikram Kini: Thank you. Appreciate it.

Mike Halloran: Thank you. Appreciate it.

Speaker #3: Thank

Vicente Reynal: Thank you.

Speaker #5: Just backing the quarter, just backing the numbers, it looks—numbers out—it looks like, kind of, organic, like organic sales. Sales company-wide, maybe company-wide could be slacking.

Operator: Your next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker #2: Your next Your next question comes from question comes from Julia Mitchell Julian Mitchell with Barclays. with Barclays. Your last Your line is question.

Julian Mitchell: Hi. Good morning. I know you've given the kind of sort of H1, H2 splits on revenue and earnings and so forth in the deck, but just wondered if you could perhaps home in a little bit on what you're anticipating for Q2. You know, just backing the numbers out, it looks like kind of organic sales company-wide may be flattish year-on-year in Q2, and then the EBITDA margin is down, I don't know, 50 to 100 BPS year-on-year in Q2. I just wonder if those are roughly accurate and any kind of segment color for what you're seeing in the current quarter.

Speaker #5: Hi, good

Speaker #3: Yeah. Julian, I'll take that one here. So I think first and foremost, your read is very directionally correct. I think the sense kind of outlined kind of the full year and kind of the expectations.

Vikram Kini: Yeah. Julian, I'll take that one here. I think first and foremost, your read is pretty directionally correct. You know, I think Vicente kind of outlined kind of the full year and kind of the expectations, but maybe to give a touch more color, specifically, you know, in terms of the phasing for H1, H2, as well as Q2. First and foremost, just to reiterate, our expectations and assumptions for phasing for EBITDA delivery in the year haven't changed. You know, H1 of the year being in that kind of 45.5% to 46% range, the balance in H2. As far as Q2, you know, we do expect sequential improvement on margins from Q1 to Q2.

Vik Kini: Yeah. Julian, I'll take that one here. I think first and foremost, your read is pretty directionally correct. You know, I think Vicente kind of outlined kind of the full year and kind of the expectations, but maybe to give a touch more color, specifically, you know, in terms of the phasing for H1, H2, as well as Q2. First and foremost, just to reiterate, our expectations and assumptions for phasing for EBITDA delivery in the year haven't changed. You know, H1 of the year being in that kind of 45.5% to 46% range, the balance in H2. As far as Q2, you know, we do expect sequential improvement on margins from Q1 to Q2.

Speaker #5: I just and a quarter. I just wonder if those are wondered if those are roughly roughly accurate and any accurate and any kind of segment color kind of segment colored what you're seeing in for what you're seeing in the current the colored quarter.

Speaker #5: Just in the deck. But just wondered if you could perhaps wondered if you could perhaps bring in a little bit of hone in a little bit on what your what you're anticipating for anticipating for the second the second quarter?

Speaker #3: But maybe to give a touch more color, specifically in terms of the phasing, both first half, second half, as well as second quarter, first and foremost, just to reiterate, our expectations and assumptions for phasing for EBITDA delivery in the year haven't changed.

Speaker #5: We're on flattish year-on-year in year two and the EBITDA Q2. And then the EBITDA margin is margin is down, I don't know, down, I don't know, 50 to 100 50 to 100 bits here on year bips year-on-year in the quarter.

Speaker #4: expectations. But maybe to give a touch more More color color, specifically in terms of specifically for the first the phasing both first half, second half, as well as and second half of the second second quarter, first and quarter.

Speaker #3: First half of the year being in that kind of 45 and a half to 46 percent range, the balance in the second half. As far as Q2, one, we do expect sequential improvement on margins from Q1 to Q2.

Speaker #5: quarter.

Vikram Kini: Yeah, Julian, I'll take that one here. I think first point, your read is pretty directly correct. You know, I think Vicente kind of outlined kind of the full year and kind of the expectations, but maybe to give a touch more color, specifically, you know, in terms of the phasing for H1, H2, as well as Q2. First and foremost, just to reiterate, our expectations and assumptions for phasing for EBITDA delivery of the year haven't changed. You know, H1 of the year being in that kind of 45.5% to 46% range, the balance in H2. As far as Q2, you know, one, we do expect sequential improvement on margins from Q1 to Q2.

Speaker #4: Yeah, Yeah. Julian, I'll take that one here. So I think first and just you're foremost, your read is very reading the redirect, directionally correct?

Speaker #4: First half of the changed. First half of the year, that kind of year being in that kind of 45 and a half 45 and a half, 46% to 46 percent range, the range.

Vikram Kini: In Q2, margins, we do still expect to be slightly down year over year, you know, kind of in that, you know, 50 to 100 basis point kind of range. It's primarily driven by ITS. We do still expect to see continued margin expansion year over year on the, on the PST side. You know, just to fill in the color there on the organic revenue side of the equation, you know, as Vicente just mentioned, Q1 was expected to be slightly down, and that's exactly what we saw. From an overall perspective, Q2 is expected to be, you know, flattish to slightly up.

Speaker #3: But in Q2, margins, we do still expect to be slightly down year over year kind of in that 50 to 100 basis point kind of range.

Vik Kini: In Q2, margins, we do still expect to be slightly down year over year, you know, kind of in that, you know, 50 to 100 basis point kind of range. It's primarily driven by ITS. We do still expect to see continued margin expansion year over year on the, on the PST side. You know, just to fill in the color there on the organic revenue side of the equation, you know, as Vicente just mentioned, Q1 was expected to be slightly down, and that's exactly what we saw. From an overall perspective, Q2 is expected to be, you know, flattish to slightly up.

Speaker #4: I correct. I think Vicente kind of think they kind of outlined a full outlined kind of the full year and kind of the year.

Speaker #4: From margin from Q1 to Q1 to Q2. Q2. But in But in Q2, margins, we do Q2, margin we do still expect to be still expect to be slightly down year slightly down here because over year.

Speaker #3: It's primarily driven by ITS. We do still expect to see continued margin expansion year over year on the PST side. And then just to fill in the color there on the organic revenue side of the equation, as Vicente just mentioned, Q1 was expected to be slightly down.

Speaker #4: First and foremost, just to foremost, just to reiterate, our reiterate, our expectations and expectations and assumptions for phasing assumptions for for EBITDA delivery in the year phasing delivery in the year haven't haven't changed.

Speaker #4: Kind of in of times in that that 50 to 100 basis 50 to 100 basis point kind of point kind of range. range. It's primarily driven by Primarily, I guess, we still IPS.

Speaker #4: We do still expect to see expect to be a continued margin continued margin expansion year over year on in the year before the the PST CSP side.

Speaker #4: The balance in the second balance in the second half. half. As far as As far as Q2, one, we Q2, one, we do expect sequential do expect potential improvement on improvement on margins.

Speaker #3: And that's exactly what we saw. From an overall perspective, Q2 is expected to be flattish to slightly up. And then the low single-digit growth on the organic side is what we're expecting the second half based on kind of the drivers that the Vicente just walked through.

Vikram Kini: In Q2, margins, we do still expect to be slightly down year over year, you know, kind of in that, you know, 50 to 100 basis point kind of range. It's primarily driven by ITS. We do still expect to see continued margin expansion year over year on the PST side. And then, you know, just to fill in the color there on the organic revenue side of the equation, you know, as Vicente just mentioned, Q1 was expected to be slightly down, and that's exactly what we saw. From an overall perspective, Q2 is expected to be, you know, flattish to slightly up.

Vikram Kini: You know, the low single digit growth in, on the organic side is what we're expecting H2 based on the kind of the drivers that Vicente just walked through.

Vik Kini: You know, the low single digit growth in, on the organic side is what we're expecting H2 based on the kind of the drivers that Vicente just walked through.

Speaker #4: And to be slightly down and after that as that's exactly what we well. Overall saw. From an overall perspective, perspective, Q2 is expected Q2 is expected to be flattish to be flattish to slightly up.

Speaker #4: That's very helpful. Thank you. And then just my follow-up would be around the ITS business. As you said, sort of margins, I think, are down there for five quarters in a row year on year.

Julian Mitchell: That's very helpful. Thank you. Just my follow-up would be around the ITS business. As you said, sort of margins I think are down there for five quarters in a row year-on-year, down again Q2. Maybe help us understand kind of the confidence on those being up in H2 and anything you could flesh out in terms of, you know, price cost impacts, anything changing competitively with what's happening on tariffs and inflation in ITS, please.

Speaker #4: to slightly up. And And then then the low single-digit growth on the growth in organic side is also expected in organic side is what we're expecting the second half based the second half based on on kind of the drivers that Vicente just drivers that they just walked offered.

Speaker #4: And side. And then just to fill in the then color there on the organic revenue side of organic revenue side of the the equation, as equation, as I Vicente just mentioned, said, Q1 was expected Q1 was expected to be slightly down.

Speaker #4: through.

Speaker #4: Down again second quarter. Maybe help us understand kind of the confidence on those being up in the second half and anything you could flesh out in terms of price-cost impacts, anything changing competitively with what's happening on tariffs and inflation in ITS, please.

Speaker #5: That's very helpful. Thank

Speaker #5: you. And then just my follow-up would be

Speaker #5: around the

Speaker #5: ITS business. As you said, sort of margins, I

Speaker #5: think, are down there for five

Speaker #5: quarters in a row year on

Speaker #5: year. Down again second

Speaker #5: quarter. Maybe help us

Vikram Kini: You know, the low single-digit growth on the organic side is what we're expecting H2 based on the kind of the drivers that Vicente just walked through.

Speaker #5: understand kind of the confidence on

Speaker #5: those being up in the

Speaker #5: second half

Speaker #5: and anything you could flesh out in terms

Speaker #2: Sure. I'll start on that one there, Julian. So obviously, fair comment from your side. I'll note that obviously, the last five quarters, the majority of those have been impacted by the kind of the tariff dynamics.

Vikram Kini: Sure. I'll start on that one there, Julian. You know, obviously, fair comment from your side. I'll note that obviously, the last five quarters, the majority of those have been impacted by the kind of tariff dynamics and kind of the underlying impact that's had on some of the demand environment, which is really the driver of what you're seeing on the margin front. You know, I think from a total year perspective, our expectation on a full year basis is that ITS will be approximately flat year over year.

Vik Kini: Sure. I'll start on that one there, Julian. You know, obviously, fair comment from your side. I'll note that obviously, the last five quarters, the majority of those have been impacted by the kind of tariff dynamics and kind of the underlying impact that's had on some of the demand environment, which is really the driver of what you're seeing on the margin front. You know, I think from a total year perspective, our expectation on a full year basis is that ITS will be approximately flat year over year.

Speaker #5: of price cost

Julian Mitchell: That's very helpful. Thank you. Then just my follow-up would be around the ITS business. As you said, sort of margins I think are down there for 5 quarters in a row year-on-year, down again Q2. Maybe help us understand kind of the confidence on those being up in H2 and anything you could flesh out in terms of, you know, price cost impacts, anything changing competitively with what's happening on tariffs and inflation in ITS, please.

Speaker #4: That's very helpful. Thank you. And then just

Speaker #5: impacts, anything changing

Speaker #4: to follow up with you around

Speaker #5: competitively with what's happening on tariffs and

Speaker #4: the ITS. Business is

Speaker #5: inflation in ITS, please.

Speaker #4: expected of margins

Speaker #4: down by quarters in a row year

Speaker #3: Sure.

Speaker #3: I'll start on that one there, Julian. So

Speaker #4: on year. And again,

Speaker #4: second quarter.

Speaker #2: And kind of the underlying impact that's had on some of the demand environment, which is really the driver of what you're seeing on the margin front.

Speaker #3: obviously, fair comment from your side. I'll

Speaker #4: Maybe help us understand

Speaker #4: the confidence on those

Speaker #3: note that obviously, the last five

Speaker #4: being up in the second

Speaker #3: quarters, the majority of those

Speaker #4: half. And anything you could

Speaker #2: I think from a total year perspective, our expectation on a full-year basis is that ITS will be approximately flat year over year. As we indicated, Q1 was going to be the most challenging quarter.

Speaker #3: have been impacted by

Speaker #3: the kind of the tariff dynamics. And

Speaker #4: flesh out in terms of price

Speaker #3: kind of the underlying impact that's had on some of the

Speaker #4: cost impact, anything

Speaker #3: demand environment, which is really the driver of what

Speaker #4: changing competitively to what's

Speaker #4: happening with tariffs and inflation in the

Speaker #3: you're seeing on the margin

Vikram Kini: As we indicated, Q1 was gonna be the most challenging quarter, you know, particularly given we hadn't really started comping, you know, or lapping the Liberation Day tariffs from prior year, which really started in Q2. As far as the H2 and to your question, we do expect that's where margin expansion kinda comes back, you know, supported by, I would say, you know, the slightly better organic volume outlook that we have kind of expected in the back half of the year.

Vik Kini: As we indicated, Q1 was gonna be the most challenging quarter, you know, particularly given we hadn't really started comping, you know, or lapping the Liberation Day tariffs from prior year, which really started in Q2. As far as the H2 and to your question, we do expect that's where margin expansion kinda comes back, you know, supported by, I would say, you know, the slightly better organic volume outlook that we have kind of expected in the back half of the year.

Speaker #3: front. I think

Speaker #4: ITS.

Speaker #3: from a total year

Vikram Kini: Sure. I'll start on that one there, Julian. You know, obviously, you know, fair comment from your side. I'll note that obviously, you know, the last five quarters, the majority of those have been impacted by the, you know, the kind of the tariff dynamics and kind of the underlying impact that's had on some of the demand environment, which is really the driver of what you're seeing on the margin front. You know, I think from a, you know, total year perspective, our expectation on a full year basis is that ITS will be approximately flat year over year.

Speaker #5: Sure. Obviously, they're

Speaker #2: Particularly given we hadn't really started comping or lapping the liberation day tariffs from prior year, which really started in second quarter. As far as the second half and to your question, we do expect that's where margin expansion kind of comes back.

Speaker #3: perspective, our expectation on a full year

Speaker #3: basis is that ITS will be

Speaker #3: approximately flat year over year.

Speaker #5: coming from the inside.

Speaker #5: The last five quarters, the

Speaker #3: As we indicated, Q1

Speaker #3: was going to be the most challenging

Speaker #5: majority of those have been

Speaker #3: quarter. Particularly given we

Speaker #5: impacted by the

Speaker #5: tariff and kind of the

Speaker #3: hadn't really started

Speaker #3: comping or lapping the liberation

Speaker #5: underlying demand environment, which is

Speaker #2: Supported by, I would say, the slightly better organic volume outlook that we have kind of expected in the back half of the year. Continued improvement in price-cost driven by, I'd say, full implementation of all the tariff-related pricing actions that have been taken, as well as kind of some of the targeted in-year actions that we always kind of have executed on.

Speaker #3: day tariffs from prior year, which really

Speaker #5: really the driver of interest on

Speaker #3: started in second quarter. As

Speaker #5: the

Speaker #5: market. I

Speaker #3: far as the second half and to your

Speaker #5: think total year perspective, our

Speaker #3: question, we do expect that's

Vikram Kini: Continued improvement in price cost, you know, driven by, I'd say, full implementation of all the tariff-related pricing actions that have been taken, as well as kind of some of the targeted in-year actions that we always kind of have executed on. Many of the productivity initiatives, including, you know, I think you saw us take some pretty meaningful restructuring charges in H2 of last year, which we would expect to continue to bolster margins, particularly as we move into H2 of this year. I think that's what kinda gets us to that kind of flattish margin expansion on a year-over-year basis.

Vik Kini: Continued improvement in price cost, you know, driven by, I'd say, full implementation of all the tariff-related pricing actions that have been taken, as well as kind of some of the targeted in-year actions that we always kind of have executed on. Many of the productivity initiatives, including, you know, I think you saw us take some pretty meaningful restructuring charges in H2 of last year, which we would expect to continue to bolster margins, particularly as we move into H2 of this year. I think that's what kinda gets us to that kind of flattish margin expansion on a year-over-year basis.

Speaker #5: expectation on a full-year basis is that

Speaker #3: where margin expansion kind of comes

Speaker #3: back. Supported by, I would

Speaker #5: ITS will be approximately flat year

Speaker #3: say, the slightly better

Speaker #5: over year. As we

Vikram Kini: As we indicated, Q1 was gonna be the most challenging quarter, you know, particularly given we hadn't really started comping, or lapping the Liberation Day tariffs from prior year, which really started in Q2. As far as H2, and to your question, we do expect that's where margin expansion kinda comes back, you know, supported by, I would say, you know, the slightly better organic volume outlook that we have kind of expected in the back H2 of the year.

Speaker #5: indicated, Q1 is the most

Speaker #3: organic volume outlook that we have kind of

Speaker #3: expected in the back half of the year

Speaker #5: challenging quarter.

Speaker #3: year. Continued improvement in

Speaker #5: Particularly given we have started

Speaker #5: having

Speaker #3: price cost

Speaker #5: lacking delivery tariffs from

Speaker #3: driven by, I'd say, full

Speaker #2: And then many of the productivity initiatives, including we were, I think you saw us take some pretty meaningful restructuring charges in the back half of last year, which we would expect to continue to bolster margins, particularly as we move into the back half of this year.

Speaker #3: implementation of all the

Speaker #5: prior years before we started in the second

Speaker #5: second quarter. As far as the second

Speaker #3: tariff-related pricing actions that have been taken, as well as

Speaker #5: half, your question, we do

Speaker #3: kind of some of the targeted in-year actions that we

Speaker #5: expect that

Speaker #3: always kind of

Speaker #5: for kind of coming

Speaker #3: have executed on. And then

Speaker #5: back. Supported by, I would

Speaker #3: many of the productivity initiatives,

Speaker #2: So I think that's what kind of gets us to that kind of flattish margin expansion on a year-over-year basis. But yes, it is a little bit more back-end weighted as a result of those drivers.

Speaker #5: say, slightly better organic volume that

Speaker #3: including we were, I think you saw us take

Speaker #5: we have expected in the back half of the

Speaker #3: some pretty meaningful

Speaker #3: restructuring charges in the back half of last year, which we would

Speaker #5: year. Continuing to

Vikram Kini: Continued improvement in price cost, you know, driven by, I'd say, full implementation of, you know, all the tariff-related pricing actions that have been taken, as well as kind of some of the targeted in-year actions that we always kind of have executed on. Many of the productivity initiatives, including, you know, I think you saw us take some pretty meaningful restructuring charges in H2 of last year, which we would expect to continue to bolster margins, particularly as we move into H2 of this year. You know, I think that's what kinda gets us to that kind of flattish margin expansion on a year-over-year basis.

Vikram Kini: Yes, it is, you know, a little bit more back-end weighted as a result of those drivers.

Vik Kini: Yes, it is, you know, a little bit more back-end weighted as a result of those drivers.

Speaker #5: improve price

Speaker #3: expect to continue to bolster margins, particularly as we

Speaker #5: cost, driven

Speaker #3: And the only thing I will add is that the exit rate on margin expansion will be consistent with our long-term targets.

Vicente Reynal: The only thing I will add is that the exit rate on margin expansion will be consistent with our long-term targets.

Speaker #5: by a full implementation

Speaker #3: So I think that's what kind of gets

Speaker #5: of tariff

Speaker #3: us to that kind of flattish

Speaker #5: provisions as well as kind of some of the

Speaker #3: margin expansion on a year-over-year basis. But

Speaker #5: targeted actions that we always kind of

Speaker #4: Great. Thank you.

Speaker #3: yes, it is a little bit more back-end

Julian Mitchell: Great. Thank you.

Speaker #3: end weighted as a result of those

Speaker #5: have

Speaker #3: drivers.

Speaker #1: Your next question comes from Jeff Sprague. With vertical research partners, your line is open.

Operator: Your next question comes from Jeff Sprague with Vertical Research Partners. Your line is open.

Speaker #5: on. And

Speaker #4: And the only thing I will add is that the exit rate on margin expansion will be consistent with our long-term targets.

Speaker #5: then

Speaker #5: including taking

Speaker #5: the meaningful restructuring charges in the back half

Speaker #4: Hey, thank you. Good morning. Just a couple of things. First, just the language on tariff here that you don't expect any impact? Does that mean you haven't sorted it all yet and you're still kind of working through it?

Speaker #5: Great. Thank

Jeff Sprague: Hey, thank you. Good morning. Just a couple things. First, just the language on tariff here that you don't expect any impact. Does that mean you haven't sorted it all yet and you're still kinda working through it? Maybe you could just kinda talk us through, you know, the IEEPA change versus the Section 232 change. I guess you're saying you think you land kinda net neutral, but again, just looking for a little more clarity there.

Speaker #5: you.

Speaker #5: of the last year, to continue to

Speaker #5: bolster margins as well as move to the back half of this

Speaker #2: Your next question comes next from Jeff Sprague with vertical research partners. Your question. Your line line is of.

Speaker #5: Yeah, so I think that will move into the back half of this year.

Speaker #5: that's kind of gets us to that kind of

Speaker #5: flattish margin expansion on

Speaker #2: open.

Speaker #5: year over year basis. But yes, this is a

Speaker #6: Hey, thank you. Good morning. Just a

Vikram Kini: Yes, it is, you know, a little bit more back-end weighted as a result of those drivers.

Speaker #6: couple of things. First,

Speaker #5: little bit more back

Speaker #5: in.

Speaker #4: Maybe you could just kind of talk us through the IEPA change versus the 232 change. I guess you're saying you think you land kind of net neutral, but again, just looking for a little more clarity there.

Speaker #6: just the language on tariff

Vicente Reynal: The only thing I would add is that the exit rates on margin expansion will be consistent with our long-term targets.

Speaker #4: And the

Speaker #4: only great.

Speaker #6: here that you don't expect any

Speaker #6: impact? Does that mean you

Speaker #6: haven't sorted it all yet and you're

Julian Mitchell: Great. Thank you.

Speaker #6: Still kind of working through it?

Speaker #5: Thank you.

Speaker #6: Maybe you could just kind of talk

Operator: Your next question comes from Jeff Sprague with Vertical Research Partners. Your line is open.

Speaker #3: Yeah. Jeff, happy to provide a little bit more. Obviously, a number of moving pieces, as you indicated. To keep it simple here, no, we have obviously worked through all those individual moving components.

Speaker #2: Your

Vikram Kini: Yeah, Jeff, happy to provide a little bit more. Obviously, a number of moving pieces you indicated. You know, to keep it simple here. No, we have obviously, you know, worked through all those individual moving components. I think the simple takeaway is kind of what you indicated here, that, you know, at this time, those moving factors, whether it be the tariff related changes, some of the underlying kind of just inflationary movements in the market, as well as a lot of the proactive measures that our internal teams have been working on from a mitigation perspective, those are kind of netting out, you know, relatively neutral on a full year basis. You know, our read at this point in time based on what has been announced is relatively neutral.

Vik Kini: Yeah, Jeff, happy to provide a little bit more. Obviously, a number of moving pieces you indicated. You know, to keep it simple here. No, we have obviously, you know, worked through all those individual moving components. I think the simple takeaway is kind of what you indicated here, that, you know, at this time, those moving factors, whether it be the tariff related changes, some of the underlying kind of just inflationary movements in the market, as well as a lot of the proactive measures that our internal teams have been working on from a mitigation perspective, those are kind of netting out, you know, relatively neutral on a full year basis. You know, our read at this point in time based on what has been announced is relatively neutral.

Speaker #6: us through the

Speaker #6: IEPA change versus the 232

Speaker #6: change. I guess you're saying you think you land kind

Speaker #6: of net neutral, but again, just

Jeff Sprague: Thank you. Good morning. Just a couple things. First, just the language on tariff here that you don't expect any impact. Does that mean you haven't sorted it all yet, and you're still kind of working through it? Maybe you could just kind of talk us through, you know, the IEEPA change versus the Section 232 change. I guess you're saying you think you land kind of net neutral, again, just looking for a little more clarity there.

Speaker #5: Hey, thanks. Good

Speaker #6: looking for a little more clarity

Speaker #5: morning. Just a couple of things.

Speaker #6: there.

Speaker #5: First, just the

Speaker #4: Yeah. Jeff, happy to provide a little bit more. Obviously, a Yeah. Not number of moving pieces of the. To keep it simple here, no, number.

Speaker #5: language

Speaker #5: of the

Speaker #3: And I think the simple takeaway is kind of what you indicated here, that at this time, those moving factors, whether it be the tariff-related changes, some of the underlying kind of just inflationary movements in the market, as well as a lot of the proactive measures that are internal teams have been working on from a mitigation perspective, those are kind of netting out relatively neutral on a full-year basis.

Speaker #5: Impact—does that mean you haven't sorted it?

Speaker #5: all yet? You're still kind of

Speaker #5: working through it? And maybe you can just kind

Speaker #5: of talk us

Speaker #5: through how you've been paying

Speaker #5: for 232 change versus

Speaker #5: 950 land, kind of net neutral.

Speaker #5: But again, just a little more

Speaker #5: clarity.

Speaker #3: So our read at this point in time, based on what has been announced, is relatively neutral. And obviously, like everyone else, we're anxious to kind of see how things continue to play themselves out for the balance of the year.

Vikram Kini: Yeah, Jeff, happy to provide a little bit more. Obviously, a lot, you know, a number of moving pieces indicated. You know, to keep it simple here, we have obviously, you know, worked through all those individual moving components. I think the simple takeaway is kind of what you indicated here, that, you know, at this time, those moving factors, whether it be the tariff-related changes, some of the underlying kind of just inflationary movements in the market, as well as a lot of the proactive measures that our internal teams have been working on from a mitigation perspective, those are kind of netting out, you know, relatively neutral on a full year basis. You know, our read at this point in time, based on what has been announced, is relatively neutral.

Vikram Kini: You know, obviously like everyone else, we're anxious to kind of see how things continue to play themselves out for the balance of the year.

Vik Kini: You know, obviously like everyone else, we're anxious to kind of see how things continue to play themselves out for the balance of the year.

Speaker #4: No, we have we have obviously worked through all obviously worked through all those individual moving components. And I that. think the simple takeaway is kind of what you indicated And at here, that at this time, those this time, those moving moving factors, whether it be factors whether it be the tariff-related the tariff-related changes, some of the underlying changes or the underlying inflationary kind of just inflationary movements in the market, as move in the market as well as a lot well as a lot of the proactive of the proactive measures that measures that our internal teams have been working on are working on mitigation from a mitigation perspective.

Speaker #4: So our So our lead at this point in time read at this point in time, based on what has been based on what has worked out is announced, is relatively neutral.

Speaker #4: And then maybe unrelated, just a little more color on life sciences, if you could, just how the year is unfolding, what you see in the pipeline, it looks like some of the life sciences reshoring announcements of a year or two ago, we're seeing some groundbreak on some bigger projects.

Jeff Sprague: Maybe unrelated, just a little more color on life sciences, if you could just, you know, how the year is unfolding, what you see in the pipeline. You know, it looks like some of the life sciences reshoring announcements of, you know, a year or two ago were seeing some groundbreaking on some bigger projects. Just wondering what the funnel looks like there and is the visibility actually improving?

Speaker #4: year.

Speaker #5: And then then maybe maybe unrelated, just a unrelated, a little more color little more color on life on life if we sciences, if you could, could.

Speaker #4: Those are kind of perspective, those are kind of netting heading out relatively out relatively neutral on a full-year neutral on a full-year basis. basis.

Speaker #4: Just wondering what the funnel looks like there and is the visibility actually improving.

Speaker #3: Yeah. Yes. Definitely improving. And clearly, we're pleased with what we saw here in the first quarter, double-digit organic quarter growth momentum on the life science side.

Vicente Reynal: Yeah. Yes, definitely improving. Clearly we're pleased with what we saw here in Q1, double-digit organic quarterly growth momentum on the life science side. A lot of these reshoring and investments that we're seeing, particularly in biopharma, and very specific around API production in the US. It's really a great trend for us in terms of the product that we have. Good visibility.

Speaker #4: relatively neutral. And obviously, like everyone And obviously, like everyone else, we're anxious else, we're anxious to see how to kind of see how things continue to play themselves out things develop this for the balance of the year.

Vikram Kini: You know, obviously like everyone else, we're anxious to kind of see how things continue to play themselves out for the balance of the year.

Speaker #5: Just wondering what the funnel looks the model looks like later. This like there and is the visibility actually subjectivity actually improving. improving.

Jeff Sprague: Maybe unrelated, just little more color on life sciences, if you could. You know, how the year is unfolding, what you see in the pipeline. You know, it looks like some of the life sciences reshoring announcements of, you know, a year or two ago, we're seeing some ground break on some bigger projects. Wondering what the funnel looks like there, and is the visibility actually improving?

Speaker #5: And

Speaker #3: And a lot of these reshoring and investments that we're seeing, particularly in biopharma, and very specific around API production in the US, it's really a great trend for us in terms of the products that we have.

Speaker #4: Yeah. Yes. Yeah. Definitely improving. And clearly, we're Definitely. Really what we saw pleased with what we saw here in the first quarter, here in the first quarter during double-digit organic quarter growth momentum on the life science side.

Speaker #5: How the just how the year is unfolding, year is rolling with the what you see in the pipeline, it looks like some of pipeline, it looks like some of the life the life sciences are shoring sciences, reshoring announcements in now.

Speaker #4: And a lot of this these reshoring and investments that we're seeing, and we're seeing particularly in particularly in biotech. biopharma, and very specific And there's around API around potential in the production in the US, it's US is really a really a great trend for great for us in terms of the products that we in terms of the pricing.

Speaker #5: A year or two of a year or two ago, we're seeing some ago, we see some groundbreak on some bigger groundbreaking six-year projects. I was wondering what projects.

Speaker #3: So good visibility. As a matter of fact, this week, we even had a great session with one of the largest biopharma companies here in the US, where we kind of collaborate as we look into specific technologies that we can actually put and help them to really accelerate some of the productivity and production that they have to do here in the US.

Vicente Reynal: You know, as a matter of fact, this week we even had a great session with one of the largest biopharma companies here in the US, where, you know, we kind of collaborate as we look into specific technologies that we can actually put and help them to really accelerate some of the productivity and production that they have to do here in the US. Good, looking good, and we feel positive about it.

Vikram Kini: Yes, definitely improving and clearly we're pleased with what we saw here in Q1, double-digit organic quarter growth momentum on the life science side. A lot of these reshoring and investments that we're seeing, particularly in biopharma, and very specific around API production in the US, it's really a great trend for us in terms of the products that we have. Good visibility. You know, we

Vicente Reynal: Yes, definitely improving and clearly we're pleased with what we saw here in Q1, double-digit organic quarter growth momentum on the life science side. A lot of these reshoring and investments that we're seeing, particularly in biopharma, and very specific around API production in the US, it's really a great trend for us in terms of the products that we have. Good visibility. You know, we

Speaker #4: have. So good visibility. As a matter of fact, So we even this week, we had a great session had a great session in front of the with one of the largest largest biopharma biotech companies here in the US, company.

Speaker #3: So looking good. And we feel positive about it.

Speaker #4: Great. Thanks. I'll leave it there.

Jeff Sprague: Great. Thanks. I'll leave it there.

Speaker #3: Thank you.

Vicente Reynal: Thank you.

Speaker #1: The next question comes from Joe Oday with Wells Fargo. Please go ahead.

Operator: The next question comes from Joe O'Dea with Wells Fargo. Please go ahead.

Vikram Kini: As a matter of fact, this week we even had a great session with one of the largest biopharma companies here in the US where, you know, we kind of collaborate as we look into specific technologies that we can actually put and help them to really accelerate some of the productivity and production that they have to do here in the US. Good looking good, and we're, we feel positive about it.

Vicente Reynal: As a matter of fact, this week we even had a great session with one of the largest biopharma companies here in the US where, you know, we kind of collaborate as we look into specific technologies that we can actually put and help them to really accelerate some of the productivity and production that they have to do here in the US. Good looking good, and we're, we feel positive about it.

Speaker #5: Hi. Good morning. Just wanted to circle back on the EBITDA margin kind of trajectory with ITS because I expect that will be kind of the biggest area of focus.

Joe O'Dea: Hi, good morning. Just wanted to circle back on the EBITDA margin kind of trajectory with ITS because I expect that will be the biggest area of focus coming out of this quarter. You know, if we're talking about something like, call it 27.5 to 28 in Q2 and moving to something that approximates 30 in H2, just if you could unpack any quantification around that. I know you gave some of the items, but any more detail around like the pricing that you put in place for tariffs, but the timing of when that starts to flow through the P&L or the impact from the restructuring, any other cost mitigation, just to help with a little bit of the quantification around that bridge from Q2 into H2.

Speaker #6: Great. Thanks. I'll

Speaker #6: leave it there.

Speaker #4: Thank

Speaker #2: The next

Speaker #4: Here in the US with a few weekends where we kind of to elaborate. I was actually collaborate. As we look into looking at specific technologies that specific technologies that we can actually we can actually put and help put and help them to them to really accelerate really accelerate some of the productivity and production that they have to do here in the US.

Speaker #7: Hi. Good morning. Just

Speaker #7: wanted to circle back on

Speaker #5: Coming out of this quarter and if we're talking about something like call it 27 and a half to 28 in Q2 and moving to something that approximates 30 in the back half, just if you could unpack any quantification around that.

Speaker #7: the EBITDA margin kind

Speaker #4: productivity. So looking good. And we feel positive about it.

Speaker #7: of trajectory

Speaker #4: Good.

Speaker #7: with ITS because I

Speaker #7: Expect that will be kind of the biggest.

Jeff Sprague: Great. Thanks. I'll leave it there.

Speaker #7: area of focus coming out of

Speaker #5: Great.

Speaker #5: Thanks.

Speaker #7: this quarter. And if we're

Vikram Kini: Thank you.

Vicente Reynal: Thank you.

Speaker #4: Thank you.

Speaker #4: you.

Speaker #7: talking about something like call it

Operator: The next question comes from Joe O'Dea with Wells Fargo. Please go ahead.

Speaker #2: The next question comes from Joe question. From Bill O'Reilly with Wells Oday with Wells Fargo. Please go Fargo. Please go ahead. ahead.

Speaker #5: I know you gave some of the items, but any more detail around the pricing that you've put in place for tariffs, but the timing of when that starts to flow through the P&L or the impact from the restructuring?

Speaker #7: 27 and a half to 28 in.

Speaker #7: Q2 and moving to

Speaker #7: something that approximates 30 in

Joe O'Dea: Hi. Good morning. Just wanted to circle back on the EBITDA margin kind of trajectory with ITS, because I expect that will be the biggest area of focus coming out of this quarter. You know, if we're talking about something like, call it 27.5% to 28% in Q2, and moving to something that approximates 30% in the H2, just if you could unpack any quantification around that. I know you gave some of the items, but any more detail around like the pricing that you put in place for tariffs, but the timing of when that starts to flow through the P&L or the impact from the restructuring, any of the cost mitigation, just to help with a little bit of the quantification around that break from Q2 into the H2.

Speaker #6: Hi. Good

Speaker #6: morning. I just wanted to circle

Speaker #7: the back half, just if you

Speaker #7: could unpack any quantification

Speaker #6: back on the

Speaker #6: EBITDA margin kind of

Speaker #7: around that. I know you gave some of the

Speaker #5: Any other cost mitigation just to help with a little bit of the quantification around that bridge from Q2 into the back half?

Speaker #6: trajectory with ITS

Speaker #7: items, but any

Speaker #7: more detail around the pricing that

Speaker #6: because I expect that will

Speaker #6: be the biggest area of

Speaker #7: you've put in place for tariffs, but the

Speaker #6: Focus. Coming out of this quarter

Speaker #7: timing of when that starts to flow through the

Speaker #7: P&L or the impact from the

Speaker #6: and if we're talking about

Speaker #3: Yeah. Sure. Joe, obviously, we're not going to necessarily provide the exact specifics on the individual moving components, but let me give a little bit more color on some of the moving parts.

Vikram Kini: Yeah, sure. Joe, we're obviously not gonna necessarily provide, you know, the exact specifics on the individual components, but let me give a little bit more color on some of the moving parts. You know, one, I think obviously kind of your read on you know the directional movement of margins is in line with expectations. As we've indicated, we do expect to see kind of sequential margin improvements here as we move through the year. Frankly, both a statement about ITS as well as PST for that matter. On the ITS front, you know, just to kind of delve into the components, a couple moving factors.

Vik Kini: Yeah, sure. Joe, we're obviously not gonna necessarily provide, you know, the exact specifics on the individual components, but let me give a little bit more color on some of the moving parts. You know, one, I think obviously kind of your read on you know the directional movement of margins is in line with expectations. As we've indicated, we do expect to see kind of sequential margin improvements here as we move through the year. Frankly, both a statement about ITS as well as PST for that matter. On the ITS front, you know, just to kind of delve into the components, a couple moving factors.

Speaker #7: restructuring? Any other cost

Speaker #6: something like, call it 27 and a

Speaker #7: mitigation just to help with a little bit of the quantification

Speaker #6: half, 28,

Speaker #6: 22, and moving to something that's

Speaker #7: around that

Speaker #6: approximately 30 in the back

Speaker #7: bridge from Q2 into the back

Speaker #6: half, if you could

Speaker #7: half?

Speaker #3: So one, I think obviously kind of your read on the directional movement of margins is in line with expectations. As we've indicated, we do expect to see kind of sequential margin improvements here as we move through the year.

Speaker #6: unpack any modification around that that

Speaker #6: You gave some of the items.

Speaker #6: that any more detail

Speaker #6: around the pricing to put in place for

Speaker #6: tariffs at the time when that starts to

Speaker #4: parts. So one, I think So one thing obviously from your read obviously kind of your read on the directional on the direction of movement movement of of margins is in line with margins is in line with expectations.

Speaker #6: flow through the P&L. Or the

Speaker #6: impact on the structuring any

Speaker #3: Frankly, both a statement about ITS, as well as PST for that matter. On the ITS front, just to kind of delve into the components, a couple of moving factors.

Speaker #6: other cost mitigation to help with a little

Speaker #6: bit of quantification

Speaker #6: around that bridge

Speaker #6: Q2 and the

Speaker #6: back.

Speaker #3: One, obviously, as I indicated here, we do expect to see organic volumes improve in the second half as comparatively to the first half levels.

Vikram Kini: One, obviously, as I indicated here, we do expect to see organic volumes improve in H2 as comparatively to the H1 levels. Clearly, you know, those do come with what I would call a normal flow through, which clearly will be a benefit that you haven't really seen kind of in the numbers, you know, over the last few quarters, just given some of the volume dynamics. Second piece would be price. So specific to price, you know, all of the I would call tariff related pricing actions are in the numbers. They were all largely taken to the back through 2025. I would say you're seeing those in the numbers as we speak.

Vik Kini: One, obviously, as I indicated here, we do expect to see organic volumes improve in H2 as comparatively to the H1 levels. Clearly, you know, those do come with what I would call a normal flow through, which clearly will be a benefit that you haven't really seen kind of in the numbers, you know, over the last few quarters, just given some of the volume dynamics. Second piece would be price. So specific to price, you know, all of the I would call tariff related pricing actions are in the numbers. They were all largely taken to the back through 2025. I would say you're seeing those in the numbers as we speak.

Vikram Kini: Yeah. Sure. Joe, obviously, I'm not gonna necessarily provide, you know, the exact specifics on the individual components, but let me give a little bit more color on some of the moving parts. You know, one, I think, obviously kind of your read on, you know, the directional movement of margins is in line with expectations. As you've indicated, we do expect to see kind of sequential margin improvements here as we move through the year. Frankly, both a statement about ITS as well as PST for that matter. On the ITS front, you know, just to kind of delve into the components, a couple moving factors.

Speaker #4: Yeah. Yeah. Sure. Joe, Sure. Obviously, we're not going to obviously, we're not going to necessarily necessarily use the provide the exact specifics on exact specifics on the individual the individual components, but let me give a little components, but let me give you a little bit of color on bit more color on some of the moving some of the moving parts.

Speaker #4: On the ITS ITS kind of front, just to kind of delve into the components, a couple of delegation factor, moving factors. one, obviously, as One, obviously, as I indicated here, I figured here, we do expect we do expect to see organic to see organic volumes volume improve in the second half improve in the second half as comparatively to the comparatively to the first half first half levels.

Speaker #3: Clearly, those do come with what I would call normal flow-through, which clearly will be a benefit that you haven't really seen kind of in the numbers over the last few quarters, just given some of the volume dynamics.

Speaker #4: As we expectations. As we've indicated, we do expect to continue to expect to see kind of the see kind of sequential margin improvements central market this here as we move through the year.

Speaker #3: Second piece would be price. So specific to price, all of the, I will call it, , tariff-related pricing actions have in the numbers. They were all largely taken through the back through 2025.

Speaker #4: year, frankly, both Frankly, both a statement about of ITS as well ITS, as well as PST for that as for that matter. On the matter.

Vikram Kini: One, obviously, as I indicated here, we do expect to see organic volumes improve in H2 as comparatively to H1 levels. Clearly, you know, those do come with what I would call normal flow through, which clearly will be a benefit that you haven't really seen kind of in the numbers, you know, over the last few quarters, just given some of the volume dynamics. Second piece would be price. Specific to price, you know, all of the I would call tariff-related pricing actions are in the numbers. They were all largely taken to the back, you know, through 2025. I would say you're seeing those in the numbers as we speak.

Speaker #3: And I would say you're seeing those in the numbers as we speak. What you haven't necessarily seen is some of the, I'd say, in-year 2026 actions, which is, I think, a catalyst of some of the margin expansion you would expect to see in the back half of the year.

Vikram Kini: You know, what you haven't necessarily seen is some of the, I'd say, in year 2026 actions, which is I think a catalyst of some of the margin expansion you would expect to see in the H2 of the year. The other factors I would probably point to here would be on the productivity side of the equation. You mentioned one on the restructuring. The restructuring has been taken. As you can expect, that restructuring is global in nature, so it does take some time for some of those actions to be fully executed, which we expect to kind of largely conclude here through the H1 of this year, and those benefits to start being more visible into the H2 of the year. The other piece would be, I would say, you know, the direct material side.

Vik Kini: You know, what you haven't necessarily seen is some of the, I'd say, in year 2026 actions, which is I think a catalyst of some of the margin expansion you would expect to see in the H2 of the year. The other factors I would probably point to here would be on the productivity side of the equation. You mentioned one on the restructuring. The restructuring has been taken. As you can expect, that restructuring is global in nature, so it does take some time for some of those actions to be fully executed, which we expect to kind of largely conclude here through the H1 of this year, and those benefits to start being more visible into the H2 of the year. The other piece would be, I would say, you know, the direct material side.

Speaker #4: level. Clearly, for those who Clearly, those do come with what I would come with normal call normal flow-through, which workgroup, which clearly will be clearly will be a benefit a benefit that you really that you haven't really seen kind of in the see kind of in the numbers over the last numbers over the last few quarters, just two quarters given some of the volume given some of the volume dynamics.

Speaker #4: And I 2025. And I would say you've seen would say you're seeing those in the numbers as those in the numbers as we we speak.

Speaker #3: The other factors I would probably point to here would be on the productivity side of the equation. So you mentioned one on the restructuring.

Speaker #4: that. Second Second piece would be price. So piece, the central specific to price, all price all of of the, I will call it, the tariff-related pricing tariff-related pricing actions actions that brought market have in the numbers; they were random efforts, they were all largely taken to all largely taken through the back through the back through 2025.

Speaker #3: The restructuring has been taken. As you can expect, that restructuring is global in nature, so it does take some time for some of those actions to be fully executed, which we expect to kind of largely conclude here through the first half of this year.

Speaker #3: And those benefits to start being more visible into the back half of the year. And the other piece would be, I would say, the direct material side.

Speaker #4: As you can expect, expect that restructuring is that restructuring is global in nature, so it global in nature. So it does take some time for does take some time for some of those actions to be some of those actions to be fully executed, fully executed, which we expect to kind which we expect to kind of log of largely conclude here through the first half of this here to the first half of this year.

Speaker #4: speak. What you haven't What you haven't necessarily seen necessarily seen is some of is some of the, I'd say, in-year the in-year 2026 2026 actions, which is, I actions, which is I think a catalyst of some think, a catalyst of some of the margin expansion of the market expansion perspective in the you would expect to see in the back half of the back half of the year.

Vikram Kini: You know, what you haven't necessarily seen is some of the, I'd say in 2026 actions, which is I think a catalyst of some of the margin expansion you would expect to see in the H2 of the year. The other factors I would probably point to here would be on the productivity side of the equation. You mentioned one on the restructuring. The restructuring has been taken. As you can expect, that restructuring is global in nature, so it does take some time for some of those actions to be fully executed, which we expect to kind of largely conclude here through the H1 of this year, and those benefits to start being more visible into the H2 of the year. The other piece would be, I would say, you know, the direct material side.

Speaker #3: As a reminder, direct materials approximately 70% of our cost of goods sold. And there is a lot of activity going on, whether it be on the I2V front or the classical, I would just call it direct material, procurement side of the equation.

Vikram Kini: You know, as a reminder, you know, direct material is approximately 70% of our cost of goods sold, and there is a lot of activity going on, whether it be on the I2V front or the classical, I would just call it, direct material procurement side of the equation. As you've seen in years past, those benefits tend to be much more visible when you have kinda your seasonally strongest quarter, which is always in the H2, and particularly Q4. Again, that's another driver of kinda some of the H2 margin expansion that you're not necessarily seeing manifest right now in Q1.

Vik Kini: You know, as a reminder, you know, direct material is approximately 70% of our cost of goods sold, and there is a lot of activity going on, whether it be on the I2V front or the classical, I would just call it, direct material procurement side of the equation. As you've seen in years past, those benefits tend to be much more visible when you have kinda your seasonally strongest quarter, which is always in the H2, and particularly Q4. Again, that's another driver of kinda some of the H2 margin expansion that you're not necessarily seeing manifest right now in Q1.

Speaker #4: And the other year. And the other thing I would piece would be, I would say, the direct say the direct materials as a material side.

Speaker #4: The other year. The other factors I would probably point factor I would like to see here with some of the to here would be on the productivity side of the productivity side of things.

Speaker #4: As a reminder, reminder, direct materials approximately direct materials approximately 70% of our 70% of our cost of goods sold. cost is still. And there's a lot of And there is a lot of activity going on, activity going on, whether it whether it be on the I2V front or be the the classical, I would just call it direct classical direct material, material, procurement side of the procurement side of things.

Speaker #3: And as you've seen in years past, those benefits tend to be much more visible when you have kind of your seasonally strongest quarter, which is always in the back half of the year, and particularly fourth quarter.

Speaker #4: So you mentioned equation. So you mentioned one on the one of the refractory—the restructuring. The restructuring has been, restructuring has been taken as you can, taken.

Speaker #4: equation. And as you've seen in years And in your past, those past, those benefits have to be much benefits tend to be much more more visible when you visible when you have kind of your seasonally have the strongest quarter.

Speaker #3: So again, that's another driver of kind of some of the back half margin expansion that you're not necessarily seeing manifest right now in the first quarter.

Speaker #4: And those year. And those benefits to start being more benefits are being visible in the back half of the visible into the back half of the year.

Vikram Kini: You know, as a reminder, you know, direct material is approximately 70% of our cost of goods sold. There is a lot of activity going on, whether it be on the I2V front or the classical, I would just call it direct material procurement side of the equation. You know, as you've seen in years past, those benefits tend to be much more visible when you have kind of your seasonally strongest quarter, which is always in H2, and particularly Q4. Again, that's another driver of kind of some of the H2 margin expansion that you're not necessarily seeing manifest right now in the first quarter.

Speaker #4: All helpful details. And then just on the demand front, when you talk about some of the order delays and some of that coming back in the quarter, but trying to understand a little bit of the ripple effect from the conflict and so if you could just talk about what you're seeing in Europe overall demand and then over the course of March and April, if you have seen any impact associated with the conflict or if that order impact is largely contained to the Middle East region.

Joe O'Dea: All helpful details. Just on the demand front, when you talk about some of the order delays, some of that coming back in in the quarter, but trying to understand a little bit of the ripple effect from the conflict. If you could just talk about what you're seeing in Europe overall demand and then, you know, over the course of March and April, if you have seen any impact associated with the conflict or if that order impact is largely contained to Middle East region.

Speaker #5: then just on the demand front, when you talk about some of the order delays and some of that coming back in the quarter,

Speaker #5: but trying to understand a little bit

Speaker #5: of the ripple effect from the

Speaker #4: We strongest quarter, which is always in the back half of can always come back after the fourth the year, and particularly fourth quarter. So again, quarter.

Speaker #5: conflict and so if you could just

Speaker #4: So again, that's another driver that's another driver of kind of some of the back of kind of some of the back half market half margin expansion that you're not expansion that you're not necessarily seeing necessarily seeing manifest right now manifest right now in the in the first first quarter.

Speaker #5: talk about what you're seeing

Speaker #5: in

Speaker #5: Europe overall demand

Speaker #5: and then over the course of March and

Speaker #4: quarter.

Speaker #3: Yeah. Joe, it is mainly contained right now to the Middle East. And the Middle East, it was really, as we said, a handful of these kind of long-cycle, large projects that as the conflict started and people had to just stay at home and not being able to leave.

Vicente Reynal: Yeah. Okay, Joe, it is mainly contained right now to the Middle East. The Middle East, it was really, as we said, you know, handful of these kind of long cycle large projects that as the conflict started and people had to just stay at home and not being able to leave. I mean, we have a lot of our team members, they're all safe and sound, but they could not leave the house to go and talk to customers. Same thing at the customer site. That is really what created some of the delay and the impact.

Joe O'Dea: All the little details. Then just on the demand front, when you talk about some of the order delays, some of that coming back in the, in the quarter. Trying to understand a little bit of the ripple effect from the conflict, so if you could just talk about what you're seeing in Europe, overall demand and then, you know, over the course of March and April, if you have seen any impact associated with the conflict or if that order impact is largely contained to Middle East region.

Speaker #5: I'll help All helpful details. And detail.

Speaker #5: impact associated with the

Speaker #4: And then based on

Speaker #4: the quarter, but trying to

Speaker #5: conflict or if that order

Speaker #5: impact is largely contained

Speaker #5: to the Middle East region.

Speaker #4: understand a little bit the ripple

Speaker #4: effect from the conflict

Speaker #4: and if you could talk about

Speaker #3: I mean, we have a lot of our team members, they're all safe and sound, but they had to they could not leave the house to go and talk to customers.

Speaker #4: what you're seeing in

Speaker #4: Europe.

Speaker #4: Overall, and over

Speaker #4: the course of March and April, if you

Speaker #3: Same thing at the customer side. So that is really what created some of the delay and the impact. And therefore, as you can see here already, in the month of April, as we said, already a third of those orders kind of already booked into us.

Speaker #4: have seen an impact April, if you have seen any

Speaker #4: I mean, we have a lot of our team members, they're all safe and sound, but they had to they could not leave the house to go and talk to customers.

Speaker #4: with the conflict

Vicente Reynal: Therefore, as you can see here already in the month of April, as we said, already a third of those orders kind of already booked into us, and we don't see any cancellation whatsoever. I think it's just at this point in time, mainly due to very fairly contained on that. As we think about continual perhaps impact in Europe, you know, the main impact that we see is clearly the increase in energy prices, which we view it as a potential long-term tailwind for us, given the nature of our products, as we said before, and how we can create customer energy efficiency for our products and services. There was actually...

Speaker #4: over. If that

Speaker #4: is largely Middle East

Speaker #4: region. Yeah. Joe, it is mainly contained right now to the Middle East. And the Middle East, it was really, as we said, a handful of these kind of long-cycle, large projects that as the conflict Yeah.

Speaker #4: Same thing at the and. customer side. So that is really what So that is really created some of the delay and the impact. And the filter for what we see therefore, as you can see here already, here already in in the month of April, the as we said, already a third of those multi-factorial of orders kind of those folks already booked into us.

Vicente Reynal: Yeah. Hey, Joe O'Dea. It is mainly contained right now to the Middle East. The Middle East, it was really as we said, you know, handful of these kind of long cycle, large projects that as the conflict started and people had to just stay at home and not being able to leave. I mean, we have a lot of our team members, they're all safe and sound, but they could not leave the house to go and talk to customers. Same thing at the customer side. That is really what created some of the delay and impact.

Speaker #3: And we don't see any cancellation whatsoever. So yeah, so I think it's just at this point in time, mainly due to fairly contained on that.

Speaker #4: As the conflict started, people started and people had to just stay at had to stay at home home and not being able to leave.

Speaker #3: As we think about continuing perhaps impacting in Europe, the main impact that we see is clearly the increase in energy prices. Which we view it as a potential long-term tailwind for us, given the nature of our products, as we said before, and how we can create customer energy efficiency for our products and services.

Speaker #4: And we don't see any cancellation whatsoever into—yeah. So, yeah, I think it's just, at this point in time, mainly due to it being fairly contained on that.

Speaker #4: As we think about continuing perhaps impacting in Europe, So the the main impact that we see is clearly the increase in energy prices. Which we view it as a potential long-term tailwind for us, given the nature of our products, as we said before, and how we can create customer energy efficiency for our products and services.

Vicente Reynal: Therefore, as you can see already in the month of April, as we said, already a third of those orders, kind of already booked into us, and we don't see any cancellation whatsoever. I think it's just at this point in time, mainly due to very early contained on that. As we think about continual, perhaps impact in Europe, you know, the main impact that we see is clearly, the increase in energy prices, which we view it as a potential long-term tailwind for us given the nature of our products as we said before, and how we can create customer energy efficiency for our products and services.

Speaker #3: There was actually a Teams were telling me about a wind that they had where they're saving upwards of $15,000 per month on a specific location at a customer, creating a payback of compressor to be anywhere into the one year.

Vicente Reynal: The teams were telling me about a win that they had where they're saving, you know, upwards of $15,000 per month on a specific location at a customer, creating a payback of compressors to be, you know, anywhere into the one year. Not everyone's gonna be like that, but I mean, I think that is really part of what we're very focused on. How can we help our customers lower those energy costs so that with the technologies that we have.

Speaker #4: There was actually teams that were telling me about a wind that they had where they're saving upwards of $15,000 per month on a specific location at a customer, creating a payback of compressor to be anywhere into the one year.

Speaker #3: Not everyone's going to be like that, but I mean, I think that is really part of what we're very focused on. How can we help our customers lower those energy costs so that with the technologies that we have?

Speaker #4: Not everyone is going to be like that, but I mean, I think that is really part of what we're very focused on. How can we help our customers lower those energy main cost.

Speaker #4: I appreciate it. Thanks.

Joe O'Dea: I appreciate it. Thanks.

Speaker #5: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Operator: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Vicente Reynal: There was actually a team were telling me about a win that they had where they're saving, you know, upwards of, you know, $15,000 per month on a specific location at a customer, creating a payback of compared to be, you know, anywhere into the 1 year. Not everyone's gonna be like that, I mean, I think that is really part of what we're very focused on. How can we help our customers lower those energy costs so that with the technologies that we have?

Speaker #3: Thanks. Good morning. I just sorry to revisit this, but I just want to sort of revisit the triangulation between organic growth in the quarter orders both kind of flat to down and then this 1% full-year organic growth.

Amit Mehrotra: Thanks. Good morning. Sorry to revisit this, but I just wanna sort of revisit the triangulation between organic growth in the quarter, orders both kind of flat to down, and then this 1% full year organic growth, and then the comps actually get a little bit harder as we progress through the year on organic growth. I'm just trying to triangulate those three things and if there's kind of this embedded expectation of demand that we're not seeing yet as we progress through the year, or maybe that's not. Maybe you can clarify that for me. Thank you.

Speaker #5: I appreciate it. I appreciate it. Thanks. Thanks.

Speaker #6: Your next

Speaker #6: question comes from Amit Mehrotra

Speaker #6: with UBS. Your line is

Speaker #6: open.

Speaker #5: Thanks, good morning. I

Speaker #5: just sorry to revisit this, but I

Speaker #5: Just want to sort of revisit the

Speaker #3: And then the comps actually get a little bit harder as we progress through the year on organic growth. So I'm just trying to triangulate those three things.

Speaker #5: triangulation between organic

Speaker #4: So costs so that with the technologies that we that. have?

Speaker #5: growth in the quarter

Speaker #5: orders both kind of flat to

Speaker #5: down and then this

Speaker #3: And if there's kind of this embedded expectation of demand that we're not seeing yet as we progress through the year or maybe that's not.

Joe O'Dea: I appreciate it. Thanks.

Operator: Your next question comes from Amit Mehrotra with UBS. Your line is open.

Speaker #2: Your next question comes

Speaker #5: the comps actually get a little bit

Speaker #2: from

Speaker #5: harder. As we progress through the year on organic

Speaker #2: ETS. Your

Speaker #5: growth. So I'm just trying to triangulate

Speaker #3: Maybe you can clarify that for me. Thank you.

Speaker #2: line.

Speaker #5: those three things, and if there's kind

Amit Mehrotra: Thanks. Good morning. I just wanna sort of revisit the triangulation between organic growth in the quarter, orders both kind of flat to down and then the 1% full year organic growth, and then the comps actually get a little bit harder as we progress through the year on organic growth. I'm just trying to triangulate those three things and if there's kind of this embedded expectation of demand that we're not seeing yet as we progress through the year, or maybe that's not. Maybe you can clarify that for me. Thank you.

Speaker #4: Thanks. Good

Speaker #4: morning. I just sorry

Speaker #6: Yeah, sure. I mean, I'll start. So I think as Vicente indicated here, first and foremost, the short cycle side of our business, whether you look at either on the ITS side or the PST side, is the piece that we're definitely seeing, I'd say, stabilization and even I'd say improvement on as we think back to the last few quarters.

Speaker #5: of this embedded expectation

Vikram Kini: Yeah, sure, Amit. I'll start. You know, I think as Vicente indicated here, first and foremost, you know, the short cycle side of our business, whether you look at either on the ITS side or the PST side, is the piece that we're definitely seeing, I'd say, stabilization and even, you know, I'd say improvement on as we think back to, you know, the last few quarters. That's obviously very encouraging. It's kind of the base of the business, and obviously what will be a driver of, you know, the improvement that we see in the demand environment.

Vik Kini: Yeah, sure, Amit. I'll start. You know, I think as Vicente indicated here, first and foremost, you know, the short cycle side of our business, whether you look at either on the ITS side or the PST side, is the piece that we're definitely seeing, I'd say, stabilization and even, you know, I'd say improvement on as we think back to, you know, the last few quarters. That's obviously very encouraging. It's kind of the base of the business, and obviously what will be a driver of, you know, the improvement that we see in the demand environment.

Speaker #5: of demand

Speaker #4: to repeat it, but I just want to sort of

Speaker #5: that we're not seeing yet as we progress through

Speaker #4: revisit the triangulation

Speaker #4: between organic growth in the

Speaker #5: the year or maybe that's not. Maybe you can

Speaker #4: quarter, quarter both kind

Speaker #5: clarify that for me. Thank

Speaker #4: of down, and

Speaker #7: Yeah, sure. I mean,

Speaker #4: then the 1% full-year organic growth complex. We

Speaker #7: I'll start. So I

Speaker #7: think as Vicente indicated here,

Speaker #4: get a little bit harder as we progress

Speaker #7: first and foremost, the short

Speaker #7: cycle side of our business, whether you look at

Speaker #4: through the year on organic growth. And I'm just

Speaker #6: So that's obviously very encouraging. It's kind of the base of the business. And obviously, what will be a driver of the improvement that we see in the demand environment.

Speaker #4: trying to triangulate some things

Speaker #7: either on the ITS side or the PST

Speaker #7: side, is the piece that we're definitely

Speaker #4: in that there's kind of this

Speaker #7: seeing. I'd say

Speaker #4: embedded expectation

Speaker #4: of demand that we're not seeing

Speaker #7: stabilization and even I'd say improvement on

Speaker #7: as we think back to the last few

Speaker #4: yet as we progress through the year.

Speaker #4: Maybe that's not—maybe you can clarify that for me. Thank you.

Speaker #7: So that's obviously very

Vikram Kini: As far as the order numbers you saw in Q1, I think as Vicente said here, clearly more impacted by the longer cycle projects. Those are projects that, you know, you typically book in H1, they go into backlog, and those might be 6 to 18 months in duration, right? Yes, obviously we want to continue to see those get to the finish line. But you know, our expectation is a lot of it was just timing and transitory. We do expect those projects to kind of, you know, not just stay in the funnel, but ultimately get to the finish line. Those will continue to feed the backlog, not just in H2 of this year, but even into 2027.

Speaker #7: encouraging. It's kind of the base of the

Speaker #4: you.

Speaker #6: As far as the order numbers you saw in Q1, I think as Vicente said here, clearly more impacted by the longer cycle of projects.

Vikram Kini: Yeah, sure. I'll start. You know, I think as Vicente indicated here, first and foremost, you know, the short cycle side of our business, whether you look at either on the ITS side or the PST side, is a piece that we're definitely seeing, I'd say, stabilization and even, you know, I'd say improvement on as we, as we think back to, you know, the last few quarters. That's obviously very encouraging. It's kind of the base of the business, and obviously what will be a driver of, you know, the improvement that we see in the demand environment. As far as the order numbers you saw in Q1, I think as Vicente said here, clearly more impacted by the longer cycle projects.

Speaker #5: Yeah. you.

Speaker #7: business and obviously what will be

Speaker #5: Sure. I mean, I'll

Vik Kini: As far as the order numbers you saw in Q1, I think as Vicente said here, clearly more impacted by the longer cycle projects. Those are projects that, you know, you typically book in H1, they go into backlog, and those might be 6 to 18 months in duration, right? Yes, obviously we want to continue to see those get to the finish line. But you know, our expectation is a lot of it was just timing and transitory. We do expect those projects to kind of, you know, not just stay in the funnel, but ultimately get to the finish line. Those will continue to feed the backlog, not just in H2 of this year, but even into 2027.

Speaker #5: start. So I think there's some

Speaker #7: a driver

Speaker #5: indications here first and

Speaker #7: of the

Speaker #5: foremost, short cycles out of our

Speaker #7: improvement that we see in the demand environment. As

Speaker #5: business, whether you look at the

Speaker #6: Those are projects that you typically book in the first half of the year. They go into backlog. And those might be six to eighteen months in duration, right?

Speaker #5: year-on-year side, is the

Speaker #7: far

Speaker #7: as the

Speaker #5: piece that we're definitely seeing. I'd

Speaker #5: say stabilization in any I'd say

Speaker #7: order numbers you saw in Q1, I think as

Speaker #7: Vicente said here, clearly more impacted by the

Speaker #5: improvement on I

Speaker #5: think in the last few quarters.

Speaker #6: So yes, obviously, we want to continue to see those get to the finish line. But one, our expectation is a lot of it was just timing and transitory.

Speaker #7: longer cycle of projects. Those

Speaker #5: So quarters.

Speaker #7: are projects that you typically

Speaker #5: that's obviously very encouraging in

Speaker #7: book in the first half of the year. They go into

Speaker #5: terms of basic business and

Speaker #5: obviously what we'll be doing

Speaker #7: backlog. And those might be

Speaker #5: will drive from

Speaker #6: We do expect those projects to kind of not just stay in the funnel, but ultimately get to the finish line. And those will continue to feed the backlog, not just in the back half of this year, but even into 2027.

Speaker #7: 6 to 18 months in duration,

Speaker #7: right? So yes, obviously, we want

Speaker #5: the

Speaker #5: improvement. As far

Speaker #7: to continue to see those get to the finish

Speaker #7: line. But one,

Speaker #5: as

Speaker #7: Our expectation is a lot of it was just

Speaker #5: the order

Speaker #7: timing and transitory. We do expect those

Speaker #6: So again, yes, we do want to see that longer cycle. Those projects get to the finish line. But that for us is more of the longer-term side of the equation.

Vikram Kini: Again, yes, we do wanna see that longer cycle, you know, those projects get to the finish line. You know, that for us is, you know, more of the longer term side of the equation. We're very encouraged by what we're seeing on the, let's say, shorter cycle and some of the book-to-ship businesses, as well as, you know, some of the momentum we continue to see on the life sciences side as well.

Speaker #5: number one, I think it's

Vik Kini: Again, yes, we do wanna see that longer cycle, you know, those projects get to the finish line. You know, that for us is, you know, more of the longer term side of the equation. We're very encouraged by what we're seeing on the, let's say, shorter cycle and some of the book-to-ship businesses, as well as, you know, some of the momentum we continue to see on the life sciences side as well.

Speaker #7: projects to kind of not

Speaker #5: really more the longer cycle

Speaker #7: just stay in the funnel, but ultimately get to the finish

Speaker #5: projects. Those are projects that

Speaker #7: line. And those will continue to until we get to the finish line.

Vikram Kini: Those are projects that, you know, you typically book in H1 of the year. They go into backlog, and those might be 6 to 18 months in duration, right? Yes, obviously we want to continue to see those get to the finish line. You know, one, our expectation is a lot of it was just timing and transitory. We do expect those projects to kind of, you know, not just stay in the funnel, but ultimately get to the finish line. You know, those will continue to feed the backlog, not just in H2 of this year, but even into 2027. Yes, we do wanna see that longer cycle, you know, those projects get to the finish line.

Speaker #7: feed the backlog, not just in the back half of

Speaker #5: you typically book in the first

Speaker #5: half of the year. They go to the backlog. And

Speaker #7: this year, but even into 2027.

Speaker #6: We're very encouraged by what we're seeing on the, let's say, shorter cycle and some of the bookship businesses. As well as some of the momentum we continue to see on the life sciences side as well.

Speaker #5: those might be 6 to 18

Speaker #7: So again, yes, we do want to see that

Speaker #5: months in duration, right? So

Speaker #7: longer cycle. Those projects get to

Speaker #5: yeah, obviously we want to continue to

Speaker #7: the finish line. But

Speaker #7: that for us is more

Speaker #5: see those get to the finish line.

Speaker #5: But one, our expectation

Speaker #7: of the longer-term side of the

Speaker #7: equation. We're very encouraged by what we're seeing

Speaker #3: Okay. Thank you. And I just wanted to follow up on that point. And maybe Vicente, the short-cycle stuff seems encouraging underneath the surface, but ultimately, it's not piercing its way through to the organic growth profile of the business.

Speaker #5: A lot of it will be timing and

Amit Mehrotra: Okay. Thank you. I just wanted to follow up on that point, and maybe, Vicente, you know, the short cycle stuff seems encouraging underneath the surface, but ultimately it's not piercing its way through to the organic growth profile of the business. I'd like to get maybe your perspective on this because obviously you know the business better than anybody else. My understanding, my feeling is that, you know, you guys took a lot of price over the last several years. I'd love for you to opine on whether there's a demand elasticity. I mean, because energy prices are high and surged during the quarter, which arguably would create a little bit of a cycle for your products. Maybe just opine on whether there's a demand elasticity issue vis-a-vis pricing and market share.

Speaker #5: transport. We expect those projects to kind

Speaker #7: on the, let's say, shorter cycle and some of

Speaker #5: of not just stay in the process

Speaker #7: the book ship businesses. As

Speaker #7: well as some of the momentum we continue to

Speaker #5: And those will continue to be the backlog not

Speaker #7: see on the life sciences side as

Speaker #7: well.

Speaker #5: just in the back half of this year, but even into

Speaker #5: Okay. Thank Okay.

Speaker #5: 2027. So again, yeah, we

Speaker #5: You. And I just wanted to follow up on that. Thank you.

Speaker #5: point. And maybe Vicente, the

Speaker #5: do want to see that longer

Speaker #5: cycle project get to the finish

Speaker #3: And I'd like to get maybe your perspective on this anybody else. And my understanding, my feeling is that you guys took a lot of price over the last several years I'd love for you to opine on whether there's a demand elasticity.

Speaker #5: line. But that for

Vikram Kini: You know, that for us is, you know, more of the longer term side of the equation. We're very encouraged by what we're seeing on the, let's say, shorter cycle and some of the book ship businesses, as well as, you know, some of the momentum we continue to see on the life sciences side as well.

Speaker #5: short cycle stuff seems

Speaker #5: encouraging. Underneath the surface, but

Speaker #5: us is more of a

Speaker #5: longer-term side of the equation. We're very

Speaker #5: ultimately, it's not piercing its way through

Speaker #5: concerned about what we're seeing on

Speaker #5: to the organic growth profile of the

Speaker #5: the shorter cycle and some of the short shift

Speaker #5: business. And I'd like to

Speaker #5: businesses. As well as a couple

Speaker #5: get maybe your perspective on this because

Speaker #5: obviously, the business is better than anybody

Speaker #5: of momentum to see on

Speaker #3: I mean, because energy prices are high and surged during the quarter, which arguably would create a little bit of a cycle for your products.

Speaker #5: the side of this.

Speaker #5: else. And my understanding, my feeling

Amit Mehrotra: Okay. Thank you. I just wanted to follow up on that point and, maybe, Vicente, you know, the short cycle stuff seems encouraging underneath the surface, but ultimately it's not piercing its way through to the organic growth profile of the business. I'd like to get maybe your perspective on this because obviously you know the business better than anybody else. My understanding, my feeling is that, you know, you guys took a lot of price over the last several years. I'd love for you to opine on whether there's a demand elasticity. I mean, because energy prices are high and surged during the quarter, which arguably would create a little bit of a cycle for your products. Maybe just opine on whether there's a demand elasticity issue vis-a-vis pricing and market share.

Speaker #5: is that you guys took a lot of

Speaker #4: And some of the follow-ups on that story,

Speaker #5: price over the last several

Speaker #5: years I'd love for you to

Speaker #4: maybe the short-term

Speaker #3: Maybe just opine on whether there's a demand elasticity issue vis-à-vis pricing and market share. Is there something else going on where some of this short cycle momentum that we're seeing across the broader industrial is not really piercing through your organic growth in the moment?

Speaker #5: opine on whether there's a demand

Speaker #4: stuff seems encouraging underneath the

Speaker #5: elasticity. I mean, because energy prices are

Amit Mehrotra: Like, is there something else going on where some of this short cycle momentum that we're seeing across the broader industrial is not really piercing through your organic growth in the moment?

Speaker #4: surface. Ultimately, it's not

Speaker #5: high and surged during the

Speaker #5: quarter, which arguably would create a little bit

Speaker #4: piercing quite

Speaker #4: the growth profile of the business.

Speaker #5: of a cycle for your

Speaker #5: products. Maybe just opine on whether there's a

Speaker #4: And I'd like to get into your

Speaker #5: demand elasticity issue vis-à-vis

Speaker #4: perspective on

Speaker #5: pricing and market share. Is there something else going

Speaker #4: the house. And I

Speaker #4: Yeah. I'll say, Amit, I mean, underneath, obviously, all the data that we have, I mean, we're kind of clearly seeing it. I mean, if I think about the PST side, when you think about the two-year stack, organic orders on PST, they're basically up in single-digit organic.

Vicente Reynal: Yeah. I'll say, Amit, I mean, underneath obviously all the data that we have, I mean, we're kind of clearly seeing it. I mean, if I think about the PST side, when you think about the two-year stack organic orders on PST, they're basically up mid-single-digit organic. When you kind of unpack what we saw in the first quarter, Precision Technology, which is kind of the more short-cycle in nature, we saw the short-cycle in nature piece actually continue to do fairly well, offset by some long-cycle year-over-year comps. I mean, some of the long-cycle, I think we tend to like to look at it better more on a H1 and H2 kind of comparison versus on a quarter-to-quarter basis.

Speaker #4: understand my feeling is that

Speaker #5: on where some of this short

Speaker #5: cycle momentum that we're seeing across the

Speaker #4: You guys put a lot of money over the

Speaker #4: last couple of years.

Speaker #5: broader industrial is not really piercing through

Speaker #5: your organic growth in the

Speaker #4: I'd love to be able to find

Speaker #5: moment? growth at the

Speaker #4: whether there's demand elasticity. I

Speaker #4: mean, energy prices are high

Speaker #4: and serves the quarter, which is

Speaker #4: arguably a little bit of a cycle in your

Speaker #4: And when you kind of unpack what we saw in the first quarter, precision technology which is kind of the more short cycle in nature, we saw the short cycle in nature piece actually continue to do fairly well offset by some long cycle kind of year-over-year comps.

Speaker #4: product. Maybe just to

Speaker #4: find whether there's demand elasticity

Speaker #4: issues in pricing and market share

Speaker #4: like something else going on where some

Speaker #4: of this short

Speaker #4: cycle is not

Speaker #4: really interesting for your organic

Speaker #4: moment. Yeah. I'll say, I mean, we're I mean, underneath, obviously, all the data that we have, I mean, we're kind of clearly

Vicente Reynal: Yeah. I'll say, I mean, we're. I mean, underneath obviously all the data that we have, I mean, we kind of clearly seeing it. I mean, if I think about the PST side, when you think about the 2 years back, organic orders on PST, they're basically up mid-single digit organic. When you kind of unpack what we saw in Q1, Precision Technology, which is kind of the more short cycle in nature, we saw the short cycle in nature P actually continue to do fairly well, offset by some long cycle, kind of year over year, comp. I mean, some of the long cycle, I think we tend to like to look at it better more on a H1 and H2 kind of comparison versus on a quarter-to-quarter basis.

Speaker #4: I mean, some of the long cycle, I think we tend to like to look at it better more on the first half and second half kind of comparison versus on the quarter-to-quarter basis.

Speaker #5: Yeah.

Speaker #4: Offset by some long cycle kind of year over also year over year, comps. I mean, year. And some of the long cycle, I think we tend to like to look at it better more on a first half and second half kind of comparison so kind of versus a quarter-to-quarter comparison basis.

Speaker #4: I seeing it. I mean, if I think about the PST side, when you mean, when you think about the two-year think about the two-year stack, organic orders on PST, they're basically up in single-digit organic.

Speaker #4: Within the ITS, when you think about the blower and the vacuum side of the business, those tend to be more short cycle. We have always indicated in the past, historically, that we have our vacuum business that is based in Europe as a good leading indicator for upswings in manufacturing demand based on short cycle.

Vicente Reynal: Within the ITS, when you think about the blower and the vacuum side of the business, those tend to be more short cycle. We have always indicated in the past historically that we have our vacuum business that is based in Europe as a good leading indicator for upswings in manufacturing demand based on short cycle, and we're seeing that. I mean, we see that clearly. Kind of when we unpack at a high level and you kind of start excluding some of these long cycles, we definitely see that short cycle continues to improve. You know, keep in mind, I mean, the demand elasticity based on price, I mean, we'd had a lot of statistics and a lot of analysis.

Speaker #4: stock, And when you kind of unpack what we and what we saw this saw in the first quarter, precision technology, which is kind of the quarter, which is kind of a more more short cycle in nature, we maker, we saw the short cycle in nature piece saw actually continue to do fairly actually well.

Speaker #4: Within within the ITS, when you think about the the blower and the vacuum side of the business, those tend to be more short lower.

Speaker #4: And we're seeing that. I mean, we see that clearly. So kind of when we unpack at a high level, and you kind of start excluding some of these long cycles, we definitely see that short cycle continues to improve and keep in mind.

Speaker #4: on short cycle. And we're seeing that. I And we're seeing that. We see mean, we see that that. So kind of clearly. So kind of when we when we look unpack at a high level, and you kind of start excluding some of these long cycles, we definitely see ok back that short that short cycle continues to improve cycle and keep in and keep in mind.

Vicente Reynal: Within the ITS, when you think about the blower and the vacuum side of the business, those tend to be more short cycle. We have always indicated in the past historically that we have our vacuum business that is based in Europe as a good leading indicator for upswings in manufacturing demand based on short cycle, and we're seeing that. I mean, we see that clearly. Kind of when we unpack at a high level and you kind of start excluding some of these long cycles, we definitely see that short cycle continues to improve and, you know, keep in mind, I mean, the demand elasticity based on price. I mean, we have a lot of statistics and a lot of analysis.

Speaker #4: I mean, the demand elasticity based on price, I mean, we'd had a lot of statistics and a lot of analysis. We see that as long as we continue to innovate and we sell based on cost of ownership and payback that remains strong, that's how our sales teams they sell today.

Speaker #4: We have cycle. We have always always indicated in the indicated in the past, historically, that we past that our vacuum have our vacuum business that is based in system in Europe has a Europe as a good leading indicator for upswings good in in manufacturing demand based manufacturing in the past cycle.

Vicente Reynal: We see that as long as we continue to innovate and we sell based on cost of ownership and payback, that remains strong. That's how our sales teams they sell today. They sell based on that total cost of ownership on the ITS side, but also on the PST side too as well.

Speaker #4: I mean, the demand elasticity based on mind, I mean, we price, I mean, we had a lot of statistics and a have a lot lot of analysis.

Speaker #4: They sell based on that total cost of ownership on the ITS side, but also on the PST side too as well.

Speaker #4: We see that of see that as long as as long as we continue to innovate and we and we we sell based on cost of ownership and payback that remains strong, sell that's that's how our sales teams they sell today.

Speaker #3: Got it. Okay. Very helpful. Thank you very much.

Amit Mehrotra: Got it. Okay. Very helpful. Thank you very much.

Speaker #4: Thank you.

Vicente Reynal: Thank you.

Speaker #4: They sell based on that total cost of ownership on the how on ITS side, but also on the PST side too as the.

Speaker #5: Your next question comes from Nathan Jones with Stifel. Your line is open.

Operator: Your next question comes from Nathan Jones with Stifel. Your line is open.

Speaker #4: well.

Speaker #5: Got it. Okay. Very helpful. Thank you it.

Speaker #6: Good morning, everyone.

Nathan Jones: Good morning, everyone.

Speaker #5: very much.

Vicente Reynal: Morning.

Speaker #3: Good morning, Nathan.

Nathan Jones: Vicente, I'd like to just ask about, you've made a couple comments on the call today about the potential for high oil prices, high energy prices in Europe to be a catalyst. We had a similar circumstance in 2022, and I believe there was a surge in demand for your products then. I'm hoping you can kind of compare where we are today in Europe to where we were maybe in 2022. I know there were some government programs that helped there, but maybe just any color you can give us on the similarities that you see and differences that you see between now and then and how rising energy prices or high energy prices impacted the business back then.

Speaker #4: Thank

Speaker #6: Vicente, I'd like to just ask about the you've made a couple of comments on the call today about the potential for high oil prices, high energy prices in Europe to be a catalyst.

Speaker #4: you.

Vicente Reynal: We see that as long as we continue to innovate and we sell based on cost of ownership and payback that remains strong, that's how our sales teams they sell today. They sell based on that total cost of ownership on the ITS side, but also on the PST side too as well.

Speaker #6: Your next question comes

Speaker #6: from Nathan Jones with Stifel.

Speaker #6: Your line is

Speaker #7: Morning, everyone. I'm Vicente, but I'd like to just ask about the you've made a couple of comments on the call today about the potential for high oil prices, high energy prices in Europe to be a

Speaker #6: We had a similar circumstance in 2022, and I believe there was a surge in demand for your products then. I'm hoping you can kind of compare where we are today in Europe to where we were maybe in 2022.

Amit Mehrotra: Got it. Okay, very helpful. Thank you very much.

Speaker #5: Got

Speaker #4: Very

Speaker #4: helpful.

Speaker #7: catalyst. We had a similar circumstance

Vicente Reynal: Thank you.

Speaker #5: Thank

Speaker #5: you.

Speaker #7: in 2022, and I

Speaker #6: I know there were some government programs that helped there, but maybe just any color you can give us on the similarities that you see and differences that you see between now and then and how rising energy prices or high energy prices impacted the business back then.

Operator: Your next question comes from Nathan Jones with Stifel. Your line is open.

Speaker #2: Your next

Speaker #2: question comes from Nathan

Speaker #7: believe there was a surge in demand for your products then. I'm

Speaker #2: Jones. Your

Speaker #2: line.

Speaker #7: hoping you can kind of compare where

Nathan Jones: Morning, everyone.

Speaker #6: Good morning, open.

Speaker #6: everyone. We had a

Speaker #7: we are today in Europe to where

Vicente Reynal: Morning.

Speaker #7: we were maybe in 2022. I know there

Nathan Jones: Vicente, I'd like to just ask about the, you made a couple comments on the call today about the potential for higher oil prices, higher energy prices in Europe to be a catalyst. We had a similar circumstance in 2022. I believe there was a surge in demand for your products then. I'm hoping you can kind of compare where we are today in Europe to where we were maybe in 2022. I know there were some government programs that helped there. Maybe just any color you can give us on the similarities that you see and differences that you see between now and then, how rising energy prices or high energy prices impacted the business back then.

Speaker #7: were some government programs that helped there, but maybe just any color you can give us on the similarities that you see and differences that you

Speaker #4: Yeah. Nathan, well said. I think as you can imagine, I mean, we're looking at a lot of those indicators to see how comparable it is gas prices are not to the same level as what it was back then.

Vicente Reynal: Yeah, Nathan. Well said. I mean, as you can imagine, I mean, we're looking at a lot of those indicators to see how comparable it is. You know, gas prices are not to the same level as what it was back then, but definitely have spiked and increased and even also, you know, gasoline and oil prices. I mean, I was just in Europe with the team not too long ago, and diesel prices are actually higher than petrol prices, which in the European market, they have not seen in quite some time. So it's gonna take a little bit of time. I mean, I think as you can imagine, I mean, these.

Speaker #7: see between now and then and how rising

Speaker #7: energy prices or high energy prices impacted the business back

Speaker #6: similar session in

Speaker #6: 2022, and I believe

Speaker #7: then.

Speaker #6: that kind

Speaker #4: But definitely have spiked and increased and even also gasoline and oil prices. I mean, I was just in Europe with the team not too long ago, and diesel prices are actually higher than petrol prices, which in the European market, they have not seen in quite some time.

Speaker #4: Yeah, Nathan. Well said. I think as you can imagine, I mean, we're looking at a lot of those indicators to see how comparable it is gas prices are not to the same level as what it was back then.

Speaker #6: of had. Where we are today

Speaker #6: in Europe, where we are

Speaker #6: in government

Speaker #6: programs. Between now

Speaker #4: But definitely Yeah. An have spiked and increased and increase and even also gasoline and oil prices. I mean, I was just in even in Europe with the team not too long ago, and diesel prices are actually higher than petrol prices, which in the European market, they have not seen in quite some time.

Speaker #4: So it's going to take it's going to take a little bit of time. I mean, I think as you can imagine, I mean, these were still early into what I would say the conflict in the Middle East.

Speaker #6: and

Speaker #6: now.

Vicente Reynal: We're still early into, what I would say, the conflict in the Middle East, and we're still early into that acceleration of the oil and gas prices. Clearly that is definitely gonna help us, and we're leveraging our demand generation tools. We're leveraging going back into the funnels and reassessing that return on investment and communicating with customers as to that energy efficiency that we can achieve based on our new technology. Again, staying, you know, optimistic in terms of being able to provide better solutions to our customers that will allow them to lower that energy cost.

Vicente Reynal: Yeah. I mean, well said. As you can imagine, we're looking at a lot of those indicators to see how comparable it is. You know, gas prices are not at the same level of what it was back then, but definitely have spiked and increased, and even also, you know, gasoline and oil prices. I mean, I was just in Europe with the team not too long ago, and diesel prices are actually higher than petrol prices, which in the European market they have not seen in quite some time. So it's gonna take a little bit of time. I mean, I think as you can imagine, I mean, these.

Speaker #4: And we're still early into that acceleration of the oil and gas prices. But clearly, that is definitely going to help us. And we're leveraging our demand generation tools.

Speaker #4: We're leveraging going back into the funnels and reassessing that return on investment and communicating with customers as to that energy efficiency that we can achieve based on our new technology.

Speaker #4: And we're still early into that acceleration of the oil and gas prices. But clearly, Europe but clearly that that is definitely going to is help us.

Speaker #4: And we're leveraging our demand generation tools. We're leveraging going back into the funnels and reassessing that return on investment and communicating with customers as to that energy efficiency that we can achieve based on our new technology.

Speaker #4: So again, staying optimistic in terms of being able to provide better solutions to our customers that will allow them to lower that energy cost.

Vicente Reynal: We're still early into what I would say, the conflict in the Middle East, and we're still early into that acceleration of the oil and gas prices. Clearly that is definitely gonna help us, and we're leveraging our demand generation tools. We're leveraging going back into the funnels and reassessing that return on investment and communicating with customers as to that energy efficiency that we can achieve based on our new technology. Again, staying, you know, optimistic in terms of being able to provide better solutions to our customers that will allow them to lower that energy cost.

Speaker #4: So again, and staying again, in terms optimistic in terms of being able to provide better solutions to our customers of our customers that will allow them that will allow them to lower that to lower energy that.

Speaker #3: And I guess my follow-up question you guys have frequently talked about the time from RFQ to booking as a sign of customer confidence. Can you talk about any changes you've seen there as it got any shorter or are we still waiting for that to come?

Nathan Jones: I guess my follow-up question, you guys have frequently talked about the time from RFQ to booking, you know, as a sign of customer confidence. Can you talk about any changes you've seen there? Has it got, you know, any shorter, or are we still waiting for that to come? Thanks.

Speaker #4: cost.

Speaker #7: And I guess my follow-up

Speaker #7: question, you guys have frequently

Speaker #7: talked about the time from RFQ to booking as

Speaker #3: Thanks.

Speaker #4: Yeah. It has improved. It is definitely not to the early days when we said that a marketing qualified lead will take four to I mean, we said historically, before all these elongations, it could take anywhere between six to eight weeks.

Vicente Reynal: Yeah. It has improved. It is definitely not to the early days when we said that, a marketing qualified lead will take four to. I mean, we said historically before all this elongation, it could take anywhere between six to eight weeks, and clearly it got elongated. It has improved a little bit, but it's nowhere near back to the levels that it was before.

Speaker #7: a sign of customer

Speaker #7: confidence. Can you talk about any changes you've seen there as it got

Speaker #7: Any shorter, or are we still waiting for that to come?

Speaker #7: Thanks.

Speaker #4: Yeah. It has improved. It is definitely Yeah. It is definitely not not to the early to be days when we said that a marketing qualified lead will take four to I mean, we said fairly historically, before all these elongations, it could take anywhere between six to eight weeks.

Nathan Jones: I guess my follow-up question is, you guys have frequently talked about the time from RFQ to booking, you know, as a sign of customer confidence. Can you talk about any changes you've seen there? Has it got, you know, any shorter, or are we still waiting for that to come? Thanks.

Speaker #5: I guess my

Speaker #4: And clearly, it got elongated. It has improved a little bit, but it's nowhere near back to the levels that it was before.

Speaker #5: follow-up question

Speaker #5: you guys have frequently talked

Speaker #5: about as a kind

Speaker #5: of customer confidence. You talk

Speaker #3: Thanks for taking the questions.

Nathan Jones: Thanks for taking the questions.

Speaker #4: Thank you.

Speaker #5: about they got any shorter

Vicente Reynal: Thank you.

Speaker #4: And clearly, it got elongated. It has improved a little bit, but it's nowhere near back to the levels that it was before.

Speaker #5: Your next question comes from Joseph Giblais with Deutsche Bank. Your line is open.

Operator: Your next question comes from Nicole DeBlase with Deutsche Bank. Your line is open.

Speaker #5: or.

Vicente Reynal: Yeah. It has improved. It is definitely not to the earlier days when we said that a marketing qualified lead, I mean, we said historically before all this elongation, it could take anywhere between 6 to 8 weeks. Clearly it got elongated. It has improved a little bit, but it's nowhere near back to the levels that it was before.

Speaker #7: Yeah. Thanks. It's Nicole DeBlase. I don't know where that came from. So good morning, guys. Thanks for the questions. I guess maybe first, organic growth for PST pretty strong.

Speaker #7: Thanks for taking the

Nicole DeBlase: Yeah. Thanks. It's Nicole DeBlase. I don't know where that came from. Good morning, guys. Thanks for the questions. I guess maybe first, organic growth for PST, pretty strong, and I think it was better than your expectations for maybe flattish originally for Q1. If you could unpack that a little bit. Do you think that that 4% growth that we saw in Q1 is sustainable throughout the rest of the year, meaning that maybe PST outperforms ITS in 2026? Thank you.

Speaker #7: questions.

Speaker #4: Thank thank you.

Speaker #6: Your next

Speaker #6: question comes from Joseph

Speaker #6: DeBlaise with Deutsche Bank. Your line

Speaker #6: is

Speaker #6: open.

Speaker #7: And I think it was better than your expectations for maybe flattish originally for the first quarter. So if you could unpack that a little bit and do you think that that 4% growth that we saw in one Q is sustainable throughout the rest of the year, meaning that maybe PST outperforms ITS in 2026?

Speaker #4: before

Speaker #8: Yeah. Thanks. It's Nicole DeBlaze. I don't know

Speaker #8: where that came from.

Speaker #8: So good morning, guys. Thanks for the questions. I

Speaker #8: guess maybe

Speaker #8: first, organic growth for

Speaker #8: PST pretty strong. And I think it was better than

Nathan Jones: Thanks for taking the questions.

Speaker #8: your expectations for maybe flattish

Speaker #8: originally for the first quarter. So if you could

Vicente Reynal: Thank you.

Speaker #4: you.

Speaker #7: Thank you.

Speaker #8: Unpack that a little bit, and do you think—

Operator: Your next question comes from Joseph DeBlase with Deutsche Bank. Your line is open.

Speaker #2: Your next question comes

Speaker #4: Yeah, Nicole. So we definitely were pleased with what we saw. And very pleased with what we saw as we mentioned on the life sciences side of the business.

Vicente Reynal: Nicole, we definitely were pleased with what we saw, and very pleased with what we saw, as we mentioned on the life sciences side of the business and kind of the short cycle nature that we saw on the PST. I think we said too as well that we're pleased with what we're seeing here as we kind of move into the month of April too as well. I think we're encouraged. Encouraged also, I made the statistic that, you know, when you think about PST organic 2-year stack, I mean, they're in the mid-single digit, which is kind of what we always said, that that segment should be operating at that mid-single digit plus.

Speaker #2: from

Speaker #8: that 4% growth that we saw

Speaker #2: Joseph. Your

Speaker #8: in one Q is sustainable

Speaker #2: line.

Speaker #8: throughout the rest of the year, meaning that maybe

Nicole DeBlase: Yeah. Thanks, Nicole DeBlase. I don't know where that came from. Good morning, guys. Thanks for the question. I guess maybe first, organic growth for PST, pretty strong, and I think it was better than your expectations or maybe flattish originally for Q1. If you could unpack that a little bit, and do you think that that 4% growth that we saw in Q1 is sustainable throughout the rest of the year, meaning that maybe PST outperforms ITS in 2026? Thank you.

Speaker #7: Yeah. I don't know where that came

Speaker #8: PST outperforms ITS in

Speaker #8: 2026? Thank

Speaker #7: from. So good morning,

Speaker #4: And kind of the short cycle nature that we saw on the PT and I think we said too as well that we're pleased with what we're seeing here as we kind of move into the month of April too as well.

Speaker #8: you.

Speaker #7: guys. Good question. I guess thank you

Speaker #4: Yeah, Nicole. So we definitely were pleased with what we saw. And I'm very pleased with what we saw as we mentioned on the life sciences side of the business.

Speaker #7: first. Organic

Speaker #7: growth pretty strong,

Speaker #7: and I think it was better than

Speaker #4: So I think we're encouraged. Encouraged also, I made the statistic that when you think about PST, organic two-year stack, I mean, they're in the mid-single digit, which is kind of what we always said that that segment should be operating at that mid-single digit, mid-single digit plus.

Speaker #7: maybe Scottish for the first

Speaker #4: And kind of the Yeah. short cycle nature that we saw on the PT and I think we said too as well that we're pleased with what we're seeing here as we kind of move into the month of April too as well.

Speaker #7: Quarter. So you could unpack that a little.

Speaker #7: bit. We think that that 4%

Speaker #7: growth that we saw in '22

Speaker #7: is sustainable throughout the

Speaker #7: year making

Speaker #7: it. Thank

Speaker #4: So hey, I think we're encouraged. Encouraged also, I made the statistic that when you think about PST organic two-year stack, I mean, they're in the mid-single digit, which is kind of what we always said that And that segment could that segment should be operating at that be mid-single digit plus.

Speaker #7: you.

Vicente Reynal: We definitely were pleased with what we saw, and very pleased with what we saw, as we mentioned on the life sciences side of the business and kind of the short cycle nature that we saw on the PT. I think we said too as well that we're pleased with what we're seeing here as we kind of move into the month of April too as well. I think we're encouraged. Encouraged also, I made the statistic that, you know, when you think about PST organic 2-year stack, I mean, they're in the mid-single digit, which is kind of what we always said that that segment should be operating at that mid-single digit, mid-single digit plus.

Speaker #7: Okay. Got it. Understood. And then just thinking a little bit more about the progression of short cycle, I know this has been asked a lot of times, so I don't want to beat a dead horse, but did you guys actually see improvement in order activity on the short cycle businesses throughout the quarter and then into April?

Nicole DeBlase: Okay. Got it. Understood. Then, just thinking a little bit more about the progression of short cycle. I know this has been asked a lot of times, so I don't want to beat a dead horse, but did you guys actually see improvement in order activity on the short cycle businesses throughout the quarter and then into April? Vicente, if you could just remind us, like, roughly what percentage of your total sales are short cycle today. Thank you.

Speaker #8: Okay. Got it. Understood. And

Speaker #8: then just thinking a little bit more

Speaker #7: And Vicente, if you could just remind us, what roughly what percentage of your total sales are short cycle today? Thank you.

Speaker #8: about the progression of short cycle, I know this has been asked a lot of times, so I don't want to beat a dead horse, but did you guys actually see improvement in order activity on the short cycle businesses throughout the quarter and then into April?

Speaker #4: Yeah. Nicole, we definitely saw we saw progression improvement, I would say, on the short cycle. Through the quarter and kind of as we continue, as I said, here moving into the more month of April.

Vicente Reynal: Yeah, Nicole, we definitely saw pro-progression improvement, I would say on the short cycle, through the quarter and kind of as we continue, as I said here, moving into the months of April. You know, order cadence continues to go fairly well in terms of line, in line with expectations and I think we're pleased with that.

Speaker #8: And Vicente, if you could just remind us what roughly what percentage of your total sales are short cycle

Speaker #4: operating

Speaker #8: today? Thank

Speaker #8: you.

Speaker #4: Yeah. Yeah. Nicole, we definitely saw we saw We progression improvement. I would say on the short cycle. Through the quarter and kind of as we continue, as I said here, moving into the month of April.

Nicole DeBlase: Okay, got it. Understood. Just thinking a little bit more about the progression of short cycle. I know this has been asked a lot of times, so I don't want to beat a dead horse, but did you guys actually see improvement in order activity on those short cycle businesses throughout the quarter and then into April? Vicente, if you could just remind us, like, roughly what percentage of your total sales are short cycle today. Thank you.

Speaker #7: Okay. Just thinking a

Speaker #4: But order cadence continues to go fairly well in terms of line in line with expectations. And so I think we're pleased with that.

Speaker #7: little bit more about the

Speaker #7: progression thank

Speaker #3: Yeah. Nicole, on the second part of your question about the kind of short circle versus long cycle, probably the easiest way to frame it up would be at the enterprise-wide level, roughly 40% of our revenue is aftermarket, which obviously has more of a activity-based kind of book and ship kind of dynamic to it.

Vikram Kini: Yeah, Nicole, on the second part of your question about the kind of short cycle versus long cycle, probably the easiest way to frame it up would be at the enterprise-wide level, you know, roughly 40% of our revenue is aftermarket, which obviously has more of a, you know, activity-based kind of book and ship kind of dynamic to it. Then when you kind of peel that apart on the whole goods side or the balance or the original equipment side, it's, you know, approximately 75% to 80%. 75% is probably a good proxy, is more shorter cycled in nature, then that leaves about 25%, which is more of the, I would call a longer cycle project type business. You do see a relatively equitable split between both segments.

Vik Kini: Yeah, Nicole, on the second part of your question about the kind of short cycle versus long cycle, probably the easiest way to frame it up would be at the enterprise-wide level, you know, roughly 40% of our revenue is aftermarket, which obviously has more of a, you know, activity-based kind of book and ship kind of dynamic to it. Then when you kind of peel that apart on the whole goods side or the balance or the original equipment side, it's, you know, approximately 75% to 80%. 75% is probably a good proxy, is more shorter cycled in nature, then that leaves about 25%, which is more of the, I would call a longer cycle project type business. You do see a relatively equitable split between both segments.

Speaker #4: But order cadence continues to go fairly well in terms of in line with expectations. And so I think we're pleased with saw Nicole on the that.

Speaker #7: you.

Vicente Reynal: Well, we saw some progression improvement, I would say on the short cycle, through the quarter and kind of as we continue, as I said here, moving into the months of April. You know, order bookings continue to go fairly well in terms of in line with expectations and so I think we're pleased with that.

Speaker #7: Yeah. Nicole, on the second part of your question

Speaker #7: about the kind of short circle versus long cycle, probably the easiest way to frame it up would be at the enterprise-wide level, roughly 40% of our revenue is aftermarket, which obviously has more of a activity-based kind of book and ship kind of dynamic to

Speaker #3: And then when you kind of peel that apart on the whole goods side or the balance or the original equipment side, it's approximately 75 to 80 percent, 75% is probably good proxy is more shorter cycled in nature.

Speaker #3: And that leaves about 25%, which is more of the, I would call it, longer cycle project-type business. And you do see a relatively equitable split between both segments, both segments have that longer cycle dynamic as we've mentioned before.

Speaker #7: it. And then when you kind of peel that

Speaker #7: apart on the whole goods side or the balance or the original equipment side, it's approximately 75 to 80 percent, 75% is probably a good proxy is more shorter cycled in nature and that leaves about 25%, which is more of the, I would call it, longer cycle project-type business.

Vikram Kini: Yeah, Nicole, on the second part of your question about the kind of short cycle versus short cycle, probably the easiest way to frame it up would be, at the enterprise-wide level, you know, roughly 40% of our revenue is aftermarket, which obviously has more of a, you know, activity-based kind of book and shift kind of dynamic to it. When you kind of peel that apart on the whole goods side or the balance of the original equipment side, you know, approximately 75% to 80%. 75% is probably a good proxy, is more shorter cycled in nature, and that leaves about 25%, which is more of the what's called a longer cycle project type business. You do see a relatively equitable split between both segments.

Vikram Kini: Both segments have that longer cycle dynamic, as we’ve mentioned before.

Vik Kini: Both segments have that longer cycle dynamic, as we’ve mentioned before.

Speaker #4: second part of your

Speaker #4: question. And then when

Speaker #7: Thank you, Vic and Vicente. I'll turn it over.

Nicole DeBlase: Thank you, Vik and Vicente. I'll turn it over.

Speaker #4: Thank you, Nicole.

Vicente Reynal: Thank you, Nicole.

Speaker #7: And you do see a relatively equitable split between both segments, both segments have that longer cycle dynamic as we've mentioned before.

Speaker #5: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Operator: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Speaker #8: Thank you, Vic

Speaker #8: Thank you. I understand that price cost is, I guess, basically a net neutral for you guys throughout the rest of the year when we net out all the tariff changes and any sort of mitigation.

Chris Snyder: Thank you. You know, I understand that price cost is, I guess, basically a net neutral for you guys throughout the rest of the year when we net out all the tariff changes and any sort of mitigation. I guess, is the expectation that the company will push more price in 2026 than what you thought coming into the year in response to inflation and just kind of part of that mitigation efforts? I mean, if so, any way to think about how much more price in 2026 versus, you know, the expectations in January? Thank you.

Speaker #4: you kind of see a lot.

Speaker #8: and Vicente. I'll turn it

Speaker #4: of

Speaker #8: over.

Speaker #4: Thank you, you.

Speaker #4: Nicole.

Speaker #6: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Speaker #9: Thank you. I understand

Speaker #8: But I guess, is the expectation that the company will push more price in 2026 than what you thought coming into the year in response to the inflation and just kind of part of that mitigation efforts?

Speaker #9: That price cost is, I guess,

Speaker #9: basically a net neutral for you guys throughout the rest of the year when we net out all the tariff changes and any sort of mitigation.

Vikram Kini: Both segments have that longer cycle dynamic, as we've mentioned before.

Speaker #7: Thank

Nicole DeBlase: Thank you, Vic and Vicente. I'll turn it over.

Speaker #7: you.

Speaker #9: But I guess, is the expectation that the company will push more price in 2026 than what you thought coming into the year in response to inflation and just kind of part of that mitigation efforts?

Vicente Reynal: Thank you.

Speaker #4: Thank

Speaker #8: I mean, if so, any way to think about how much more price in '26 versus the expectations in January? Thank you.

Operator: Your next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Speaker #2: Your next

Speaker #2: question price

Chris Snyder: Thank you. You know, I understand that price cost is basically a net neutral for you guys throughout the rest of the year when we net out all the tariff changes and any sort of mitigation. Is the expectation that the company will push more price in 2026 than what you thought coming into the year in response to inflation and just kind of part of that mitigation efforts? I mean, if so, any way to think about how much more price in 2026 versus, you know, the expectations in January? Thank you.

Speaker #3: Yeah, Chris, let me probably unpack that and clarify a few things here. So I think the price cost being more neutral, particularly here in the first quarter, as we're continuing to lap some of the tariff dynamics, I think that's more of a fair statement.

Vikram Kini: Yeah, Chris, let me unpack that and clarify a few things here. I think the price cost being more neutral, particularly here in Q1, you know, as we're continuing to lap some of the tariff dynamics, I think that's more of a fair statement. I think as you move into the back half of the year, we do expect the price cost dynamic to turn, you know, a bit more positive. What I would point to is, are we taking what I would call incremental tariff related actions at this point? No, I don't think that's the case anymore.

Vik Kini: Yeah, Chris, let me unpack that and clarify a few things here. I think the price cost being more neutral, particularly here in Q1, you know, as we're continuing to lap some of the tariff dynamics, I think that's more of a fair statement. I think as you move into the back half of the year, we do expect the price cost dynamic to turn, you know, a bit more positive. What I would point to is, are we taking what I would call incremental tariff related actions at this point? No, I don't think that's the case anymore.

Speaker #9: I mean, if so, any way to think about how much more price in 2026 versus the

Speaker #2: talk

Speaker #2: is

Speaker #9: expectations in January? Thank

Speaker #9: you.

Speaker #7: Yeah, Chris, let thank you. me unpack that and clarify a few things here. So I think the price cost being more neutral, particularly here in the first quarter, as we're continuing to lap some of the tariff dynamics, I think that's more of a fair statement.

Speaker #3: I think as you move into the back half of the year, we do expect the price cost dynamic to turn a bit more positive.

Speaker #3: And what I would point to that is, are we taking, what I would call, incremental tariff-related actions at this point? No. I don't think that's the case anymore.

Speaker #7: I think as you move into the back half of the year, we do expect the price-cost dynamic to turn a bit more.

Vikram Kini: As we indicated, even as we came into the year, we expect pricing to kind of revert back to that kind of more normalized 1% to 2%, that you've seen in historic times. That does include just some of the, I would say, normal course pricing actions you would expect. Again, not kind of peanut butter and vanilla across the entire enterprise, but, you know, targeted pricing, where it makes sense. That's the piece that's still, you know, I'd say in play here, which does drive some of the more H2, particularly, Q4, you know, price cost being positive. Again, not being necessarily more on the tariff at this point in time, just given things have kind of stabilized. It's much more what I would call, normal course pricing.

Speaker #3: As we indicated even as we came into the year, we expect pricing to kind of revert back to that kind of more normalized 1 to 2 percent that you've seen in historic times.

Vik Kini: As we indicated, even as we came into the year, we expect pricing to kind of revert back to that kind of more normalized 1% to 2%, that you've seen in historic times. That does include just some of the, I would say, normal course pricing actions you would expect. Again, not kind of peanut butter and vanilla across the entire enterprise, but, you know, targeted pricing, where it makes sense. That's the piece that's still, you know, I'd say in play here, which does drive some of the more H2, particularly, Q4, you know, price cost being positive. Again, not being necessarily more on the tariff at this point in time, just given things have kind of stabilized. It's much more what I would call, normal course pricing.

Speaker #7: positive. And what I would point to that

Speaker #7: is, are we taking what I would call incremental tariff-related actions at this point? No. I don't think that's the case anymore. As we indicated, even as we came into the year, we expect pricing to kind of revert back to that kind of more normalized 1 to 2 percent that you've seen in historic times that does include just some of the, I would say, normal course pricing actions you would expect

Vikram Kini: Yeah, Chris, let me back add and clarify a few things here. I think the price cost being more neutral, particularly here in Q1, you know, as we're continuing to lap some of the tariff dynamics, I think that's more of a fair statement. I think as you move into the H2, we do expect the price cost dynamic to turn, you know, a bit more positive. What I would point to that is, are we taking what I would call incremental tariff-related action to this point? No, I don't think that's the case anymore.

Speaker #4: Yeah. And

Speaker #3: And that does include just some of the, I would say, normal course pricing actions you would expect again, not kind of peanut butter and vanilla across the entire enterprise, but targeted pricing where it makes sense.

Speaker #3: And so that's the piece that's still, I'd say, in play here, which does drive some of the more second-half, particularly Q4 price cost being positive.

Speaker #7: again, not kind of peanut butter and vanilla across the entire enterprise, but targeted pricing where it makes sense. And so that's the piece that's still, I'd say, in play here, which does drive some of the more second half, particularly Q4 price cost being positive.

Speaker #4: what I would think that

Speaker #4: is

Speaker #3: So again, nothing necessarily more on the tariff at this point in time, just given things have kind of stabilized. It's much more, what I would call, normal course pricing.

Vikram Kini: You know, as we indicated even as we came into the year, we expect pricing to kind of revert back to that kind of more normalized 1% to 2%, that you've seen in historic times. That does include just some of the, I would say, normal course pricing actions you would expect. Again, not kind of peanut butter and vanilla across the entire enterprise, but you know, targeted pricing, where it makes sense. That's the piece that's still, you know, I'd say in play here, which does drive some of the more H2, particularly, Q4, you know, price cost being positive. Again, nothing necessarily more on the tariff at this point in time, just given things have kind of stabilized. It's much more what I would call, normal course pricing.

Speaker #8: All right. Thank you for that. We appreciate it. And then maybe if I could just follow up on the Middle East. I understand there was an impact on orders in Q1, but for the full year, you guys are saying no impact on sales or orders, it seems like, for the full year.

Chris Snyder: I thank you for that. I appreciate it. You know, maybe if I could just follow up on the Middle East. You know, I understand there was an impact on orders in Q1, but for the full year, you guys are saying no impact on sales or orders, it seems like, for the full year. I guess, did the Middle East have an impact on Q1 sales? Is there any impact that you expect to come through in Q2, on the Middle East? Again, just on the revenue side. Thank you.

Speaker #7: So again, nothing necessarily more on the tariff at this point in

Speaker #7: time, just given things have kind of

Speaker #7: stabilized. It's much more what I would

Speaker #7: call normal course

Speaker #4: again, in

Speaker #7: pricing. All right. Thank you for that. We

Speaker #7: appreciate it. And then maybe if I could just

Speaker #8: But I guess, did the Middle East have an impact on Q1 sales? And is there any impact that you expect to come through in Q2 on the Middle East?

Speaker #7: follow up on the Middle East. I understand there was an impact on orders in Q1, but for the full year, you guys are saying no impact on sales or orders, it seems like, for

Speaker #7: the full year. But I guess, did

Speaker #8: And again, just on the revenue side. Thank you.

Speaker #7: the Middle East have an impact on

Speaker #4: time. It's much

Speaker #3: Yeah, Chris, to keep it fairly simple, I think the teams did an exceptional job here in Q1. So on the shipments or revenue side, no.

Vikram Kini: Yeah, Chris, to keep it fairly simple, I think the teams did an exceptional job here in Q1. On the shipments or revenue side, no meaningful impact one way or the other in Q1. At this point in time, obviously not expecting any material movement here in Q2, but you know, obviously clearly an area that we're watching just like everyone else in terms of how the conflict continues to play itself out.

Vik Kini: Yeah, Chris, to keep it fairly simple, I think the teams did an exceptional job here in Q1. On the shipments or revenue side, no meaningful impact one way or the other in Q1. At this point in time, obviously not expecting any material movement here in Q2, but you know, obviously clearly an area that we're watching just like everyone else in terms of how the conflict continues to play itself out.

Speaker #7: Q1 sales? And is

Speaker #4: more what I would call normal

Speaker #7: there any impact that you expect

Speaker #4: pricing.

Speaker #7: to come through in

Speaker #7: Q2 on the Middle East? And again, just on the revenue side. Thank

Speaker #5: I thank you

Chris Snyder: Thank you for that. I appreciate it. You know, maybe if I could just follow up on the Middle East. You know, I understand there was an impact on orders in Q1, but for the full year, you guys are saying no impact on sales or orders, it seems like, for the full year. I guess, did the Middle East have an impact on Q1 sales? Is there any impact that you expect to come through in Q2 on the Middle East? Again, just on the revenue side. Thank you.

Speaker #5: for that. I appreciate it. And

Speaker #3: No meaningful impact one way or the other in Q1. At this point in time, obviously not expecting any material movement here in Q2, but obviously, clearly an area that we're watching just like everyone else in terms of how the conflict continues to play itself out.

Speaker #5: then maybe a follow-up in the

Speaker #7: you. Yeah, Chris, to keep it fairly simple, I think the teams did an exceptional job here in Q1. So

Speaker #5: middle but I

Speaker #7: on the shipments or revenue side, no, no meaningful impact one way or the other in Q1. At this point in time, obviously not expecting any material movement here in Q2, but obviously clearly an area that we're watching just like everyone else in terms of how the conflict continues to play itself

Speaker #5: guess did the middle have an

Speaker #8: Thank you. I appreciate that.

Chris Snyder: Thank you. I appreciate that.

Speaker #5: impact on Q1

Speaker #5: sales? Is there any impact

Speaker #5: Your next question comes from Stephen Volkman with Jeffreys. Your line is open.

Operator: Your next question comes from Stephen Volkmann with Jefferies. Your line is open.

Speaker #5: that you expect to come through

Speaker #5: in Q2 on the

Speaker #5: middle?

Speaker #7: out.

Speaker #9: Thank you. I appreciate

Speaker #9: Hi. Good morning, guys. Thanks for taking the question. Most of it's been answered, but I guess I'm curious we're approaching the two-year anniversary of ILC Dover now.

Stephen Volkmann: Hey, good morning, guys. Thanks for taking the question. Most of it's been answered, but I guess I'm curious. We're approaching the two-year anniversary of ILC Dover now. Is there anything qualitative you can say around how that asset specifically is performing relative to the segment, maybe in terms of, I don't know, growth or margin? Just kind of bring us up to speed on how that's doing.

Speaker #9: that.

Vikram Kini: Yeah, Chris, to keep it fairly simple, I think the teams did a exceptional job here in Q1. On the shipments or revenue side, no meaningful impact one way or the other in Q1. At this point in time, obviously not expecting any material movement here in Q2, but, you know, obviously clearly an area that we're watching just like everyone else in terms of how the conflict continues to play itself out.

Speaker #4: Yeah.

Speaker #6: Your next

Speaker #6: question comes from Stephen Volkman with

Speaker #4: So thank

Speaker #6: Jefferies. Your line is

Speaker #6: open.

Speaker #10: Hi. Good morning, guys. Thanks for taking the question. Most of it's been answered, but I guess I'm curious

Speaker #9: Is there anything qualitative you can say around how that asset specifically is performing relative to the segment, maybe in terms of general growth or margin?

Speaker #10: we're approaching the two-year anniversary of ILC Dover now. Is there

Chris Snyder: Thank you. I appreciate that.

Speaker #4: you.

Speaker #9: Just kind of bring us up to speed on how that's doing.

Speaker #10: anything qualitative you can say

Speaker #10: around how that asset

Operator: Your next question comes from Stephen Volkmann with Jefferies. Your line's open.

Speaker #2: Your

Speaker #2: next question comes

Speaker #10: specifically is

Speaker #2: from Jeffrey. Your

Speaker #4: Yeah. I think we don't tend to go into kind of unpeeling each of the businesses in particularly across any of the two segments. But I mean, after a two-year anniversary, we're pleased with all the investments that we have done.

Vicente Reynal: Yeah. See, we don't tend to go into kind of peeling each of the businesses in particular across any of the two segments. I mean, after a two-year anniversary, we're pleased with all the investments that we have done. I mean, we have a full lineup of new team really leveraging the tools that we have around IRX. And really, as you can see, obviously, that and investments that we have done in commercial investments to really accelerate and penetrate more. You're seeing it now here in the numbers. I mean, obviously, ILC Dover is a good part of a PST segment today.

Speaker #10: performing relative to the

Speaker #2: line.

Speaker #10: segment, maybe in terms of general

Speaker #10: growth or margin? Just kind

Stephen Volkmann: Hey. Good morning, guys. Thanks for taking the question. Most of it's been answered, but I guess I'm curious. We're approaching the 2-year anniversary of ILC Dover now. Is there anything qualitative you can say around how that asset specifically is performing relative to the segment, maybe in terms of, I don't know, growth or margin? Just kind of bringing us to speed on how that's doing.

Speaker #5: Hi. We're approaching the new

Speaker #10: of bring us up to speed on how that's

Speaker #10: doing.

Speaker #4: Yeah. See, we don't tend to go into kind of unpeeling each of the businesses in particularly across any of the two segments. Yeah. But I mean, after a two-year anniversary, we're pleased with all the investments that we have done.

Speaker #4: I mean, we have a full lineup of new team really leveraging the tools that we have around IRX. And really, as you can see, obviously, that and investments that we have done in commercial investments to really accelerate and penetrate more.

Speaker #5: year. Is there

Speaker #5: anything how

Speaker #5: that

Speaker #5: specifically performing relative

Speaker #5: to the segment

Speaker #5: maybe in terms

Speaker #5: of bring us up to

Speaker #5: speed on how that's doing?

Speaker #4: And you're seeing it now here in the numbers. I mean, obviously, ILC Dover is a good part of the PST segment today. And as we said, and particularly the life sciences.

Vicente Reynal: Yeah. I think we don't tend to go into kind of unpeeling each of the businesses in particularly across any of the two segments. I mean, after a 2-year anniversary, we're pleased with all the investments that we have done. I mean, we have a full lineup of new team really leveraging the tools that we have around IRX. Really, as you can see, obviously and investments that we have done in commercial investments to really accelerate and penetrate more. You're seeing it now here in the numbers. I mean, obviously, ILC Dover is a good part of the PST segment today.

Vicente Reynal: As we said, you know, like, and particularly the life sciences and life science technology, you know, or at a double-digit kind of order run rate, we're pleased with that because we have now created a really good platform for the M&A. As you remember, that was kind of what we were looking for with the ILC Dover too as well. Now we have embedded, you know, quite a few of these now bolt-on acquisitions into the life science business of ILC Dover. Continue to be pleased. I think the team is executing very well and we see a bright future ahead.

Speaker #4: And life science technology at a double-digit kind of order run rate, we're pleased with that because we have now created a really good platform for DM&A.

Speaker #4: And you're seeing it now here in the numbers. I mean, obviously, ILC Dover is a good part of the PST segment today. And as we said, and particularly the life sciences and life science technology at a double-digit kind of order run rate, we're pleased with that because we have now created a really good platform for the M&A.

Speaker #4: And as you remember, that was kind of what we were looking for with the ILC Dover too as well. And now we have embedded quite a few of these now bolt-on acquisitions into the life science business of ILC Dover.

Speaker #4: So continue to be pleased. I think the team is executing very well. And we see a bright future ahead.

Speaker #4: And as you remember, that was kind of what we were looking for with the ILC Dover, too, as well. And now we have embedded quite a few of these now bolt-on acquisitions into the Life Science business of ILC Dover.

Speaker #8: Okay. Thank you. And then just follow on to that, is there anything in the M&A funnel maybe of the 10 LOIs or something that would be even close to that size of ILC Dover, or is this all more like what we've seen year to date?

Stephen Volkmann: Okay. Thank you. Just follow on to that. Is there anything in the M&A funnel, maybe of the 10 LOIs or something that would be even close to that size of ILC Dover, or is this all more like what we've seen year to date?

Vicente Reynal: As we said, you know, like, and particularly the life sciences and life science technology, you know, or at a double digit kind of order run rate. We're pleased with that because we have now created a really good platform for the M&A. As you remember, that was kind of what we were looking for with the ILC Dover too as well. Now we have embedded, you know, quite a few of these now bolt-on acquisitions into the life science business of ILC Dover. Continue to be pleased. I think the team is executing very well and we see a bright future ahead.

Speaker #4: So continue to be pleased. I think the team is executing very well. And we see a bright future But ahead.

Speaker #10: Okay. Thank you. And then just follow on to that, is there anything in the M&A funnel maybe of the 10 LOIs or something that would be even close to that size of ILC Dover, or is this all more like what we've seen year to date?

Speaker #4: Yeah. As I think on the LOI, it's kind of more on the bolt-on in nature. Having said that, I mean, there's definitely a couple of transactions, particularly one that is not of the size of ILC, but about a little bit more than a billion dollar purchase price transaction.

Vicente Reynal: I think on the LOI is kind of more on the bolt-on in nature. You know, having said that, I mean, there's definitely a couple of transactions, and particularly one that is not of the size of ILC, but about, you know, a little bit more than $1 billion purchase price transaction. But that one is not on the LOI. It's in the funnel, and we're having great conversations, but it is not one of the 10 LOIs.

Stephen Volkmann: Okay. Thank you. Then, just follow on to that, is there anything in the M&A funnel, maybe of the 10 LOIs or something that would be even close to that size of ILC Dover, or is this all more like what we've seen year to date?

Speaker #4: Okay, yeah. As I think on the LOI, it's kind of more bolt-on in nature. Having said that, I mean, there's definitely a couple of transactions—particularly one that is not of the size of ILC, but about a little bit more than a $1 billion purchase price transaction.

Speaker #4: But that one is not on the LOI. It's in the funnel. And we're having great conversations. But it is not one of the 10 LOIs.

Speaker #8: Super. Appreciate it. Thanks.

Stephen Volkmann: Super. Appreciate it. Thanks.

Speaker #4: But that one is not on the LOI. It's in the funnel, and we're having great conversations, but it is not one of the 10 LOIs.

Speaker #4: Thank you.

Vicente Reynal: Thank you.

Speaker #5: Your next question comes from Andy Kaplowitz with Citigroup. Your line is open.

Operator: Your next question comes from Andy Kaplowitz with Citigroup. Your line is open.

Vicente Reynal: Yeah. As I think on the LOI, it's just kind of more on the bolt-on in nature. You know, having said that, I mean, there's definitely a couple of transactions and particularly one that is not of the size of ILC, but about, you know, a little bit more than a $1 billion purchase price transaction. That one is not on the LOI. It's in the funnel and we're having great conversations, but it is not one of the 10 LOIs.

Speaker #4: Yeah.

Speaker #10: Hey, good morning, everyone.

Speaker #10: Super.

Andy Kaplowitz: Good morning, everyone.

Speaker #10: Appreciate it. Thanks.

Speaker #4: Good morning, Andy.

Speaker #4: Thank Super. Thank you.

Vicente Reynal: Morning, Andy.

Speaker #4: you.

Andy Kaplowitz: Vicente, you mentioned, I think, 40% of the business now aftermarket. I think, you know, we've talked a lot about recurring revenue. I think it exceeded $450 million last year, and you talked about a backlog of $1.1 billion in future revenue. As that continues to grow, I mean, what are you seeing in terms of mix for 2026 and sort of moving forward?

Speaker #10: Listen, you mentioned, I think, 40% of the business now aftermarket. I think we've talked a lot about recurring revenue. I think it exceeded 450 million last year.

Speaker #6: Your next question comes

Speaker #6: from Andy Kaplowitz with Citigroup. Your line is

Speaker #6: open.

Speaker #11: Hey, good morning, everyone.

Speaker #4: Good morning, Andy.

Speaker #10: And you talked about a backlog of 1.1 billion in future revenue. Has that continued to grow? And what do you see in terms of mix for '26 and sort of moving forward?

Speaker #11: Listen, you morning, everyone. mentioned, I think, 40% of the business now aftermarket. I think we've talked a lot about recurring revenue. I think it exceeded 450 million last year, and you talked about a backlog of 1.1 billion in future revenue.

Stephen Volkmann: Super. Appreciate it. Thanks.

Speaker #4: Yeah, Andy. I think it continues to be an area of emphasis. And focus. And yes, particularly it continues to do very well. We have launched new solutions.

Vicente Reynal: Yeah, Andy, I think it continues to be an area of emphasis and focus, and yes, particularly it continues to do very well. We have launched new solutions, and we're pleased with making the great progress towards achieving that $1 billion recurring revenue target that we set by kind of run rate at the end of 2027. It's an area of focus. The team is putting a lot of attention, and as you can imagine, it has created incredible customer loyalty and stickiness when we have these solutions to the customer. It's gonna continue to be an area of investment for us.

Vicente Reynal: Thank you.

Operator: Your next question comes from Andrew Kaplowitz with Citigroup. Your line's open.

Speaker #2: Your next

Speaker #11: Has that continued to grow? And what do you see in terms of mix for '26 and sort of moving

Speaker #2: question comes

Speaker #2: from good

Speaker #11: forward?

Andrew Kaplowitz: Good morning, everyone.

Speaker #4: Yeah, Andy. I think it continues to be an area of emphasis. And focus. And yes, particularly it continues to do very well. We have launched new solutions.

Vicente Reynal: Morning, Andy.

Speaker #4: Morning.

Speaker #4: And we're pleased with making the great progress towards achieving that billion-dollar recurring revenue target that we set by kind of run rate at the end of 2027.

Andrew Kaplowitz: Vicente, you mentioned I think 40% of the business now aftermarket. I think, you know, we've talked a lot about recurring revenue. I think it exceeded $250 million last year. You talked about a backlog of $1.1 billion in future revenue. Has that continued to grow? I mean, what do you see in terms of mix for 2026 and sort of moving forward?

Speaker #4: And we're pleased with making the great progress towards achieving that billion-dollar recurring revenue target that we set by kind of run rate at the end of 2027.

Speaker #4: So it's an area of focus. The team is putting a lot of attention. And as you can imagine, it has created incredible customer loyalty and stickiness when we have these solutions to the customer.

Vicente Reynal: Yeah, yeah. I think continues to be an area of emphasis and focus. Yes, particularly it continues to do very well. We have launched new solutions and we're pleased with making the great progress towards achieving that billion-dollar recurring revenue target that we set by kind of run rate at the end of 2027. It's an area of focus. The team is putting a lot of attention and as you can imagine, it has created incredible customer loyalty and stickiness when we add these solutions to the customer. It's gonna continue to be an area of investment for us.

Speaker #4: So it's an area of focus. The team is putting a lot of attention. And as you can imagine, it has created incredible customer loyalty and Yeah.

Speaker #4: So it's going to continue to be an area of investment for us.

Speaker #10: That's helpful. And then just one more on the Middle East. You mentioned you got a third of the delayed 40 million of longer cycle orders back in April.

Andy Kaplowitz: That's helpful. Just one more on the Middle East. You mentioned you got a third of the delayed $40 million of longer cycle orders back in April, but could you give us more color on what, you know, the nature of these orders are? Do you think you need the Middle East conflict to end to get all of the orders back, or are your people telling you that, you know, it's just a matter of time, even if the conflict lasts, that you get these delays back?

Speaker #10: But could you give us more kind of what the nature of these orders are? And do you think you need the Middle East conflict to end to get all of the orders back, or are your people telling you that it's just a matter of time, even if the conflict lasts, that you get these delays back?

Speaker #11: That's helpful. And then just one more on the Middle East. You—

Speaker #11: mentioned you got a third of the delayed 40 million of longer cycle orders back in April. But could you give us more kind of what the nature of these orders are?

Speaker #11: And do you think you need the Middle East conflict to end to get all of the orders back, or are your people

Speaker #4: Yeah. So these were really kind of planned expansion and production capacity expansions. Related kind of long cycle project orders. We don't need at least at this point in time, we don't expect that it needs the conflict to end.

Vicente Reynal: Yeah. These were really kind of plant expansion and production capacity expansion related kind of long cycle project orders. We don't need, at least at this point in time, we don't expect that it needs the conflict to end. It was just a matter of, you know, kind of putting the final, you know, final details of these purchase orders. But obviously, as you can imagine, I mean, the teams and the customer were not able to even in some cases leave their homes to be able to have that kind of close communication and finalizing things. I think it's just, at this point in time, we think it's timing.

Speaker #4: When we have these solutions to the customer, stickiness increases. So it's going to continue to be an area of investment for us.

Speaker #4: we mentioned you got a

Speaker #11: telling you that it's just a matter

Speaker #11: of time, even if the conflict lasts, that you get these delays back?

Andrew Kaplowitz: That's helpful. Just one more on Middle East. You mentioned you got a third of the delayed $40 million of longer cycle orders back in April. Can you give us more color on what, you know, the nature of these orders are? Do you think you need the Middle East conflict to end to get all of the orders back? Are your people telling you that, you know, it's just a matter of time even if the conflict lasts, how you get these delayed orders?

Speaker #4: Yeah. time? So these were really kind of planned expansion and production capacity expansions. Related kind of long cycle project orders. We don't need at least at this point in time, we don't expect that it needs the conflict to end.

Speaker #4: third telling you that

Speaker #4: And it was just a matter of kind of putting the final details of these purchase orders. But obviously, as you can imagine, I mean, the teams and the customer were not able to even in some cases leave their homes to be able to have that kind of close communication and finalizing things.

Speaker #4: it's just a matter of

Speaker #4: And it was just a matter of kind of putting the final details on these purchase orders. But obviously, as you can imagine, I mean, the teams and the customer were not able to, even in some cases, leave their homes to be able to have that kind of close communication and finalize things.

Speaker #4: Yeah. I So I think it's just at this point in time, we think it's timing. There's definitely going to be a rebuild in a lot of the petrochemical facilities that have been kind of damaged.

Vicente Reynal: Yeah. These were really kind of plant expansion and production capacity expansion related to long cycle project orders. We don't need, at least at this point in time, we don't expect that it needs the conflict to end. It was just a matter of, you know, kind of putting the final, you know, final details of this purchase order. Obviously, as you can imagine, I mean, the teams and the customer were not able to even in some cases leave their homes to be able to have that kind of close communication and finalizing things. I think it's just at this point in time, we think it's timing.

Speaker #4: So I think it's just at this point in time, we think it's timing. There's definitely going to be a rebuild in a lot of the petrochemical facilities that have been kind of damaged.

Vicente Reynal: You know, there's definitely gonna be a rebuild in a lot of the petrochemical facilities that have been kind of damaged. I mean, we clearly have products that participate in that regard, so I think it's gonna be good for the long term. We also believe.

Speaker #4: So that, I mean, we clearly have products that participate in that regard. So I think it's going to be good for the long term.

Speaker #4: We also believe.

Speaker #4: So that, I mean, we clearly have products that participate in that regard. So I think it's going to be good for the long term.

Speaker #10: Appreciate the cover.

Andy Kaplowitz: Appreciate the color.

Vicente Reynal: Mm-hmm. Thank you.

Speaker #4: Thank you.

Speaker #5: Your next question comes from Nigel Coe with Wolf Research. Your line is open.

Operator: Your next question comes from Nigel Coe with Wolfe Research. Your line is open.

Speaker #4: We also think Appreciate believe.

Speaker #11: Thanks. Good morning. It's been a long time since I asked this question, but what percentage of the current portfolio percentage do you think is levered to energy be it process markets, oil and gas chems, etc.?

Nigel Coe: Thanks. Good morning. It's been a long time since I've asked this question, but you know, what percentage of the current portfolio, Vicente, do you think is levered to energy, you know, be it process markets, oil and gas, chems, et cetera?

Speaker #11: Appreciate the

Speaker #11: color.

Speaker #4: Thank you.

Speaker #4: you.

Vicente Reynal: I mean, you know, there's definitely going to be a rebuild in a lot of the petrochemical facilities that have been kind of damaged. I mean, we clearly have products that participate in that regard. I think it's going to be good for the long term, we also believe.

Speaker #6: Your next question Your

Speaker #6: comes from Nigel Ko with Wolf

Speaker #6: Research. Your line is

Speaker #6: open.

Speaker #12: Thanks. Good

Speaker #12: morning. It's been a long time since I asked

Speaker #12: this question, but what percentage of the current portfolio percentage do you think is levered

Speaker #4: Yeah. I know you have a good question. It's a lot of our technologies are very applicable to multiple industries. And they're in some cases kind of agnostic.

Vicente Reynal: Yeah, Nigel, good question. You know, it's you know, a lot of our technologies are very applicable to multiple industries and they're in some cases kind of agnostic. Clearly we're pivoting and kind of trying to help in some of these cases situations as we see expansion into production capacities like petrochemical facilities. For example, our Nash liquid ring vacuum that is widely used in the pulp and paper. It's also and can be very well utilized in the distillation towers of petrochemical facilities to be able to decompose products even further. I think we're putting attention to obviously help our customer where help is needed. That percentage of total revenue kind of could fluctuate based on the approach that we give to certain customer levels.

Speaker #12: to energy be it process markets, oil and gas chems, etc.?

Andrew Kaplowitz: Appreciate the color.

Speaker #4: it. Thank

Vicente Reynal: Mm-hmm. Thank you.

Speaker #4: Yeah, I know you have a good question. A lot of our technologies are very applicable to multiple industries, and they're, in some cases, kind of agnostic.

Operator: Your next question comes from Nigel Coe with Wolfe Research. Your line's open, Nigel.

Speaker #4: And clearly, we're pivoting and kind of trying to help in some of these cases situations as we see expansion into production capacities like petrochemical facilities, how our for example, our NASH liquorine vacuum that is widely used in the pulp and paper is also and can be very well utilized in the distillation towers of petrochemical facilities to be able to decompose products even further.

Speaker #2: next question comes

Speaker #2: from

Speaker #2: your.

Nigel Coe: Thanks. Good morning. It's been a long time since I've asked this question, you know, what percentage of the current portfolio, Vicente, do you think is levered to energy, you know, be it process markets, oil and gas, temps, et cetera?

Speaker #4: Thanks. Good morning. It's been a

Speaker #4: long

Speaker #4: time

Speaker #4: And clearly, we're pivoting and kind of trying to help in some of these cases situations as we see expansion into production capacities like petrochemical facilities, how our for example, our NASH liquorine vacuum that is widely used in the pulp and paper, it's also and can be very well utilized in the distillation towers of petrochemical facilities to be able to decompose products even to I further.

Vicente Reynal: Yeah. You know, a good question. You know, it's, you know, a lot of our technologies are very applicable to multiple industries. They're in some cases kind of agnostic. Clearly we're pivoting and kind of trying to help in some of these cases, situations as we see expansion into production capacities like petrochemical facilities. For example, our Nash liquid ring vacuum that is widely used in the pulp and paper. It's also and can be very well utilized in the distillation towers of petrochemical facilities to be able to decompose products even further. I think we're putting attention to obviously help our customer where help is needed.

Speaker #4: So I think we're putting attention to obviously help our customer where help is needed. And that percentage of total revenue kind of could fluctuate based on the approach that we give to certain customer levels.

Speaker #11: Okay. Okay. So what you're saying is that it doesn't matter what it is today. There's opportunities to grow that number. Okay. And then just maybe a follow-on to Joe DeBlase's question.

Nigel Coe: Okay. What you're saying is that it doesn't matter what it is today, there's opportunities to grow that number. Okay.

Vicente Reynal: That's right.

Nigel Coe: Then just maybe a follow-on to Nicole DeBlase's question. The life sciences. Do you think that the double-digit life sciences revenue growth can continue? I guess what I'm asking here is, was there anything unusual on the destocking or restocking activity there? Would you think that life sciences can be sustained? How does the life sciences margin compare to the average within PST?

Speaker #12: Okay. Okay. So what you're saying is that it doesn't matter what it is today, there's opportunities to grow that number. Okay. And then just maybe a follow-on to Joe DeBlaise's question.

Speaker #11: The life sciences, do you think that the double-digit life sciences revenue growth can continue? And I guess what I'm asking here is, was there anything unusual on the destocking or restocking activity there?

Speaker #4: think

Vicente Reynal: That percentage of total revenue kind of could fluctuate based on the approach that we give to certain customer levels.

Speaker #12: The life sciences, do you think that the double-digit life sciences revenue growth can continue? And I guess what I'm asking here is, was there anything unusual on the destocking or restocking activity there?

Speaker #11: Would you think that life sciences can be sustained? And how does the life sciences margin compare to the average within PSP?

Speaker #4: okay.

Nigel Coe: Okay. Okay. Okay. What you're saying is that it doesn't matter what it is today, there's opportunities to grow that number. Okay.

Speaker #12: Yeah, Nigel and Vic, I'll take that. So maybe I'll answer it kind of backwards here. So I'd say on an overall basis, the life sciences margin profile is comparable to the overall segment.

Vikram Kini: Yeah. Nigel, this is Vic. I'll take that. Maybe I'll answer it kind of backwards here. I'd say on an overall basis, you know, the life sciences margin profile is comparable to the overall segment. You know, clearly, it's the area where you've had more of the integration with the ILC Dover assets, with the legacy life sciences assets of Ingersoll Rand and things of that nature. But it's also probably the area where we see continued opportunity, particularly as some of those life sciences businesses continue to show good growth momentum. It's you know, solid margin profile, particularly areas like biopharma.

Vik Kini: Yeah. Nigel, this is Vic. I'll take that. Maybe I'll answer it kind of backwards here. I'd say on an overall basis, you know, the life sciences margin profile is comparable to the overall segment. You know, clearly, it's the area where you've had more of the integration with the ILC Dover assets, with the legacy life sciences assets of Ingersoll Rand and things of that nature. But it's also probably the area where we see continued opportunity, particularly as some of those life sciences businesses continue to show good growth momentum. It's you know, solid margin profile, particularly areas like biopharma.

Speaker #12: Would you think that life sciences can be sustained? And how does the life sciences margin compare to the average within PSP?

Vicente Reynal: That's right.

Nigel Coe: Just maybe a follow-on to Nicole DeBlase's question. The life sciences. Do you think that the double digits life sciences revenue growth can continue? I guess what I'm asking here is, was there anything unusual on the stocking or restocking activity there? Do you think that life sciences can be sustained? How does the life sciences margin compare to the average within PST?

Speaker #13: Yeah, Nigel and Vic, I'll take that. So maybe I'll answer it kind of backwards here. So I'd say on an overall basis, the life sciences margin profile is comparable to the overall segment.

Speaker #12: Clearly, it's the area where you've had more of the integration with the ILC Dover assets with the legacy life sciences assets of Ingersoll Rand and things of that nature.

Speaker #12: So but it's also probably the area where we see continued opportunity particularly as some of those life cycle sciences businesses continue to show good growth momentum.

Speaker #13: Clearly, it's the area where you've had more of the integration with the ILC Dover assets with the legacy life sciences assets of Ingersoll Rand and things of that nature.

Speaker #12: It's solid margin profile particularly areas like biopharma. So again, I would say relatively in line with overall segment, but clearly an area for opportunity.

Speaker #13: So but it's also probably the area where we see continued opportunity particularly as some of those life cycle sciences businesses continue to show good growth momentum.

Vikram Kini: Yeah. This is Vicente Reynal. I'll take that. Maybe I'll answer it kind of backwards here. I'd say on an overall basis, you know, the life sciences margin profile is comparable to the overall segment. You know, clearly this is the area where we've had more of the integration with the ILC Dover assets, with the legacy life sciences assets of Ingersoll Rand and things of that nature. But it's also probably the area where we see continued opportunity, particularly as some of those life sciences businesses continue to show good growth momentum, in, you know, solid margin profile, particularly areas like biopharma. Again, I would say, you know, you know, relatively in line with the overall segment, but clearly an area for opportunity.

Vikram Kini: Again, I would say, you know, relatively in line with overall segment, but clearly an area for opportunity. As far as the growth cadence, things like that, you know, listen, I think clearly we're encouraged by what we saw. You know, obviously, a double-digit growth cadence over the entirety of LST is not necessarily something that we've called for over the, you know, the entire year or anything of that nature. Clearly we're encouraged by what we're seeing here. We expect to continue to see good momentum.

Vik Kini: Again, I would say, you know, relatively in line with overall segment, but clearly an area for opportunity. As far as the growth cadence, things like that, you know, listen, I think clearly we're encouraged by what we saw. You know, obviously, a double-digit growth cadence over the entirety of LST is not necessarily something that we've called for over the, you know, the entire year or anything of that nature. Clearly we're encouraged by what we're seeing here. We expect to continue to see good momentum.

Speaker #12: As far as the growth cadence, things like that, listen, I think clearly we're encouraged by what we saw. Obviously, a double-digit growth cadence over the entirety of LST is not necessarily something that we've called for over the entire year or anything of that nature.

Speaker #13: It's solid margin profile particularly areas like biopharma. So again, I would say relatively in line with overall segment, but clearly an area for opportunity.

Speaker #13: As far as the growth cadence, things like that, listen, I think clearly we're encouraged by what we saw. Obviously, a double-digit growth cadence over the entirety of LST is not necessarily something that we've called for over the entire year or anything of that nature.

Speaker #12: But clearly, we're encouraged by what we're seeing here. We expect to continue to see good momentum and I think to Vicente's point earlier, the fact that you have a two-year stack on orders that's in that mid-single-digit realm, I think definitely is kind of where we have been targeting this segment to operate.

Vikram Kini: You know, I think to Vicente's point earlier, the fact that you have a, you know, a two-year stack on orders that's in that mid-single digit realm, I think definitely is kind of where we have been targeting this segment to operate, and we continue to expect to see, you know, continued momentum here as we move forward. I think we're really encouraged by what we're seeing here. You know, we definitely see continued margin expansion, particularly as we move sequentially through the course of the year.

Vik Kini: You know, I think to Vicente's point earlier, the fact that you have a, you know, a two-year stack on orders that's in that mid-single digit realm, I think definitely is kind of where we have been targeting this segment to operate, and we continue to expect to see, you know, continued momentum here as we move forward. I think we're really encouraged by what we're seeing here. You know, we definitely see continued margin expansion, particularly as we move sequentially through the course of the year.

Speaker #13: But clearly, we're encouraged by what we're seeing here. We expect to continue to see good momentum and I think to Vicente's point earlier, the fact that you have a two-year stack on orders that's in that mid-single-digit realm, I think definitely is kind of where we have been targeting this segment to operate.

Vikram Kini: As far as the growth cadence, things like that, you know, listen, I think clearly we're encouraged by what we saw. Obviously, a double-digit growth cadence over the entirety of LST is not necessarily something we've called for over the, you know, the entire year or anything of that nature. Clearly, we're encouraged by what we're seeing here. We expect to continue to see good momentum. You know, I think to Vicente's point earlier, the fact that you have a, you know, a 2-year stack on orders that's in that mid-single-digit, you know, realm, I think definitely is kind of where we have been targeting this segment to operate, and we continue to expect to see, you know, continued momentum here as we move forward.

Speaker #12: And we continue to expect to see continued momentum here as we move forward. So I think we're really encouraged by what we're seeing here.

Speaker #12: And we definitely see continued margin expansion particularly as we move sequentially through the course of the year.

Speaker #13: And we continue to expect to see continued momentum here as we move forward. So I think we're really encouraged by what we're seeing here.

Speaker #11: Okay. Thanks, Vic.

Nigel Coe: Okay. Thanks, Nick.

Speaker #5: Your next question comes from Joe Ritchie with Goldman Sachs. Your line is open.

Operator: Your next question comes from Joe Ritchie with Goldman Sachs. Your line is open.

Speaker #13: And we definitely see continued margin expansion particularly as we move sequentially through the course of the

Speaker #13: year.

Speaker #11: Hey, guys. Good morning.

Joe Ritchie: Hey, guys. Good morning.

Speaker #12: Okay. Thanks, Vic.

Speaker #4: Good morning.

Vikram Kini: Morning, Joe.

Vik Kini: Morning, Joe.

Speaker #12: Hey, Joe.

Joe Ritchie: Yeah, so a lot's been covered. Maybe just kind of parsing out the ITS margins this quarter. I know you've attributed it to volumes, tariffs, and investments. Seems like tariffs probably had the outsized impact this quarter. I don't know, I'm estimating maybe something in that $10 to 15 million zone. Can you maybe just give us some quantification on the tariff impact this quarter? Then ultimately, if we're getting back to neutral as the year progresses, I guess we should probably see that come back in the upcoming quarters.

Speaker #11: So yeah, so a lot's been covered. Maybe just kind of just parsing out the IPS margins this quarter. I know you've attributed it to volumes, tariffs, and investments.

Speaker #6: Your next question comes from

Speaker #6: Joe Richie with Goldman Sachs.

Speaker #6: Your line is

Speaker #6: open.

Speaker #12: Hey, guys. Good

Speaker #12: morning. Hey, Joe.

Speaker #11: Seems like tariffs probably had the outsized impact this quarter. I don't know. I'm estimating maybe something in that 10 to 15 million dollar zone.

Speaker #4: Yeah. So a lot's been covered. Maybe just kind of just parsing out the IPS margins this quarter. I know you've attributed it to volumes, tariffs, and investments.

Vikram Kini: I think we're really encouraged by what we're seeing here. You know, we definitely see continued margin expansion, particularly as we move sequentially through the course of the year.

Speaker #11: Can you maybe just give us some quantification on the tariff impact this quarter and then ultimately if we're getting back to neutral as the year progresses, I guess we should probably see that come back in the upcoming quarters?

Speaker #4: okay.

Nigel Coe: Okay. Thanks, Vicente.

Speaker #4: Seems like tariffs probably had the outsized impact this quarter. I don't know. I'm estimating maybe something in that $10 to $15 million zone.

Operator: Your next question comes from Joe Ritchie with Goldman Sachs. Your line is open.

Speaker #2: Your next

Speaker #2: question comes

Speaker #2: from

Speaker #2: your.

Speaker #4: Can you maybe just give us some quantification on the tariff impact this quarter and then ultimately if we're getting back to neutral as the year progresses, I guess we should probably see that come back in the upcoming

Speaker #5: Hey,

Joe Ritchie: Hey, guys. Good morning.

Speaker #5: guys.

Speaker #4: Yeah, Joe. So I think without question, I think the two drivers you mentioned there, both the tariff-related dynamics as well as just the flow-through on organic volume, which obviously this is a healthy gross margin business.

Vikram Kini: Yeah, Joe. I think, you know, without question, I think the two drivers you mentioned there, both the tariff-related dynamics as well as, you know, just the flow through on organic volume, which obviously this is a healthy gross margin business. Clearly those are the two biggest factors. We haven't necessarily quantified one versus another, but those are the two bigger drivers. You know, to your point, yes, clearly as we move into Q2, you know, remember the tariff-related noise really started in April of last year or kind of in Q2 of last year.

Vik Kini: Yeah, Joe. I think, you know, without question, I think the two drivers you mentioned there, both the tariff-related dynamics as well as, you know, just the flow through on organic volume, which obviously this is a healthy gross margin business. Clearly those are the two biggest factors. We haven't necessarily quantified one versus another, but those are the two bigger drivers. You know, to your point, yes, clearly as we move into Q2, you know, remember the tariff-related noise really started in April of last year or kind of in Q2 of last year.

Speaker #5: Morning.

Vikram Kini: Morning, Joe.

Joe Ritchie: Lot, yeah, a lot's been covered. Maybe just kind of just parsing out the ITS margin this quarter. I know you've attributed it to volume, tariff investments. Seems like tariff probably had the outsized impact this quarter. I don't know, I'm estimating maybe something in that $10 to 15 million zone. Can you maybe just give us some quantification on the tariff impact this quarter? Ultimately, if we're getting back to neutral as the year progresses, I guess we should probably see that come back in the upcoming quarters.

Speaker #4: quarters? Yeah, Joe. So I think without question, I think the two drivers you mentioned there, both the tariff-related dynamics as well as just the flow-through on organic volume, which obviously this is a healthy gross margin business.

Speaker #4: So clearly, those are the two biggest factors. We haven't necessarily quantified one versus another, but those are the two bigger drivers. To your point, yes, clearly as we move into Q2, remember the tariff-related noise really started in April of last year or kind of in the second quarter of last year.

Speaker #4: So I think on a year-over-year basis, this is where the comps on the margin side of the equation start to moderate a bit more.

Vikram Kini: I think on a year-over-year basis, this is where the comps on the margin side of the equation start to moderate, you know, a bit more, and that's why the margin expansion expectation is more back-end weighted here, particularly now as all the pricing actions and mitigation actions and things like that have really gone into place. I think it's also worth noting here that, you know, even over the course of the last year and even into Q1, we've continued to invest on the, on the cost side of the equation and on the SG&A side, really feet on the street, R&D, you know, the same areas we've talked about quite a bit. For us, that's an area that we wanted to be hyper-focused on continuing to invest because that's gonna drive the ongoing organic growth moving forward.

Vik Kini: I think on a year-over-year basis, this is where the comps on the margin side of the equation start to moderate, you know, a bit more, and that's why the margin expansion expectation is more back-end weighted here, particularly now as all the pricing actions and mitigation actions and things like that have really gone into place. I think it's also worth noting here that, you know, even over the course of the last year and even into Q1, we've continued to invest on the, on the cost side of the equation and on the SG&A side, really feet on the street, R&D, you know, the same areas we've talked about quite a bit. For us, that's an area that we wanted to be hyper-focused on continuing to invest because that's gonna drive the ongoing organic growth moving forward.

Speaker #5: Yeah.

Vikram Kini: Yeah. Yeah. I think, you know, without question, I think the two drivers you mentioned there, both the tariff related dynamics as well as, you know, the flow-through on organic volume, which obviously this is a healthy gross margin business. Clearly those are the two biggest factors. We haven't necessarily quantified one versus another, but those are the two bigger drivers. You know, to your point, yes, clearly as we move into Q2, you know, remember the tariff related noise really started in April of last year or kind of in Q2 of last year. I think on a year-over-year basis, this is where the comps on the margin side of the equation start to moderate, you know, a bit more.

Speaker #4: And that's why the margin expansion expectation is more backhand weighted here particularly now as all the pricing actions and mitigation actions and things like that have really gone into place.

Speaker #4: So I think, on a year-over-year basis, this is where the comps on the margin side of the equation start to moderate a bit more.

Speaker #4: I think it's also worth noting here that even over the course of the last year and even to Q1, we've continued to invest on the cost side of the equation and on the SG&A side really feet on the street R&D, the same areas we've talked about quite a bit.

Speaker #4: And that's why the margin expansion expectation is more backhand-weighted here particularly now as all the pricing actions and mitigation actions and things like that have really gone into place.

Speaker #4: I think it's also worth noting here that even over the course of the last year and even to Q1, we've continued to invest on the cost side of the equation and on the SG&A side really feet on the street, R&D, the same areas we've talked about quite a bit.

Speaker #4: And so for us, that's an area that we wanted to be hyper-focused on continuing to invest because that's going to drive the ongoing organic growth moving forward.

Speaker #4: So I'd say those are the biggest drivers. But yes, your point is valid that as we move sequentially through Q2 and really into the back half of the year, that's where those tariff-related headwinds moderate.

Vikram Kini: I'd say those are the biggest drivers. Yes, your point is valid that as we move sequentially through Q2 and really into H2, that's where those tariff related headwinds moderate.

Vik Kini: I'd say those are the biggest drivers. Yes, your point is valid that as we move sequentially through Q2 and really into H2, that's where those tariff related headwinds moderate.

Speaker #4: And so for us, that's an area that we wanted to be hyper-focused on continuing to invest because that's going to drive the ongoing organic growth moving forward.

Vikram Kini: That's why the margin expansion expectation is more back half weighted here, particularly now with all the pricing actions and mitigation actions and things like that have really gone into place. I think it's also worth noting here that, you know, even over the course of the last year and even into Q1, we've continued to invest on the cost side of the equation and on the SG&A side, really feet on the street, R&D, you know, the same areas we've talked about quite a bit. For us, that's an area that we wanted to be hyper-focused on continuing to invest because that's gonna drive the ongoing organic growth moving forward. I'd say those are the biggest drivers.

Speaker #11: Okay. Helpful, Vic. And then maybe Vicente, just on the M&A pipeline and the LOIs, I know back in the day, I think you guys had a goal ultimately to get the PSP business up to like a $2 billion-ish type run rate business from a revenue perspective.

Joe Ritchie: Okay. Helpful, Nick. Then maybe Vicente, just on the M&A pipeline and the LOIs. I know, you know, back in the day, I think you guys had a goal, ultimately to get the PST business up to, you know, like a $2 billion-ish type run rate business from a revenue perspective. As you think about, your pipeline, and whether that's the LOI or maybe the broader company pipeline that you're looking at, like how much of that is centered on the PST business versus ITS, going forward?

Speaker #4: So, I'd say those are the biggest drivers. But yes, your point is valid that as we move sequentially through Q2 and really into the back half of the year, that's where those tariff-related headwinds moderate.

Speaker #12: Okay. Helpful, Vic. And then maybe Vicente, just on the M&A pipeline and the LOIs, I

Speaker #11: As you think about your pipeline, and whether that's the LOI or maybe the broader company pipeline that you're looking at, how much of that is centered on the PSP business versus IPS going forward?

Speaker #12: know back in the day, I think you guys had a goal ultimately to get the PSP business up to like a $2 billion-ish type run rate business from a revenue perspective.

Vikram Kini: Yeah, your point is valid that as we move sequentially through Q2 and really into H2, that's where those tariff related headwinds moderate.

Speaker #12: As you think about your pipeline, and whether that's the LOI or maybe the broader company pipeline that you're looking at, how much of that is centered on the PSP business versus ITS going forward?

Speaker #4: Yeah. So, Joe, so I'll say that on the PSP side, back to your commentary about making it larger and bigger, I mean, it's kind of double in size since we started talking about PSP.

Vicente Reynal: Yes, Joe. I'll say that, you know, on the PST side, back to your commentary about making it larger and bigger, I mean, it's kind of doubled in size since we started talking about PST. Those tend to be, I would say, a good blend between both ITS and PST. But again, we continue to see a lot of great prospects in the PST side that we're very excited about.

Joe Ritchie: Okay. Helpful, Vic. Then maybe Vicente, just on the M&A pipeline and the LOIs. I know, you know, back in the day, I think you guys had a goal ultimately to get the PST business up to, you know, like a 2 billion-ish type run rate business on a revenue perspective. As you think about your pipeline, whether that's the LOI or maybe the broader company pipeline that you're looking at, like how much of that is centered on the PST business versus ITS going forward?

Speaker #5: I Okay. Great. Thank

Speaker #4: Yeah. So Joe, so I'll say that on the PSP side, back to your commentary about making it larger and bigger, I mean, it's kind of double in size since we started talking about PSP.

Speaker #4: And those 10 LOIs, I would say a good blend between both, IPS and PSP. And but again, we continue to see a lot of great prospects in the PSP side that we're very excited about.

Speaker #4: And those 10 LOIs, I would say a good blend between both, ITS and PSP. And but again, we continue to see a lot of great prospects in the PSP side that we're very excited about.

Speaker #11: Okay. Great. Thank you.

Joe Ritchie: Okay, great. Thank you.

Speaker #4: Thank you.

Vicente Reynal: Thank you.

Speaker #5: Your next question comes from David Raso with Evercore ISI. Your line is open.

Operator: Your next question comes from David Raso with Evercore ISI. Your line is open.

Vicente Reynal: Yeah. Yeah, Joe. I'll say that, you know, on the PST side, back to your commentary about making it larger and bigger, I mean, it's kind of doubled in size since we started talking about PST. And those LOIs, I would say a good blend between both ITS and PST. Again, we continue to see a lot of great prospects in the PST side that we're very excited about.

Speaker #13: Hi. Thank you. For the second half of the year, ITS, the margins, can you give us a sense of where do you think that growth will come from organically between compressors, vacuum and blowers, and the lifting power tool segments?

David Raso: Hi. Thank you. For H2, ITS, the margins, can you give us a sense of where do you think that growth will come from organically between compressors, vacuum and blowers, and the lifting power tool segments? Just remind us on the relative margin between those three.

Speaker #12: Okay. Great. Thank you.

Speaker #4: Thank

Speaker #4: you.

Speaker #6: Your next question comes

Speaker #6: from David Rasso with

Speaker #6: Evercore ISI. Your line is

Speaker #6: open.

Speaker #14: Hi. Thank you. For the second

Speaker #13: And just remind us on the relative margin between those three.

Speaker #14: half of the year, ITS, the margins, can you give us a sense of where do you think that growth will come from organically between compressors, vacuum and blowers, and the lifting power tool segments and just remind us on the relative margin between those

Vikram Kini: Yeah. Sure, David. I'll kind of give you a quick overview. So, you know, obviously the power tools piece is relatively small. It's kind of the smallest piece of the equation. To keep it very simple, the margin profile between compressors, blowers, and vacuum are actually quite comparable. You know, you don't see a dramatic mix impact between them or things of that nature. Clearly, some of those technologies maybe have more aftermarket than others, but in totality, fairly comparable. So, I think the simple answer to your question here is, and then clearly with compressors being, you know, upwards of 65% of the revenue base, you know, clearly that's going to be, you know, the biggest driver just 'cause it's the biggest piece.

Speaker #4: Yeah. Sure, David. I'll kind of give you a quick overview. So obviously, the power tools piece is relatively small. It's kind of the smallest piece of the equation.

Vik Kini: Yeah. Sure, David. I'll kind of give you a quick overview. So, you know, obviously the power tools piece is relatively small. It's kind of the smallest piece of the equation. To keep it very simple, the margin profile between compressors, blowers, and vacuum are actually quite comparable. You know, you don't see a dramatic mix impact between them or things of that nature. Clearly, some of those technologies maybe have more aftermarket than others, but in totality, fairly comparable. So, I think the simple answer to your question here is, and then clearly with compressors being, you know, upwards of 65% of the revenue base, you know, clearly that's going to be, you know, the biggest driver just 'cause it's the biggest piece.

Joe Ritchie: Okay, great. Thank you.

Speaker #5: you. Thank you.

Vicente Reynal: Thank you.

Speaker #14: three?

Speaker #4: To keep it very simple, the margin profile between compressors, blowers, and vacuum actually quite comparable. You don't see a dramatic mix impact between them, or things of that nature.

Speaker #2: Your next

Operator: Your next question comes from David Ross with Evercore ISI. Your line is open.

Speaker #2: question comes from

Speaker #4: Yeah. Sure, David. I'll kind of give you a quick overview.

Speaker #2: David.

Speaker #4: So obviously, the power tools piece is relatively small. It's kind of the smallest piece of the equation. To keep it very simple, the margin profile between compressors, blowers, and vacuum is actually quite comparable.

Speaker #2: Your.

David Ross: Hi. Thank you. For the H2 of the year, ITS and margins, can you give us a sense of where do you think that growth will come from organically between compressors, vacuum and blowers and the window and power tool segments? Just remind us on the relative margin between those three.

Speaker #5: Hi.

Speaker #5: Thank

Speaker #5: you.

Speaker #4: Clearly, some of those technologies maybe have more aftermarket than others, but in totality, fairly comparable. So I think the simple answer to your question here is, and then clearly with compressors being upwards of 65% of the revenue base, clearly that's going to be the biggest driver just because it's the biggest piece.

Speaker #4: You don't see a dramatic mix impact between them, or things of that nature. Clearly, some of those technologies maybe have more aftermarket than others, but in totality, fairly comparable.

Vikram Kini: Yeah, sure, David. I'll kind of give you a quick overview. You know, the power tools piece is relatively small. It's kind of the smallest piece of the equation. To keep it very simple, the margin profile between compressors, blowers and vacuums is actually quite comparable. You know, you don't see a dramatic mix impact between them or things of that nature. Clearly, some of those technologies maybe have more aftermarket than others, but in totality, fairly comparable. I think the simple answer to your question here is, I mean, clearly with compressors being, you know, upwards of 65% of the revenue base, you know, clearly that's going to be, you know, the biggest driver just because it's the biggest piece.

Speaker #5: Yeah.

Speaker #4: So I think the simple answer to your question here is, and then clearly with compressors being upwards of 65% of the revenue base, clearly that's going to be the biggest driver just because it's the biggest piece.

Speaker #4: But I do think that we expect to see I'd say positive contributions from all the underlying technologies. And as Vicente said here, when you think about the shorter cycle kind of momentum, we've seen it in the blower vacuum side.

Vikram Kini: I do think that we expect to see, you know, I'd say positive contributions from all the underlying technologies. You know, as Vicente said here, when you think about the short cycle kind of momentum, you know, we've seen it in the blower vacuum side, we've seen it in pieces of the compressor side. I think we're encouraged, at least by, I'd say some of the underlying market activity that we're seeing, that should kind of lend itself to some of that expansion you see in H2.

Vik Kini: I do think that we expect to see, you know, I'd say positive contributions from all the underlying technologies. You know, as Vicente said here, when you think about the short cycle kind of momentum, you know, we've seen it in the blower vacuum side, we've seen it in pieces of the compressor side. I think we're encouraged, at least by, I'd say some of the underlying market activity that we're seeing, that should kind of lend itself to some of that expansion you see in H2.

Speaker #5: So Your next question

Speaker #4: But I do think that we expect to see, I'd say, positive contributions from all the underlying technologies. And as Vicente said here, when you think about the shorter cycle kind of momentum, we've seen it in the blower, vacuum side.

Speaker #4: We've seen it in pieces of the compressor side. So I think we're encouraged at least by, I'd say, some of the underlying market activity that we're seeing that should kind of lend itself to some of that expansion you see in the back half of the year.

Speaker #11: All right. So sort of mix agnostic, just we just need the volume, essentially, regardless either subsector. When it comes to in the tariff impact, and you say it gets better as the year goes on, can you just clarify in the first quarter, is that pricing you put in against tariffs and they're dropping revenues at zero margin?

David Raso: All right. Sort of mix agnostic, just we just need the volume essentially, regardless either subsector.

Vikram Kini: Generally correct, yeah.

Vik Kini: Generally correct, yeah.

David Raso: When it comes to the tariffs and the tariff impact, and you say it gets, you know, better as the year goes on. Can you just clarify in Q1, is that pricing you put in against tariffs and they're dropping revenues at zero margin? Or are we actually getting an EBITDA hit, and we need the price to catch up to that in H2?

Vikram Kini: I do think that we expect to see, you know, I'd say positive contributions from all the underlying technologies. You know, as Vicente said here, when you think about the shorter cycle kind of momentum, you know, we've seen it in the blower vacuum side. We've seen it in pieces of the compressor side. I think we're encouraged, at least by, I'd say some of the underlying market activity that we're seeing, that should kind of lend itself to some of that expansion you see in the back half of the year.

Speaker #12: All right. So sort of mix agnostic, just we just need the volume, essentially, regardless either subsector. When it comes to tariffs, in the tariff impact and you say it gets better as the year goes on, can you just clarify in the first quarter, is that pricing you put in against tariffs and they're dropping revenues at zero margin?

Speaker #11: Or are we actually getting an EBITDA catch up to that in the second half of the year?

Speaker #4: It's more the former of what you've said. So the pricing actions related to tariffs have largely all been taken through the balance of 2025.

Vikram Kini: It's more the former of what you've said. The pricing actions related to tariffs have largely all been taken through the balance of 2025. You're seeing that come through now, offsetting tariffs. I would say it's-

Vik Kini: It's more the former of what you've said. The pricing actions related to tariffs have largely all been taken through the balance of 2025. You're seeing that come through now, offsetting tariffs. I would say it's-

Speaker #12: Or are we actually getting an EBITDA hit and we need the price to catch up to that in the second half of the year?

David Ross: All right. Sort of mix agnostic, just we just need the volume essentially, regardless of either sub-sector.

Speaker #4: You're seeing that come through now, offsetting tariffs, I would say it's dollar neutral, but obviously margin dilutive. And now, obviously, on a year-over-year basis, as you move through Q2 to Q4, you're seeing the tariff piece of that start to normalize because you had the tariffs in prior year.

Vikram Kini: Dollar neutral, but obviously margin dilutive. Now obviously on a year-over-year basis, you move through Q2 to Q4, you're seeing the tariff piece of that start to normalize because you had the tariffs in prior year. Clearly, with the mitigation actually taken, combined with some of the ongoing pricing actions we're taking, that's why we expect to see better momentum, particularly exiting the year and in Q4.

Vik Kini: Dollar neutral, but obviously margin dilutive. Now obviously on a year-over-year basis, you move through Q2 to Q4, you're seeing the tariff piece of that start to normalize because you had the tariffs in prior year. Clearly, with the mitigation actually taken, combined with some of the ongoing pricing actions we're taking, that's why we expect to see better momentum, particularly exiting the year and in Q4.

Speaker #4: It's more the former of what you've said. So the pricing actions related to tariffs have largely all been taken through the balance of 2025.

Vikram Kini: Generally.

David Ross: In the tariff impact, when you say it gets, you know, better as the year goes on, can you just clarify in Q1, is that pricing you put in against tariffs and they're dropping revenues at zero margin? Or we are getting an EBITDA hit, and we need to price to catch up to that in H2 of the year?

Speaker #4: You're seeing that come through now, offsetting tariffs. I would say it's dollar-neutral, but obviously margin-dilutive. And now, obviously, on a year-over-year basis, as you move through Q2 to Q4, you're seeing the tariff piece of that start to normalize because you had the tariffs in prior year.

Speaker #4: And clearly, with the mitigation actions we've taken combined with some of the ongoing pricing actions we're taking, that's why we expect to see better momentum particularly exiting the year and in Q4.

Speaker #11: All right. That's helpful. I appreciate it. Thank you.

David Raso: All right. That's helpful. I appreciate it. Thank you.

Vikram Kini: It's more the former of what you said. The pricing actions related to tariffs have largely all been taken through the balance of 2025. You're seeing that come through now offsetting tariffs. I would say it's dollar neutral, but obviously margin dilutive. Now maybe kind of year over year basis, you move through Q2 to Q4, you're seeing the tariff piece of that start to normalize because you had the tariffs in prior years. Clearly, with the mitigation actions we've taken combined with some of the ongoing pricing actions we're taking, that's why we expect to see better momentum, particularly at toward the end of the year in year 4.

Speaker #4: Well,

Vicente Reynal: You bet.

Speaker #5: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Operator: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Speaker #12: All right. That's helpful. I appreciate it. Thank you.

Andrew Buscaglia: Hey, good morning, everyone.

Speaker #12: Hey, good morning, everyone.

Speaker #4: Yep.

Speaker #2: Hey, Andrew.

Vicente Reynal: Andrew.

Speaker #6: Your

Speaker #6: next question comes from

Andrew Buscaglia: looks like I got one last question, even this far in the queue. I think no one's brought up China yet, and I wanna say that your comment there was, is that recall orders still outperforming underlying markets? Is that a comment around, like improving improvement off of the stabilization you've been commenting on the past couple quarters, or what are you seeing in that market?

Speaker #12: I still think I got one last question even this far in the queue. But I think no one's brought up China yet, and I want to say that your comment there was, as I recall, orders still outperforming underlying markets.

Speaker #6: Andrew Biscaglia with BNP comes Paribas. Your line is open.

Speaker #15: Hey, good morning,

Speaker #15: everyone.

Speaker #16: Hey, Andrew.

Speaker #15: Still think I got one last question even this far in the queue, but I think no one brought up China yet, and I want to say that your comment there was, as I recall, orders still outperforming underlying markets.

David Ross: All right. That's helpful. I appreciate it. Thank you.

Speaker #12: Is that a comment around improvement off of the stabilization you've been commenting on the past couple of quarters? Or what are you seeing in that market?

Vikram Kini: You bet.

Operator: Your next question comes from Andrew Buscaglia with BNP Paribas. Your line is open.

Speaker #5: from

Speaker #15: Is that a comment around improvement off of the stabilization you've been commenting on the past couple of quarters? Or what are you seeing in that

Speaker #4: Yeah. Andrew, China 4.0, again, we have been able to outperform the market that we're playing in China. With basically new technologies, taking technologies from other acquisitions and localizing that in China for China, and the team has done now consistently a pretty good job over the past, I'll say, three quarters of being positive on an organic order basis.

Vicente Reynal: Yeah. Andrew, you know, China for us, again, we have been able to outperform the market that we're playing in China with basically new technologies, taking technologies from other acquisitions and localizing that in China for China. The team has done now consistently a pretty good job over the past, I'd say, three quarters of being positive on an organic order basis. Again, we're pleased with the execution. It's just another form of kind of highlighting the self-help commercials that.

Andrew Buscaglia: Hey, good morning, everyone.

Vikram Kini: Andrew.

Speaker #5: Andrew.

Andrew Buscaglia: Still think I got one last question even this far in the queue. I think no one's brought up China yet, and I wanna say that your comment there was, I think I recall quarters still outperforming underlying markets.

Speaker #15: market?

Speaker #4: Yeah. Andrew, China for us, again, we have been able to outperform the market that we're playing in China. With basically new technologies, taking technologies from other acquisitions and localizing that in China for China, and the team has done now consistently a pretty good job over the past, I'd say, three quarters of being positive on an organic order basis.

Andrew Buscaglia: Is that a comment around, like, improving on the stabilization you've been commenting on the last past couple quarters? Or what are you seeing in that market?

Speaker #4: And so again, we're pleased with the execution. It's just another form of kind of highlighting the self-help commercial that we continue to push on a global basis.

Vicente Reynal: Yeah, Andrew, you know, China for us, again, we have been able to outperform the market that we're playing in China with basically new technologies, taking technologies from other acquisitions and localizing that in China for China. The team has done now consistently a pretty good job over the past, I'd say three quarters of being positive on an organic quarter basis. Again, we're pleased with the execution. It's just another form of kind of highlighting the self-help commercials that we continue to push on a global basis, yeah.

Speaker #5: Yeah. I

Andrew Buscaglia: Yeah

Vicente Reynal: We continue to push on a global basis. Yeah.

Speaker #4: Yeah.

Speaker #4: And so again, we're pleased with the execution. It's just another form of kind of highlighting the self-help commercial that we continue to push on a global basis.

Andrew Buscaglia: What do you see for the China market this year? Like, what's your sense in terms of where that market's going for you guys?

Speaker #11: What do you see for the China market this year? What's your sense in terms of where that market's going for you guys?

Andrew Buscaglia: What do you see for the China market this year? Like, what's your sense in terms of where that market's going for you guys?

Speaker #4: Yeah.

Speaker #4: I think we still don't see the market itself outgrowing now. What we see is us outgrowing and taking share in the market itself. If the market is not we don't see China market shrinking.

Vicente Reynal: I think, you know, we still don't see the market itself outgrowing. Now, what we see is us outgrowing and taking share in the market itself. We don't see China market shrinking. It is obviously highly competitive, but we still see a lot of good opportunities based on the technologies that we have and how we're approaching the market. I mean, we got hundreds of examples. I was in China earlier this year and at one of our medical device facilities and the in China for China for that medical device operation is opportunity is very high. That's an example.

Speaker #12: What do you see for the China market this year? What's your sense in terms of where that market's going for you

Speaker #12: guys?

Speaker #4: It is obviously highly competitive. But we still see a lot of good opportunities based on the technologies that we have and how we're approaching the market.

Speaker #4: I mean, and we got hundreds of examples that were in China earlier this year. And one of our medical device facilities and the in-China-for-China for that medical device operation is opportunities very high as an example.

Andrew Buscaglia: What do you see for the China market this year? Like, what's your sense in terms of where that market's going for you guys?

Speaker #4: It is obviously highly competitive. But we still see a lot of good opportunities based on the technologies that we have and how we're approaching the market.

Speaker #4: I mean, and we got hundreds of examples. That was in China earlier this year. And one of our medical device facilities and the in-China-for-China for that medical device operation is opportunities very high as an

Vicente Reynal: I think, you know, we don't see the market itself outgrowing. Now, what we see is us outgrowing and taking share in the market itself. We don't see China market shrinking. It is obviously highly competitive, but we still see a lot of good opportunities based on the technologies that we have and how we're approaching the market. I mean, we got hundreds of examples. I was in China earlier this year and at one of our medical device facilities and the in China for China for that medical device operation is its opportunity is very high as an example.

Speaker #5: think Yeah.

Speaker #11: Yeah. Okay. Great. Thanks, Vicente.

Andrew Buscaglia: Yeah. Okay. All right. Thanks, Vicente.

Speaker #4: Thank you. Thank you, Andrew.

Vicente Reynal: Thank you. Thanks, Andrew.

Speaker #5: That is all the time we have for questions. I'll turn the call to Vicente for closing remarks.

Operator: That is all the time we have for questions. I'll turn the call to Vicente for closing remarks.

Speaker #4: example.

Speaker #12: Yeah. Okay. Great. Thanks,

Speaker #4: Thank you, Sarah. Just finally, I just want to pass one more thank you to our employees for their ongoing dedication and commitment to having that ownership mindset and controlling what we can control and continue to deliver performance for our shareholders, which, by the way, all of our employees are.

Vicente Reynal: Thank you, Sarah. Just finally, I just wanna pass one more thank you to our employees for their ongoing dedication and commitment to having that ownership mindset and controlling what we can control and continue to deliver performance for our shareholders, which, by the way, all of our employees are. They have that reward and skin in the game to continue to deliver long-term value performance for all of us. Thanks again for the interest, and we'll talk soon.

Speaker #12: Vicente.

Speaker #4: Thank

Speaker #4: you. Thank you, Andrew.

Speaker #6: That is all the time we have for questions. I'll turn the call to Vicente for closing

Speaker #6: remarks.

Speaker #4: Thank you, Sarah. Just

Speaker #4: finally, I just want to pass one more thank you to our employees for their ongoing dedication and commitment to having that ownership mindset and controlling what we can control and continue to deliver performance for our shareholders, which, by the way, all of our employees are.

Speaker #4: And they have that rewarding skin in the game to continue to deliver long-term value performance for all of us. So thanks again for the interest.

Andrew Buscaglia: Yeah. Okay. Great. Thank you, Vicente.

Speaker #5: Great. Thank you.

Speaker #5: Thank

Speaker #5: you. Thank

Vicente Reynal: Thank you, Andrew.

Speaker #4: And we'll talk soon.

Operator: That is all the time we have for questions. I'll turn the call to Vicente for closing remarks.

Speaker #4: And they have that rewarding skin in the game to continue to deliver long-term value performance for all of

Operator: This concludes today's conference call. Thank you for joining.

Vicente Reynal: Thank you, Sarah. Just finally, I just wanna pass one more thank you to our employees for their ongoing dedication and commitment to having that ownership mindset and controlling what we can control and continue to deliver performance for our shareholders, which, by the way, all of our employees are. They have that rewarding skin in the game to continue to deliver long-term value performance for all of us. Thanks again for the interest, and we'll talk soon.

Speaker #5: you. Just

Speaker #4: us. So thanks again for the interest and we'll talk soon.

Speaker #5: finally, Thanks

Speaker #6: This concludes today's conference call. Thank you for

Speaker #6: joining. You may now disconnect.

Speaker #5: Again, thank you for joining. You may

Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.

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