¶1Operator: Thank you for standing by, and welcome to Eaton's First Quarter 2026 Earnings Results Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Yan Jin, Senior Vice President, Investor Relations. Please go ahead, sir.

¶2Yan Jin: Hey, good morning. Thank you all for joining us for Eaton's First Quarter 2026 Earnings Call. With me today are Paulo Ruiz, Chief Executive Officer; and Dave Foster, Executive Vice President and Chief Financial Officer. Our agenda today, including the opening remarks by Paulo, then I will turn it over to Dave who will highlight the company's performance in the first quarter. As we have done on our past calls, we'll be taking questions at the end of Paulo's closing commentary. The press release and the presentation we'll go through today, including reconciliations to non-GAAP measures have been posted on our website, and a replay of this webcast will be accessible on our website after the call. Before we begin, I would like to note that our comments today will include forward-looking statements with respect to sales, earnings and other matters. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our recent SEC filings. With that, I will turn it over to Paulo.

¶3Paulo Sternadt: Thanks, Yan, and thanks, everyone, for joining us. Starting on Page 3, I'm happy to report we have delivered solid results to start the year. From a demand perspective, we continue to see tremendous strength. Rolling 12-month orders are up in all businesses, 42% in Electrical Americas and 13% in both Electrical Global and Aerospace. We are winning business at unprecedented rates, resulting in our backlog hitting a new record high in both Electrical and Aerospace with book-to-bill increasing to 1.2 combined on a rolling 12-month basis and even stronger than that year-over-year. Our accelerating orders driven by data center orders up 240% prove continued strong demand and our winning value proposition as an end-to-end solutions provider. Overall, the businesses are executing nicely to start the year. We posted record revenue of $7.5 billion, along with Q1 record segment profit of $1.7 billion and margins of 22.7%. We are pleased to beat our adjusted EPS guide and consensus. All the bid was operational. We also delivered strong total revenue growth of 17% and higher margins than anticipated. We are also executing well on our deals to boost growth. We closed Ultra PCS in January and Boyd Thermal in March, both ahead of schedule. Our partnerships with NVIDIA resulted in a complete solution for their generation of chips, Vera Rubin. Thanks to our teams for the strong work as we keep shaping our portfolio. As we look toward the rest of the year, with an unprecedented demand backdrop we raised our organic growth outlook by 200 basis points to a midpoint of 10% and also raised our adjusted EPS midpoint expectations to now $13.28 for the year, which covers the EPS dilution from the Boyd acquisition. Another important update, on March 2, we announced Dave Foster as CFO. We are thrilled to have you back, Dave, and he has 29 years career with Eaton, which brings deep understanding of our business and markets as well as a proven ability to drive performance. Dave and I will dive into Q1 and the 2026 outlook. But first, let's move to Slide 4. We continue to drive eaten forward with our bold strategy to lead, invest and execute for growth. All 3 pillars are designed to accelerate our growth and create sustained value for shareholders. Today, we will discuss how we are executing for growth in Electrical Americas investing for growth, including the Boyd Thermal acquisition and leading for growth with a customer-centric approach. Slide 5 includes an update on how we are executing for growth in Electrical Americas. Demand remains incredibly robust. We are winning like never before, and the order and the backlog growth supports that. Meanwhile, we're accelerating our production ramp in the Americas to meet demand. The investments we are making over $1 billion in CapEx are at record scale for us, but well within our capability to navigate. And most importantly, we are on track as planned and feel confident on our path forward, given our strong position in growing markets and proven track record of solid execution at Eaton. Americas recovered well from a tough January and February with impact from the winter storms in our facilities and across the supply chain. Our team recovered well in March. April was another strong month. From both sales and margin perspective, Q1 will be the trough and as mentioned in our last earnings call in February. We expect progress as we enter Q2 and momentum in Q3 and Q4, which will set up the business to meet or exceed our margin target of 32% by 2030. Turning to Page 6 and our investing for Growth strategic pillar where we are doubling down on high-growth, high-margin markets to capitalize on once-in-a-lifetime opportunities. We've taken both portfolio actions in the last year, including the successful integration of Fiber bond, which enhances our model approach. Resilient power, which fast tracks our solid-state transformer technology and various partnerships like the design partnership with NVIDIA and the on-site power partnership with Siemens Energy to help solve for global power constraints. Now Eaton's broad portfolio has been further enhanced by the acquisition of Boyd Thermal. Our complete offering to data centers now has leading liquid cooling solutions, a true grid to chip approach that is unique to Eaton. We have solutions from power generation and the grid, gray space power infrastructure and now a stronger presence in the white space, along with cooling solutions. More specifically on Eaton's Boyd Thermal, this business is a core design partner to leading hyperscalers and silicon providers. As [indiscernible] plates expand across compute, networking and rack-level components, Boyd system level position drives also increased CDU adoption. Embedded at a cheap and system level, Boyd Thermal expands Eaton's presence in the white space and gives Eaton early visibility into evolving data center platform requirements, advancing next-generation power and cooling management. The cooling business is on track to record $1.7 billion or better in revenue in the full year of 2026, of which about $1.4 billion will be included in Eaton financials for the year with margins generally in line with the prior expectations. The Boyd business had a very strong start of the year, up well over 100% in Q1 versus prior year. In fact, Boyd's backlog doubled over the last 6 months. Boyd's recent wins underscore strong momentum in liquid cooling, reflecting customer preference for its deep engineering integration, early design engagement, speed of execution, manufacturing readiness and ability to scale globally. Therefore, we are confident in 2026 outlook. We are very excited to welcome the strong team to the Eaton portfolio and look forward to continued success together. Turning to Page 7. We are leading for growth by striving to move fast, co-creating innovative solutions with our customers at the center of everything we do. Here, we highlight the Eaton [indiscernible] DSX platform as part of our collaboration with NVIDIA to support the next generation of AI factories with end-to-end grid to cheap infrastructure. AI factories represent a new class of infrastructure, and they are driving a massive global build-out, where data center power demand could nearly triple between 2025 and 2030. This unprecedented demand requires end-to-end solutions for faster builds and more efficient energy usage. That's why we developed the Eaton [indiscernible] DSX platform. It delivers a complete modularized implementation of AI factory infrastructure, spanning grid connection, power distribution, advanced cooling and structural architectures engineered for higher speed, efficiency and resilience, truly an ideal solution. By integrating Eaton's grid to cheap architecture, we are enabling our customers to move beyond custom designs toward efficient, reliable and modular solutions. It's a unique collaboration tailored to help our customers with their greatest challenges, and we couldn't be more excited for our customers to benefit from this technology. Now I will turn over to Dave to walk through the financials.

¶4David Foster: Thanks, Paulo. I would first like to say how honored I am to be back at Eaton. I've seen a lot of great changes in my almost 30 years with the company, but I've never been more excited than I am today to be part of Eaton's growth journey by how well positioned we are to deliver on our commitments. I'll start by providing a brief summary of Q1 results on Page 8. Organic growth for the quarter was 10%, driven by strength in Electrical Americas, Electrical Global and Aerospace, partially offset by lower sales and mobility driven by -- primarily by a deliberate action to fix the tail, exiting a low-margin North America light vehicle business. Excluding declines in mobility, our organic growth would have been almost 12%. We generated record Q1 revenue of $7.5 billion, and a Q1 record $1.7 billion of segment operating profit. Adjusted EPS of $2.81 is a Q1 record and $0.06 above the midpoint of our guidance range. We also had a strong quarter for free cash flow, which was up 245% over prior year. Now let's move on to the segment details. On Slide 9, we highlight the Electrical Americas segment. Demand is accelerating. Our negotiations pipeline was up 81% in Q1 over prior year, translated into record orders and backlog. The business maintained strong operational momentum, delivering record sales and Q1 record operating profit. Organic sales of 14% was driven primarily by strength in data centers, up about 50% along with strong growth in commercial and institutional and machine OEM. Operating margin was 25.6%. As we discussed last quarter, we expected early 2026 headwinds as America's ramping capacity at an unprecedented scale to meet the accelerating demand. While revenue growth was very strong, we faced additional headwinds in the quarter from higher input costs than originally planned, along with costs related to delivering higher volumes in the quarter. The higher costs are short-term timing headwind, which is being offset with an announced April 1 price increase and other additional price actions. We have confidence to execute on our commitments for 2026. Now I will summarize the results for our Electrical Global segment. Total growth of 21% included organic growth of 9% and 6% attributed to the Boyd acquisition. Overall, a very strong performance for the quarter. We had strength in data center, residential and machine OEM. Operating margin of 19.2% was up 60 basis points over prior years, driven primarily by higher sales and continued operational efficiencies. As you can see on the chart, demand in Global remains incredibly strong, driven by strong orders, up 13% on a rolling 12-month basis with broad end market momentum and exceptional strength in data center demand. This reinforces a powerful growth trajectory ahead for the business. Before moving on to our industrial businesses, I'd like to briefly recap the combined Electrical segment's performance. For Q1, we posted an organic growth of 13% and total growth of 20%, a great start to the year, and we are pleased with the progress we are making on all of our acquisitions. Segment margins were 23.4%. On a rolling 12-month basis, orders accelerated up 32%, and our book-to-bill ratio for our electrical sector grew to 1.2 from 1.1 last quarter. In the quarter, Electrical Sector orders were up 47%. As a result, total electrical backlog increased 48% over prior year. Demand continues to surge, providing tremendous visibility and underpins our confidence in the Electrical business. Page 11 highlights our Aerospace segment. Organic sales growth of 9% remained at a high level and resulted in record sales with particular strength in defense aftermarket along with strength in commercial OEM and commercial aftermarket. We closed the acquisition of Ultra PCS in January and the business performed in line with our expectations, contributing 5 points of total sales growth. Operating margin expanded by 360 basis points to a record 26.7%, driven primarily by sales growth and a onetime facility sale gain in the quarter. Even excluding the onetime gain, aerospace margin expanded 80 basis points over prior year, very strong performance to start the year. The robust orders and a growing backlog continue to position Aerospace for growth. Moving to our mobility segment on Page 12. In the quarter, the business now including both vehicle and eMobility, declined by 6% on an organic basis driven primarily by the decision I mentioned earlier to exit a low-margin business. Margins are flat year-over-year, primarily driven by mix and operational improvements to offset higher commodity and wage inflation. We remain on track to execute the spin of the segment by the first quarter of 2027. Now I will turn it back to Paulo to discuss our updated guidance and close out the presentation.

¶5Paulo Sternadt: Thanks, Dave. Page 13 includes our end market growth assumptions. The demand in data center and distributed IT market continues to grow even faster than we estimated 3 months ago. We now estimate 32 gigawatts of total data center capacity under construction in the U.S., of which 70% is AI. Total data center backlog has grown to 228 gigawatts or 12 years of backlog at a 2025 build rates, up from the 11 years in our last update. As you can see on the chart, data center is not our only strong market. We see durable strength in many electrical markets and in Aerospace. These many paths for sustainable growth gives confidence to deliver continued differentiated growth in 2026 and beyond. Moving on to Page 14. We summarized our 2026 revenue and margin guidance. Following a strong quarter, we now expect total company organic growth to be between 9% to 11%, up 200 basis points at the midpoint, with strength in Electrical Americas and Electrical Global, which both increased 300 basis points at the midpoint. For segment margins, our guidance range of 24.1% to 24.5% is 50 basis points lower than the prior guide, primarily due to Electrical Americas Q1 performance. We are taking decisive actions to offset temporary cost headwinds in Electrical Americas. And as we discussed earlier, we are confident with our sequential margin improvement in Electrical Americas and expect to exit the year with margins north of 30%. On the next page, we have the balance of our guidance for 2026 and Q2. For 2026, we are raising the low end of our adjusted EPS guide. Now we expect full year EPS to be between $13.05 and $13.50, $13.28 at the midpoint. For the full year, adjusted EPS guidance includes flowing through the full Q1 beat and absorbing the Boyd dilution to EPS. The tariff impacts are included in this guidance and considered immaterial. We are reaffirming our cash flow expectations for the year, and we have provided a guidance for Q2 on this page. Healthy end markets, combined with our record backlog provides strong visibility into our outlook for the year. With the industry's best positioned portfolio, we are highly focused on disciplined execution throughout 2026. I will close with a quick summary on Page 16. Our strategy to lead, invest and execute for growth is working. We continue to transform our portfolio, allocating capital and resources towards higher growth, higher-margin businesses. The demand environment remains exceptional. We are winning at unprecedented rates. Our orders accelerated once again and our record backlogs provide visibility going forward. This was another strong quarter for Eaton. We delivered record Q1 adjusted EPS and segment profit, along with record revenue reflecting improved execution, ramping capacity as well as the impact of strategic actions we have taken to drive earnings performance. Bottom line, we see a compelling and exciting runway ahead with our strongest growth opportunities still in front of us. And with that, I look forward to taking your questions.

¶6Yan Jin: Thanks, Paulo. [Operator Instructions] With that, I will turn it over to the operator for instructions.

¶7Operator: Our first question for today comes from the line of Scott Davis from Melius Research.

¶8Scott Davis: I'm sure you're going to get a lot of questions on margins, so I'll go in a different direction. But there's a lot of debate around the long-term architectures and data centers and I think a lot of confusion out there. Can you guys just talk a little bit about your competitive position in the landscape for solid-state transformers or on the medium voltage side? And maybe even a TAM, if you could address that?

¶9Paulo Sternadt: Sure. Well, thanks, and thanks for starting with a strategic question. I appreciate that. I will start talking about this in broader terms. You said it correctly, a lot of the discussion is around the medium voltage solid state transformers technology, but we're also leading the pack more broadly as a company on how to transform the complete data centers into direct current technology. So it's broader than just the power transformers, right, all the way from the utility down to the chips. So we got to think about power distribution as well, power protection, 800 [indiscernible] DC or higher actually for future applications. And this is exactly -- I want to clarify, this is exactly the broad scope of our partnership with NVIDIA that we launched for the new generation of Rubin chips. So that the [indiscernible] scope is already 800-volt DC. But the most important question for investors is, why does this matter? Why does it matter so much for data center operators and I would say it is because the industry wants to increase tokens per megawatt. In other words, to increase the efficiency the data centers. So if you look at where we operate as a company and other companies operate as well, the biggest lever to increase this efficiency is to reduce the use of chillers because today, chillers consume around 20% of the data center power. So with the new cheap technology, for example, the one that NVIDIA announced at the beginning of the year, as they can run hotter and counting our advanced cooling solutions from Boyd, we can make this possible. So that's the biggest lever. But the second biggest lever is exactly what you mentioned here, Scott, is to move from AC architecture to DC architectures. If you look at today's efficiency, even in the most improved designs in AC, efficiency runs at 93% and we estimate and all the industry leaders estimate that switching to this direct current technology 800 volts or above can save up to 5% from data center operations, moving the efficiency all the way up to 98%. So if you think about this, this is huge dollars and huge efficiency gains that can change completely the economics of the data center. So I want to get that out. I would say this, we as a company, we are in a leading position to commercialize our medium voltage solid-state transformers to get more specific to your question. The fact that we acquired Resilient Power Systems accelerate their [indiscernible] development because we acquired an immersion code offering that drives much more power density in a much smaller footprint. So it really leapfrogged our evolution here. And we have more than a handful of solid-state transformer pilots actually approaching 2 handful, including hyperscaler customers. What we are getting from those discussions with them, it's a lot of positive feedback. We are working through those pilots. And in the meantime, we start taking the leading role also developing industry codes and standards in the U.S. but also in Europe. And as I mentioned before, as we are taking the commercial lead here, we're already providing quotes on 800-volt DC projects now. We expect orders in the second half of the year for shipments starting in late 2027 and some of those also beginning of '28. So we're making solid progress there. So if I'm to conclude here in summary, while there are other companies working on this technology, which I would say is good for quicker adoption of the industry, we are very confident in our leadership position in the solid-state transformers, and I would say more broadly to lead the complete power conversion to DC.

¶10Operator: And our next question comes from the line of Chris Snyder from Morgan Stanley.

¶11Christopher Snyder: Maybe I'll balance for Scott and ask more of a near-term 1 here. So Q1 Electrical Americas margins came in below expectations. It sounded like there's maybe some unexpected cost inflation. So maybe just some incremental color on that. And then what gives you confidence or could you help unpack the drivers that get that Americas margin to 30% or maybe even a little bit higher into the back half. It sounds like from the prepared remarks that there's price coming. So just anything on how material that could be in the time line there to lift those back half margins.

¶12Paulo Sternadt: Thanks, Chris. Well, thanks for this question. Certainly top of mind for all investors, I'd like to get started by providing a little bit of context to this margin discussion because we need to take this discussion in a broader sense of our growth trajectory. And as you heard in our prepared remarks, the demand is fantastic. And I just want to give this team -- this group of people, 3 data points for us to reflect on. The first one, look at orders, right, 60% up year-over-year. And this is on top of a very strong base in '25, having data centers being 240% growth validating our strategic choices. So this is a one strong data point. The second one I will mention, as you heard, our backlogs are up 44% in Electrical Americas. So this was a high bar in '25, and this business added $4.4 billion to the backlog in just 1 year. It's incredible what the team was able to add, while we're still delivering double-digit growth on top line. So that's the second data point. The third one is the negotiation pipeline, as you heard from Dave, is up 81%. Now if you take a step back here and look at all those data points, I would say we are the precipice of a new growth cycle here for this business, a real growth cycle, an inflection point and we are starting to get ready for it. We need to get ready for that inflection point. So as a reminder to everyone, I'm getting to the weeds of the margin development. As a reminder to everyone, we finalized the construction, and we are currently ramping up 12 factories as we speak to handle this growth. The bulk of this ramp-up cost is concentrated in Q4 last year and the first half of this year and these expansions are going well. They are progressing as planned. Now to the details on the margin development, the year-over-year margin is temporarily impacted by 2 reasons. I reemphasize temporarily impacted. The first temporary impact is a negative price cost lag based on commodity inflation beginning of the year. This temporary impact will be more than offset in the full year by pricing that we already implemented on April 1. So that's the first part of the margin recovery. The second one, we accelerated ramp-up costs in Q1 to deliver 30% higher revenue growth. So as you remember, in February, when we discussed, we committed to a 10% midpoint growth for Electrical Americas. Now we are committing to 13% growth. So we needed to upload investments in Q1. So this is part of it. It's also a temporary effect, given this ordinance trends, we took this deliberate action and followed [indiscernible] investments in Q1, and we are accelerating our ramp. As you know, we discussed in the last earnings call, every time you add fixed cost, labor, depreciation of new CapEx and start-up expenses ahead of volume, it creates this temporary margin headwind. Most importantly, I want to report that if you look at the product unit economics, the product margins remain very healthy, and we continue to expect in this new guidance, we continue to expect our full year 2026 segment profit in dollars to be roughly the same, around $4.4 billion as per prior guide. And if you ask what the confidence we have, I have and the team has on our second half margins, I would say we're on the right trajectory to get started. We finished March with strong performance in Q1 and April was also a good start for Q2. So that's the first point I want to get out. But the second and most importantly, looking towards the second half as utilization increases and recent pricing actions take effect, we expect to have strong operating leverage and margin recovery over the coming quarters, which reflects into our guidance, as you see, that shows sequential margin improvement starting from Q2 and gaining momentum towards the second half. And as explained through our last 2 earnings calls, this is the year of execution for the Americas, for sure. And the team is very focused. I want to report the team is really focused and very supported by the whole corporation. And the progress is tangible at even weekly meetings we have with the team, we can see progress week over week. So we remain confident about the strong exit rate for 2026 and we are committed to the 32% margin by 2030.

¶13Operator: [Operator Instructions] Our next question comes from the line of Deane Dray from RBC Capital Markets.

¶14Deane Dray: Yes. Sorry, can you hear me now?

¶15Paulo Sternadt: Yes.

¶16Deane Dray: I'll also add my welcome back to Dave and my question is directed to Dave. I'd be really interested in hearing about your early observations now that you're back at Eaton and where are your priorities and focus as CFO?

¶17David Foster: Dean, thanks for the welcome. Let me start with culture, which is one of the reasons I've worked at Eaton for almost 30 years. So I can already see and feel positive changes within the company and we have an increased focus on our customers, and we've had a lot of focus on improving our team operating dynamics. It's been great to see. If I look at growth, I've never seen this level of organic growth across the company in my career. And it's more than just an Electrical Americas story. We see it in Electrical Global. We see it in Aerospace. And then Paulo talked about it a little bit in his last answer, but the commitment that we've made to invest to grow the company organically really stands out to me, both people and assets. I personally reviewed the growth projects in the Americas during my first 3 weeks on the job, and I came away very confident in our ability to deliver 2026. No, I'm going to -- this will be a little different take. But for me, coming back, I clearly see the benefits of functional transformation efforts that have been ongoing at Eaton over the last 4 years. I see it across the enterprise, but let me share 1 of the many examples from the finance function. So in late 2023, we went all in on centralized and specializing our credit collections teams. And I'm really happy to say that we delivered record past due percentage performance at the end of 2025, and then we beat it again by 100 basis points at the end of Q1. So the end result is improved cash flow and reduced risk, but it also helps us free up time in our plants and divisions to focus on operations. So very similar to what policies since I've been back for 9 weeks, I can see visible progress and improvement across the total company. I see it in the numbers. I see it in the reviews that I sit in. And again, secondly, what Paulo said, we finished March very strong and the preliminary results for April are continue to build the momentum that we take into the second half of the year. So if I look at the top priorities for myself and the company, one, obviously, deliver our commitments for growth, margins and cash flow in 2026 and make sure we're positioned well to exceed or meet or exceed our expectations for 2030. For me, personally, I get a chance to leverage my strong operations background and my pricing experience with large direct customers. I understand the Eaton business system very well and how we operate as a company. So it's made it very easy for me to plug back into the company. And then I have strong relationships with all the operating leaders across the globe, and that really helps to drive results and resolve issues as they come up. If I look at it, we're going to -- one of the big objectives this year is to successfully integrate the Boyd Thermal Ultra-PCS and fiber bond acquisitions as well as execute the spin of our mobility business. And maybe many of you don't know, but last year, I supported the businesses at Eaton on both the Boyd and Ultra PCS acquisitions. And I also spent some time on the mobility spend in the fourth quarter of last year. And that experience has allowed me to hit the ground running and engage with our efforts involving all of these projects. I clearly know what we need to do to deliver synergies in both of the deals as well as understanding the base business. And then finally, on a functional point of view, I'm going to continue to work with our leadership team in finance to drive finance transformation objectives. And personally, I'm going to really lead a continuous improvement culture across all the finance that mirrors the rest of the enterprise with the simple goal of just getting better every day. So hopefully, that answers your question.

¶18Operator: And our next question comes from the line of Nicole DeBlase from Deutsche Bank.

¶19Nicole DeBlase: I guess just kind of following on to all the highlights of the strong order growth that we're seeing and Paulo, what you said about this kind of being an inflection with respect to demand. I'm just thinking about do you have enough capacity to address that inflection in demand based on what's been done so far and what's ongoing within Electrical Americas? Or should we be expecting maybe another tranche of capacity expansion in the quarters and years to come? And if so, like could that expansion be of a similar size to what you guys have embarked upon in EA already? Or could it be a bit smaller?

¶20Paulo Sternadt: Thanks. As we stated before, we announced the expansion of 24 facilities, and we are done with 12 of them. We are ramping there are still 6 to come online by the end of the year that we're going to ramp next year and the other 6 beyond 2027. Of course, there's a lot of success in our orders. There's a lot of success in our combined portfolio and our growing backlog, negotiation pipeline, all of that, but I wouldn't expect to see such an increase in capacity investments all at once hitting our business anytime soon. It's going to be more like a continuous investment over time. and something that we are really focused as well as the team is to sweat those assets, right? We are inserting very good operators inside every part of the Electrical business, they're showing results. We're going to make those new plans work, and we're going to get the high returns our investment. So in short, I would say half -- more than half of the pain is gone, is highly concentrated in Q4. As I said before, and then starts to get back in a much better situation for the second half as we ramp those volumes. And there will be a continuous improvement and continuous investment, but nothing of this magnitude of 24 plants in the space of 2 years.

¶21Operator: And our next question comes from the line of Chad Dillard from Bernstein.

¶22Charles Albert Dillard: So I've got a question for you on competitors buying into the cold plate market. So I guess, part one is what share of cold places is represented in Boyd. And then part 2 is how do these acquisitions impact the competitive landscape?

¶23Paulo Sternadt: Great question, another top of mind topic for investors. Thanks for that question. I would just start by just showing my welcome and my excitement to have the Boyd team as part of Eaton. I would say, is a winning team in the fastest-growing portion of the data center market, the advanced liquid cooling. So we are really happy to be able to count the support of that talented team. And I'm glad I told you, I hope you were in our last earnings call, I made a short comment sarcastically that we should brace for comments around cooling coming up every month. And I would say this is truer than ever with the latest news we saw from the market. But now seriously, if I look back even a space of 3 months, I would say that I believe this investor community evolved in their thinking in the last months. And I believe most understand now that co plates are not commodities, I saw a couple of really good reports coming out from analysts. So there is understanding that cold plates are actually strategic assets for our customer co-development customer centricity and future wins that actually can be paired and can pull wins for system business like CDUs for cooling and power management, especially one of those 3 things under the same rule. So there is much more understanding of its growth potential. I'm happy that's the case now. If we start looking at the recent co plate acquisitions, I would say that a further, in my opinion, further validate our strategy because it demonstrates the attractiveness of this tremendous market growth opportunity we saw earlier on. And the other thing I want to highlight in terms of landscape -- competitive landscape to the second part of your question, before acquiring Boyd, the team really did -- our team really did the homework and we systematically evaluated the market landscape for over a year. So we did that on our own. We hired an external consultant. We hired a cooling expert from the Department of Energy. All those 3 independent data points of browsing the market pointed to Boyd. So we are confident we bought the BaaS business, the market leader at the right multiple, also very important to say that. And based on Boyd's world leading market position, we are also very happy about their capabilities and the scale they can implement in the next months and years. And as you said, there's a lot of deals. We are familiar with those deals. In my opinion, that does not change our view of the market because as I said before, we browse the market for the best deal possible. And this game around liquid cooling is a game, in my opinion, will define as a game of trust given the high stakes of being so close to the chips and keeping the servers working and the revenue generation assets operating well. It's a game of trust, it's a game of speed and cost on innovation. Constant innovation is what marks this market very strongly. So the other thing I want to say, and this is the mindset of our team here that we will protect you will learn from and will augment what made Boyd great, which is their speed, the superior engineering they have, the manufacturing quality at increased scale. So we are really focused there. Now if I stop, this is a big picture for the business and the cooling market. We know that the future is bright for this technology. But then we should ask ourselves what makes us feel good about the shorter term. And here, once again, if you look at the Boyd's business and now we call it our liquid cooling business at Eaton, revenues should meet or exceed this $1.7 billion in revenue, certainly a huge growth over $1.1 billion this team achieved last year. And we feel really confident. Why we feel confident on that number. Q1 revenues from this cooling business at Boyd more than doubled year-over-year. And also the backlog doubled from 6 months ago. So the business is really growing really fast and winning big. The second thing, I would say, the run rate in Q1 was already around $400 million. So we modeled to stay at that level in Q2 and raised the second half to $450 million per quarter, it's reasonable, it's conservative, and we think it's perfectly feasible as the business is ramping. Now we only owned the business for 3 weeks. So we thought it was premature to raise the full year forecast at this time. But I want to reassure everyone we are aiming for an upside and we'll be prepared for that upside. So in summary, just to give you my final words on this topic, market validation of our strategy given the last years, we're extremely happy to have Boyd in our portfolio, and I'm very confident in delivering our own growth plans for '26 and beyond.

¶24Operator: And our next question comes from the line of Andy Kaplowitz from Citi.

¶25Andrew Kaplowitz: Obviously, you raised your organic revenue guide for the year which seems like it's mostly coming from data center strength, but what are you seeing in terms of other mega projects? Are you simply further unlock there? And maybe your thoughts on broader economic trends impacting EA and Electrical Global, any impact from the Middle East on your business, for instance?

¶26Paulo Sternadt: Very good question. I'll give you a flavor on mega projects first. Another strong quarter, another strong quarter. The announcements were up 29% year-over-year, growing 36% in full year '25. So if you put a 2-year stack, the stack [indiscernible] 65% up. So a very strong development in mega projects. So the backlog of mega projects now is around $3.3 trillion and is up 31% year-over-year. But the most important thing for Q1 is that we saw an uptick on mega project starts, which is when people start spending money and buying equipment. So mega projects parts reached $54 billion in Q1. So it's more than double the same period last year. And since we start tracking that in 2021, it's the third best quarter on record. So very strong tailwinds that will come from mega projects in the years to come. You had a second and third part to your question. I will just give you some flavor on the other markets, so we allow other colleagues to ask questions. But we also had strength -- we see strength in utility orders, we see strength in machine OEM, we see strength in aerospace more broadly for the company. So we have different vectors of growth, which are not necessary data center only. So I'll not give full details now, so we allow other colleagues to ask their questions as well. But thanks for your highlights on the mega projects. So strong quarter once again.

¶27Operator: And our next question comes from the line of Patrick Baumann from JPMorgan.

¶28Patrick Baumann: I just had a quick one on the EA margin again for the commentary you made on March and April being better and then the incremental pricing you put through in April. I'm just wondering if you could give any insight into how much improvement that you saw in those months. And then what kind of improvement you expect in margin from first quarter to second quarter? Because it does sound like you expect it to get better. But it's not really clear to what extent?

¶29Paulo Sternadt: Great. So I would get started also allow Dave to make some comments later. We see the biggest mission for this business actually to reach the top line and keep growing. And they did that exceptionally well in March. We have a very strong end of the quarter. That performance repeated in April. And in terms of margin development, the 2 things I said before, I shared before, there are temporary headwinds. They will be solved as we execute on the volume ramp. So this is on the right track, and that give us confidence. The second thing, which hasn't hit our numbers yet entirely is the pricing that we implemented at beginning of April. So if you put these 2 together, the business is demonstrating top line growth and executing on the expansion well, also took the right measures in terms of pricing already implemented. So we'll see that coming in the second half. And to just go back to what we said last year in terms of the EPS split between first and second half is pretty much what we see in this guidance as well, right? So I will start by making those comments, and I'll allow Dave to give some color here from his perspective.

¶30David Foster: Yes. Based on our -- how we finished March and April, with our guidance, we're up 150 basis points from Q1 to Q2 and the Electrical Americas. And keep in mind, on the price actions we don't get the full take in the first quarter when we execute them. That tends to come through in the following quarter. So again, we're confident in our guide for Q2 for Electrical Americas. And again, April demonstrated that we're continuing the momentum that we saw at the end of Q1.

¶31Patrick Baumann: And that's 150 basis points you're saying from 1Q to 2Q is the expectation?

¶32David Foster: Correct.

¶33Operator: And our next question comes from the line of Andrew Buscaglia from BNP.

¶34Andrew Buscaglia: I just wanted to check on -- a lot of discussion on the data center front and orders were quite strong there. But can you give some commentary on what's going on order-wise and trend-wise by the other subsegments within Electrical Americas?

¶35Paulo Sternadt: Sure. I will give you a commentary. Let me talk about utilities because it's an important market, and it's tightly connected with the data center boom as well as you guys know. So we continue to see very strong momentum in terms of orders for the utility business here. So we had double-digit growth on a 12-month rolling basis for Electrical Americas and for Electrical Global mid-single digits. So strong orders coming our way on the utility side. And on the strategic commentary, I want to say that we continue to make progress gaining share in voltage regulators, capacitors and switchgear, which are actually 3 product groups we are ramping up with our investments, so we keep winning shares in that area. And that's our focus because it has most differentiated performance. We are a bit more selective on single-phase transformers because it's the smallest part of our portfolio, also the least differentiated and I would say this, we expect the market to remain strong for a very long period of time. Just if you recall all those data center announcements triggered, what I would say, everyone already sees the power generation and transmission investment. So it's very well reflected in power gen and power transmission, but it's not so much yet reflected in the power distribution utility business, right? We see this uptick in orders, but we believe the biggest wave in investment is going to come later. And just to remind everyone, how good it is to see investment in power generation for us at Eaton, every investment in generation creates a compounding opportunity for it. And first of all, when there is a power generation project, we sell the medium voltage gear required for this project. And then in a later stage, when there's power to get distributed by the grid once again, opportunity for us to distribute protect those [indiscernible]. And then lastly, and even more impactful to us is when this power reaches our end customers, being data centers, being commercial, institutional, any other end market because we need to manage that power reliably and safely. So we are very, very convinced that the utility business is going to remain stronger for longer. And we also -- I would say this, I will give you some color on the short cycle businesses we have. So again, short cycle, high single digits in Q1 revenues from mid-single digits in Q4. So we see this continued momentum quarter-over-quarter. And then if you go through the details of what makes the short-cycle businesses, we saw some recovery in Americas for resi, low single digits. And once again, we are not counting on the resi market to be strong for us to make our numbers by any means. And we saw also a stronger recovery in the EMEA business in the residential space. MOEM is back -- up for both Americas and Global. And distributed IT, we see high single digit in the Americas, up, right? High single digits up, and it was a little bit down global versus last year. So we see green shoots coming from Q4 extending into Q1 on the short-cycle markets. And I will say this, and I'm proud to say our team is capitalizing on this market recovery and recovery and winning. And this is important because we also drive utilization of our factories that serve those end markets. I hope that helps.

¶36Operator: And our next question comes from the line of Joe Ritchie from Goldman Sachs.

¶37Joseph Ritchie: I wanted to -- I wanted to circle back on Boyd. So clearly off to a great start this year. I'm curious, how are you managing like potential disruption from the integration of this asset with legacy Eaton? And then also as it relates to capacity, I know you addressed the capacity for your core business. But I guess, as Boyd coming in, what kind of capacity additions are necessary in order to fulfill like their backlog and how fast they're growing?

¶38Paulo Sternadt: Great question. So to the first 1 -- first part of your question, as I said before, it's a game of trust, it's a game of speed. It's a game of getting the technology implemented and also getting the ramp done in the right way. We are taking a very cautious and deliberate approach to integrating this business into Eaton. The reason we went after Boyd was that they were the market leader. We didn't want to go for a smaller asset, which we've found will be very difficult to make it work in our organization. So here, they know what they're doing. They were part of Goldman before and they were performing before. So our philosophy cannot be any harder or more difficult in side item at all. So we are taking very good care of the team, a very talented team. They are retaining them. They report directly to our COO at the sector level. They report directly to Heath, so high visibility, high attention. And in terms of investments, over time, this business grew fantastic rates at very low CapEx rates versus sales, like think about 3%, 4%. And with this explosive growth they have now, they have more investment in terms of sales approaching double digits temporarily is already part of our guidance for the year, and it's all been implemented. So the teams are running, and as I said before, a very good Q1 in terms of output and growth. We just got the April numbers yesterday, also very strong performance. So we are really excited about the business. We are respectful of what they built and we're actually leveraging some of their connections with cheap manufacturers to be a lead for other technologies of Eaton to win. And a good example of that could be also what we are doing with NVIDIA and other companies. So we keep high touch connection with this team. We want them to run fast, and we are supporting them to run fast.

¶39Operator: And our next question comes from the line of Julian Mitchell from Barclays.

¶40Julian Mitchell: Maybe just to circle back to the sort of ramp-up slope that the guidance is predicated on, and I suppose 2 sides to that. One is overall firm-wide EPS, is the sort of guide based on a $4 type number in Q4? And sort of allied to that, on the Electrical Americas division, I think incremental margins you're guiding year-on-year at about 10% in Q2 year-on-year. should we think about third quarter in the 20s and then fourth quarter in the sort of 50s percent type incremental margin?

¶41Paulo Sternadt: Yes. I will start, I'll also, Dave, to provide color. Thanks for your question. Here, I would say couple of things. Once again, you're perfectly right in analysis. That's exactly what we're committing to. And the reasons behind are, once again, twofold: One is the pricing already implemented; and two, we're going to get the leverage from the ramp-up investments that we have that's going to start implementing our profits, improving our incremental here. And also all the efficiencies we are dealing with as we learn how to operate in those plants will be behind us. So yes, absolutely in line, and this is perfectly feasible and aligned with the previous guidance we had between first half and second half EPS breakdown. Any additional comments, Dave?

¶42David Foster: The only thing I would add is, in addition to the benefits we see on the scale of the growth on the manufacturing costs, we also see the benefit on reducing support costs as a percentage of sales in the back half of the year.

¶43Paulo Sternadt: Okay. Thanks. I'd like to make a couple of comments just to close here the call, some closing remarks. Very interesting questions. I'm glad we moved to this one question per analyst format, maybe more dynamic. We could talk to more people. Let me just make a couple of comments to conclude the call. I will start by saying that I would say our strategy is working, right? We are, in my opinion, we are closer to our customers, and we are designing the future together with them. This is really important for the future development of this company. We are shaping our portfolio at fast pace. Just think about how much ground we covered last year, we allocated capital boldly, and I also say, surgically, the proof point in our numbers, you can see the Electrical business grew 20% total sales with 13% organic and Aerospace grew 16% total sales with 9% organic. So those were 2 markets where we decided to invest and allocate capital. And in terms of execution, I would just highlight once again, we are executing an unprecedented demand. Record orders and backlogs are paired with strong negotiation pipeline, and this give us very high level of visibility and confidence moving forward. I would say also, we showed demonstrated operational improvements that allow us to beat our top line commitment for the quarter and also to raise organic growth guidance for the full year. And in terms of margins and the Americas development, the ramp is on track. We are accelerating the execution. As I said before, we have confidence in the top line and the margin upside as the year progresses. So in a nutshell, this allowed us to beat the Q1 EPS, have confidence to absorb the EPS impact of our acquisitions and still be able to raise the full year EPS guidance. So thanks to everyone for your time, and thanks for your questions. Thank you.

¶44Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

¶1Ann-Sofie Nordh: Welcome to this presentation of ABB second quarter results. You will hear from our CEO, Morten Wierod, and our CFO, Christian Nilsson. They will talk through results as per usual tradition. After this, we will run through the Q&A session. I'm Ann-Sofie Nordh, Head of Investor Relations. With that, I will just simply hand over to you, Morten, for the presentation.

¶2Morten Wierod: Thanks, Ann-Sofie. Let's talk through the building blocks that resulted in another record quarter for both orders and revenues, good earnings growth, a solid margin improvement, and good cash flow. In total, things progressed more or less as planned. We delivered on our guidance, I'm pleased with the results. I want to start with M&A. You have heard me talk about the teams being active on a good target pipeline. Now we see these efforts result in three recently announced acquisition, which combined would add approximately 3.5% to our 2025 revenues. This includes two smaller deals, one being in the Italian company, Specialtrasfo, who is specialized in medium-voltage transformers. I want to make it clear that we're not going back into the general power transformer business. No, these are custom-engineered components aimed at industrial and energy applications. It fits well in the Motion High Power division, as they can integrate these transformers with our large motors and drives into fully optimized powertrain solutions. The other small deal is in the Marine & Ports division in the business area Automation. Their acquisition of the marine automation specialist, Høglund, is a nice complement to our existing offering. Høglund's integrated automation system handles automation, monitoring, and control tasks on board of ships. By combining data from engines, power generators, and cargo systems, it helps improve safety, energy efficiency, and overall operational performance. This will further strengthen our already leading position in marine. This morning, we also announced a larger deal, namely our offer to acquire Rotork. We have followed Rotork from a distance for a long while, impressed by their technology. They are a leading manufacturer of actuators and would expand our automation offering. Importantly, timing is good, as ABB is in good shape. We have improved governance and performance of our own company. We are ready to welcome Rotork into ABB. This is an important step to expand the ABB automation offering. It broadens our scope in what we call the Sense, Control, Act automation loop. We can take these solutions into our extensive market reach and build on our digital and technology capabilities. We see a strong strategic fit between Rotork and the ABB purpose and our leading position in the Electrification and Automation. This deal will bring together two businesses with highly complementary technology portfolios and similar customer relationships, geographic footprints, and strong installed bases. Beyond the strategic fit, we see Rotork's culture and operating philosophy similar to ours. Last year, they generated revenues of GBP 777 million and a high adjusted operating margin of 24.6%. Absorbing this into the ABB result for 2025, our revenues would increase by about 3%, and Operational EBITA margin would improve by about 20 basis points. This acquisition would be accretive to our earnings per share in year two, as the first year is burdened by certain acquisition-related costs. We have agreed on a price of GBP 5.03 per Rotork share. In USD terms, this comes to about $5.5 billion. In 2025 multiple terms, an EV-to-sales of about 5.3x and EV-to-EBITDA of about 19.5x. This represent a discount in the region of 5%-25% versus our own multiples. Accounting for synergies, the EV-to-EBITDA multiple reduces in the mid-teens range. From a timing perspective, we expect the transaction to close in the first half of 2027, post Rotork shareholder vote and customary regulatory approvals. It is our strong view that Rotork joining ABB adds long-term value across the stakeholder groups. The Rotork board is aligned on the strategic fit, and it is supportive and recommends the offer. What do we actually mean when we talk about the Sense, Control, Act automation loop? I would say that automation is about closing feedback control loops. You are sensing a condition. You take algorithmic decisions in controllers, which triggers an act in, for example, a motor and drive running a fan, pump, or compressor. First, there is sensing. The sensor feed process signals into the automation system. These are signals of pressure, temperature, flow, or level, or the chemical composition of gases and liquids. The automation system controls, monitors, and optimize the continuous production processes. This can be in a pulp and paper plant or on an oil platform. The system uses the sensor signals to infer a process state, to analyze deviations, and to calculate corrective actions. This takes us to the Act phase. The DCS signals the actuators, which triggers, for example, a valve to optimize how much is open in order to adjust the pressure of flow or liquid or gas. Our position within the automation loop has this far been biased towards the DCS and sensing. Rotork is a leading independent manufacturer of actuators with a particularly strong position in electric actuators. By adding this to our portfolio, we would improve our offering into the Act phase and further strengthen our competitive position. As part of the Automation extended platform, it will enhance our ability to help our customers through increasingly digital, connected, and autonomous solutions across energy and process industries. There are, of course, different types of actuators, and Rotork is leading player across electric, pneumatics, and hydraulic actuation. Electric actuators represent more than half of Rotork's sales. From a customer perspective, these come with the benefit of consuming energy only when performing work. This reduces operational cost and improves energy efficiency. They also provide highly accurate positioning and motion control. This is essential for applications requiring multiple points of positioning or precise adjustments. Rotork will be a really strong match, extending our current offering. In the combined setup, we are better balanced in the Sense, Control automation loop. As I mentioned earlier, we have followed Rotork for a long time. They have many qualities as the plan is that they will operate as a separate division within the Automation business area, adding about 12% to revenues. By running them as a separate division, we would retain accountability and operational focus, very much in line with the ABB Way operating model. Automation products is a profitable business, so our mix improves. In the combined setup, the business area operational EBITDA margin would have been 15.2%, 120 basis points higher than reported 2025 actuals. We are very hopeful about what we and Rotork can jointly accomplish. Together, we will be a strong partner to customers as we move towards increasingly digital, connected, and autonomous solutions across energy and process industries. Let's turn back to Q2. We delivered new record levels for both orders and revenues. In the order chart, you see that this is the first time we generated about $12 billion in one quarter. The very strong comparable increase of 28% is driven by a broad and good activity across most of our customer segments. Notably, the Automation business area even tempered overall order growth for the group. Importantly, their market environment remains strong, so their order decline is linked to the very tough comparable. Christian will talk more about this shortly. Speaking of strong markets, we had surging order growth of 58% in Electrification and a very strong 20% in Motion. In total, the elevator pitch would be that all of our three business areas continue to see a robust overall market situation, and we don't see a pattern of pre-buys. Demand is rather unpinned by sustained customer investments across the secular megatrends of energy expansion, energy efficiency, and energy resilience. Areas where ABB's portfolio is very well-positioned to deliver. Looking closer at the different customer segments, data center stands out with a triple-digit order increase. We had a challenging comparable in the Utility segment, but the market is strong, with investments in grid build-out, stability, and reliability. We also see good demand for upgrades on electrical infrastructure in, for example, tunnels and airports. A link to transport, marine, and rail continue to be strong areas. In the building segments, orders were up in the commercial area, including for HVAC. In the quarter, we got yet another proof point of what we can accomplish with the combined strength of our business areas, the power of ABB. Under the extended partnership with VoltaGrid, Motion and Automation will supply synchronous condensers with the associated prefabricated E-house units. These are systems that act as critical stabilization assets, enabling the voltage stability required by next-generation AI chips. Well done by the joint team. As I mentioned, revenues were the highest on record at $9.5 billion. You can see in the chart that revenues tend to be sequentially up in the second quarter, but this year the uptake was larger than usual, in line with our guidance. Revenues increased in both the project and short-cycle businesses, and higher volumes was the biggest contributor to the strong comparable growth of 12%. This includes a good pricing contribution of close to 2% with the teams balancing customer relationships and defending our own profitability. As a net total, we delivered a positive book-to-bill of 1.27, and it was positive in all three business areas. The backlog is up at the record level of $30 billion, up 28% on a comparable basis. In my view, we performed very well in a strong market. Looking at the different geographies, orders were up by double digits in all three regions. The Americas continued to be the strongest growth driver. Orders increased by 52% like-for-like. Looking specifically at the U.S., orders were up by as much as 62%. This high number includes some large bookings, but also base orders were very strong and improved by about 30%. Europe was up by 12%. Here we saw a decline in the largest market, Germany, but this was more than offset by order improvements in several of the other large countries. Asia, Middle East, Africa improved by 12%, with China being up 10%. Let's turn to earnings, which reflects both favorable market conditions and a strong execution. We converted the 12% comparable revenue growth to a 20% increase in Operational EBITA to $1.9 billion. This reflects a margin improvement of 90 basis points to 20.2%. Similar to the prior quarter, we had pressure on gross margin. It dropped by 50 basis points from last year, impacted mainly by unrealized derivatives on FX and commodities. We also still have a bit of a gap on the price-cost balance. That said, we did achieve a gross margin of 40%, which admittedly is a good level. The impact from the unrealized derivatives feeds through to income from operations or EBIT. We had about $130 million of special non-operational items, partially offsetting a strong business performance. In total, we improved income from operation as well as earnings per share by 8%. With that, I hand over to you, Christian.

¶3Christian Nilsson: Thanks, Morten. Let's take a look at what happened in different business areas. As usual, we start with Electrification, which delivered new record highs across virtually all the headlight numbers. Comparable orders were up by as much as 58%. The absolute intake advanced from an already strong trajectory, and for the first time hit the +$7 billion mark. This is underpinned by strong, broad-based sentiment across major customer segments. I actually noted that this was the sixth consecutive quarters with a positive book-to-bill in Electrification. In Q2, it was 1.39. The order backlog increased by 59% to $13.7 billion. Looking at the different segments, data centers stood out again with a triple-digit order growth. Still, we see a solid project pipeline, with data centers requiring increasingly more Electrification content. The market is clearly very supportive. We are performing well in this strong market. There are very good developments also in the other markets. If we exclude the data center segment, Electrification orders still increased by double digits. One segment to highlight is land-based infrastructure. This is driven by modernizing electrical infrastructure for tunnels, roads, or rail. Demand in the building segment also improved, driven by commercial activity. The utility segment is another strong market, although in this particular quarter, the order growth was limited due to last year's high comparable. Now turning to revenues, which amounted to $5.2 billion on a comparable growth of 19%. This was driven by good progress in both the short cycle and project business. Higher volumes was clearly the main driver, but the team did well also on price management, which added about 2%. It was encouraging to see the sequential acceleration in pricing in the second quarter. We still have a bit of a gap in price versus input cost to cover in gross margin. Here we expect to be at least neutral for the full-year. In the second quarter, this gap was more than compensated for by efficiency improvements and stringent SG&A control. As a net total, the Operational EBITA was up by 26% to $1.3 billion. This reflects a margin of 24.9%, yet another record high from the Electrification team. Looking at the third quarter, we expect comparable revenue growth to be at least similar to what we saw in Q2, and Operational EBITA margin should improve from the second quarter levels of 24.9%. Let's turn to Motion. Contrary to the usual seasonal trend, orders actually increased sequentially and reached $2.6 billion. This reflects a comparable growth of 20% from last year, driven by improvements in both the short cycle and project business. As Morten mentioned earlier, we see a good demand for our grid stabilization technologies with our industry-leading synchronous condensers. Other positive segments were rail, marine, and mining. On the more short cycle side, there was strength in HVAC for commercial buildings as well as in data centers cooling. Similar to recent quarters, the softer areas are the process-related segments like chemicals and pulp and paper. Turning now to revenues of $2.2 billion, with a comparable revenue growth of 4%, more or less equally driven by volume and price, with an additional percentage of growth derived from portfolio changes. As we mentioned, coming into the quarter, profitability was under pressure. Operational EBITA margin dropped by 130 basis points to 18.5%. There are multiple factors to consider. First, the positive impact by operational leverage on comparable revenue growth. This was, however, more than offset by our Gamesa Electric acquisition operating at a loss and diluted margin by around 70 basis points year-on-year. This is similar to what we saw in Q1, and we expect it to be dilutive for the remainder of this year. Additionally, we still have some operational inefficiencies in our High Power Division. These should, however, be resolved during the second half of the year. Lastly, there were some timing impacts in production volumes in the traction division, which had an adverse impact on profitability. The high-level view for Motion can be summarized as good orders in a solid market, but some challenges on profitability, which partially will linger throughout the year. Looking at the third quarter, we expect comparable revenue growth in the mid to high single-digit range year-on-year. Operational EBITA margin should be similar to the second quarter. Let's turn to Automation, where orders remain sequentially stable on the level of $2.5 billion. These orders actually make it one of their strongest quarters, but still recorded a year-on-year decline of 14%. This is due to last year's high comparable, which includes a very large single booking of $600 million. You can see it in the charts on the left-hand side. Let's take a look at order drivers. Demand for Marine as well as port automation and Electrification continues to be strong. Overall, our performance in oil and gas remained solid, with any disruptions linked to the Middle East conflict contained to the local market. Similar to what we see in Motion, the softer demand is noted in the process-related industries of pulp and paper and chemicals. We still see a muted CapEx environment in the Mining segment. Revenues came through slightly better than expected, with comparable growth of 7%. Overall, we generated revenues of $2.2 billion, it came with somewhat of an adverse mix. The higher share of revenues from the project and system integration business had a slight negative impact on gross margin. Still, the team improved Operational EBITA margin by 120 basis points to 15.4%, supported by a stringent cost control, not least in SG&A. I should also mention that in the quarter, we had about 70 basis points of margin support from a one-timer. This stems from a provision release linked to a project settlement. Overall, another solid delivery from the Automation team. Looking at the third quarter, we expect comparable revenues to improve in the mid-single-digit range. Operational EBITA margin should improve year-on-year. Cash was another solid point in our results. As noticeable in the chart, we didn't have the usual pattern of sequentially higher free cash flows. As you may recall, the first quarter was boosted by about $425 million from a real estate sale. On a year-on-year basis, we improved slightly to $881 million. This was backed by a good operational earnings increase, which offset the impact from higher CapEx spend in continuing operations, as well as a lower cash flow in discontinued operations. All in all, this was a good cash quarter. We are well on track to improve our free cash flows from last year's strong level of $4.6 billion. With that, I hand it back to you, Morten.

¶4Morten Wierod: Thanks, Christian. Let's finish off with the outlook. As evident in our Q2 results, we play in strong markets. Order backlog is rising, and the short-cycle business is clearly supportive. We raise our growth guidance for the year to a low double-digit to low teens increase in comparable revenues. This adds confidence to our current margin outlook, which is to improve from last year, even when excluding the real estate gain in the first quarter of 2026. For the third quarter, we expect a low- to mid-teens growth in comparable revenues year-on-year, and the Operational EBITA margin should show sequential improvement from the second quarter. Ann-Sofie, let's open up for questions.

¶5Ann-Sofie Nordh: Yes. Very good. Just as a quick reminder, for those of you who are dialed in on the phone, please press star 14 to register to ask a question. Also, remember to mute the webcast as your line is opened. Also, again, we kindly ask you to limit yourself to one question. This is so we can allow for as many as possible to be heard. You can also put your questions through the online tool in the webcast, I will then voice them over from here. With that, let's take the first question, it comes from Martin Wilkie at Citi. Martin, your line should be open.

¶6Martin Wilkie: Yeah. Good morning. Thank you for taking the question. The question is on Electrification orders. Obviously, a phenomenally strong quarter, even after a couple of very strong quarters beforehand. You said there's no pre-buy. I guess what everyone's trying to work out is whether lead times are extending, and this is reflecting deliveries and build-out further out into 2028 and beyond, or whether this is sort of a near-term driver that's going to get put into the ground in 2027. Just understanding a little bit more about how you see the sort of duration of the backlog that you're building and what it means for demand strength for the overall industry. Is this lead time related, or is this really true underlying strength in higher and higher build-outs for your customers?

¶7Morten Wierod: No, I can take that. We see the strong growth here in all sectors. The lead times are the same or similar to what they have been before. We don't see any pre-buys. We don't see really any change from a lead time perspective. It's more that we're getting more capacity online. That means also we can take more orders on our side, and you see that also reflected in our increased revenue guidance, both for the quarter now and the year. That's really the driving factor behind it. Just high activity level and good demand in the market.

¶8Ann-Sofie Nordh: Very good.

¶9Martin Wilkie: Great. Thank you.

¶10Ann-Sofie Nordh: Thanks, Martin. Magnus from Nordea. Are you with us, Magnus?

¶11Magnus: Hi, Morten, Christian. It's Magnus from Nordea. Staying on the same topic I think Christian talked about, double-digit growth ex data centers and order intake in Q2. I think we were slightly higher than that, maybe teens or so in Q1. Could you frame a little bit if the order growth ex data center is moderated in the quarter?

¶12Morten Wierod: Yeah.

¶13Christian Nilsson: No, the double-digit growth outside data center is definitely here in Q2, and it's a similar pattern that we saw in Q1. Let's say the continuation of that good performance, both in Q1 and now as we see it in Q2 outside data centers.

¶14Ann-Sofie Nordh: I could add to that.

¶15Magnus: No moderations.

¶16Ann-Sofie Nordh: Yeah, I could add to that also. In Electrification specifically in this quarter, we had a very high comp in the Utility segment, which didn't support order growth for that reason. Otherwise, all good.

¶17Magnus: Perfect. Thank you so much.

¶18Ann-Sofie Nordh: We have a question here from the online tool. It comes from Benjamin Heelan. Could you provide some color on pricing trends across Electrification and Automation? Are there differences by geography?

¶19Morten Wierod: Now, we see for this quarter about 2% increase in price. Up from the Q1. That is also what we talked about after the first quarter. We also said that we will, because we need some time to get that full compensation of the cost increases we saw earlier in the year. There is a bit of a lag, and that is what we are executing on and according to that plan. That is still valid, as we said earlier, that it will be more than compensated on cost by the end of the year. Of course, there are differences here in the short cycle versus the long cycle. The long cycle business, you can also do more of hedging when it comes to material and long and fixed contract. Of course, the short cycle, you cannot do that, there is where you need to be quicker when it comes to adopting, be more dynamic in pricing. We see that more, as I say, on the short cycle business where you need to do faster updates. In geographies, of course, the strongest, let us say where we have more of inflation is in the Americas, where we see also the strongest growth. There is where you have more price effect than, for instance, what we see in China. Also, the price decline that we saw earlier, at least a year back in China, that has reversed. That is also what gives a positive impact on pricing when we are talking about the average. Of course, that difference is still there between the higher price increase markets, talking U.S. versus China, but the delta has now been lifted on both sides.

¶20Christian Nilsson: Maybe Europe we can add in the middle between the two, I guess is fair to say.

¶21Morten Wierod: Yep.

¶22Ann-Sofie Nordh: Thank you. Then we move to the conference call, we take the question from Andre at UBS, please.

¶23Andre: Yes, good morning. Thank you very much for taking my question. Can we just talk about Rotork acquisition, could you comment on what drove the decision to pull the trigger at this stage, rather than any sort of point of time in, I think, the last 10 years that we've talked about it on and off? Just one specific angle on that. In terms of customer fit, from what I understand, Rotork is obviously very petrochemical oil and gas exposed, but your DCS, most natural areas of strength are rather in metal mining and pulp and paper, waste water rather than the hydrocarbons. Could you talk about how you can synergize these two across the time?

¶24Morten Wierod: Yep. We looked at Rotork for quite some time, and been impressed about the performance. What we really like is the leadership in technology and on market leadership. That are our two aspects that we like, and it's a good fit with the Electrification and Automation focus from ABB, also it's very similar to Rotork. If you look at end user and end customer exposure, you also see a very good overlap. 40% of the business of Rotork is oil and gas. That would add, if you're looking at then ABB overall, it's at 0.5% more oil and gas exposure to our existing ABB business. We see rather this complementing and being able to connect the sensing and the control through our distributed control system, our leadership there, and then the actuators with really the act part coming from the Automation system. Combining these two, we believe is a great fit for end customers and end users. It gives a better service expansion opportunities also for Rotork when they have a wider ABB network to help. That is where we believe there is good both revenue and cost synergies between us, to be able to create that value that we are confident that we will have getting Rotork into ABB. We are looking forward to that new opportunity.

¶25Ann-Sofie Nordh: I'm going to.

¶26Andre: Why now? Sorry.

¶27Ann-Sofie Nordh: Sorry? [crosstalk]

¶28Andre: The beginning of the question, why now?

¶29Morten Wierod: I think here maybe the timing is from an ABB side. We are running as a strong performing company. We have a good governance model in our ABB Way is well established, we believe it's the right time also to take in some bigger assets or bigger parts into the company. This will benefit our Automation business, it will benefit the overall ABB business. We believe now is a good time.

¶30Andre: Thank you.

¶31Ann-Sofie Nordh: I'm going to tie onto that with a question on Rotork from the online queue from Delphine, who says, what assumption do you have on the midterm revenue growth for Rotork?

¶32Morten Wierod: Well, I will not comment on the outlook. I think that is something that they have to do as they are still a separate company. I'm sure there are opportunities to ask that question also.

¶33Ann-Sofie Nordh: Good move. We'll take another call from the conference call line. We'll open up for Will Mackie at Kepler, please.

¶34Will Mackie: Thank you very much. I wanted to come back to the data center end market segment and touch on, I'm sure, a subject on everyone's mind, which is the continuity of order intake that you've achieved this year. Do you talk about a positive price level and a positive pipeline going ahead? Could you comment broadly on how you see that pipeline maturing into orders in Q3 and Q4? Do you see the current levels of demand that you've just booked sustainable going into the next couple of quarters? Thank you.

¶35Morten Wierod: Yeah. Thanks. We have seen a very strong comparable growth, of course, coming into these quarters, for the Electrification business, reaching the first time about $5 billion in Q4, first time about $6 billion in Q1, and now the first time about $7 billion. Continue always making records in business. I haven't seen that happening, that always happen. We should kind of be a bit also aware, of course, of that one. In general, we see a very strong pipeline, also when we're talking about our large customers in this field. The capital allocation and the investment plans are clearly there. It's our ability, of course, then to we don't take orders that we cannot commit to the right execution date, we see we have a strong and a positive outlook also when you look at the future for the data center sector. I think we should also recognize there will be kind of a variation in the order intake. You may remember everyone after Q1 last year, where we'd had kind of less of bookings, no large order in that quarter. Now we had some very good quarters behind us. In general, we're looking at a strong demand and also a good outlook for the data centers. I cannot promise you that we will continue to make that kind of records that we've done every quarter now. You will see some variation in the order intake, but the longer-term outlook is very strong.

¶36Will Mackie: Thank you.

¶37Ann-Sofie Nordh: Thanks. Then we have next in line, Max from Morgan Stanley.

¶38Max: Hi. Good morning. My question is just around the Electrification revenues and your capacity. If orders are running at this sort of $6.5 billion-$7 billion level, and we end up, let's say at $27 billion of orders plus, I'm just trying to understand kind of how quickly that can convert into revenues and kind of how much capacity you have. I guess if I look at your sort of sales this year, they're going to be, say, $21 billion. If we think about kind of a lot of this capacity or a lot of these orders being for delivery in 2027, my interpretation would be that there'd be no reason that the growth should slow down. We should be landing at somewhere around $25 billion. I guess I'm just trying to understand how quickly and how high can revenues get up to next year. Can we see kind of $25 billion, $26 billion? Is that realistic with the capacity that you have? Thank you.

¶39Morten Wierod: You're quite early here, Max, when it comes to talking about 2027 already. We will get there in January with more guidance for 2027. What I can-

¶40Max: You have the backlog. You're kind of locked in for a lot of it, I guess. Yeah.

¶41Morten Wierod: True. What we will see is more kind of also the short cycle business. The book-to-bill is where we will see how then the total turns out. What I can talk about is kind of the capacity build-out. You know that we have over time invested and increased our CapEx now for many years. It's investments in the U.S., investments in China, in India. We also announced in this quarter $200 million expansion and additional CapEx into Europe because we talk now a lot about the U.S. and the data center build-up, as Christian also referred to, we're seeing a strong demand also. We are up 12% in Europe in this quarter, 12% in Asia, Middle East, Africa. If you're looking at- We are adding capacity to be able to deal with the higher order backlog that we now have in place. Of course, as I said earlier, we do not take orders where we aren't fully committed that we can deliver on time. That is a very important part. It's the lessons learned from the past. That's one of the things that I think is also helping us winning share, seen as one of the most reliable partners in this space. The order intake, what we can show today is based on committed capacity that we have in place or are being built. Why we increased the guidance is we see that some of the capacity that is now coming online based on previous years' investments, is giving the expected benefits, the expected increased capacity. This is a continuous job now on expanding more or less, especially in Electrification, every unit that we have with more square meter, more Robotics, more Automation and more people aligned, which needs to be trained. We are on a good journey there to be able to execute on this, and get that order backlog into revenues.

¶42Max: Maybe just one clarification. Do you have any orders in your backlog that extend into 2028 already, or is all of this now still for 2027?

¶43Morten Wierod: No, we have also for 2028, especially if you talk about Automation business. There you will see the pipeline, for instance, in the cruise segment being much longer.

¶44Max: In Electrification. Sorry. In Electrification.

¶45Morten Wierod: Well, in Electrification, part of the portfolio goes also into these cruise ships, into mining, and also some of the data centers. This is not all for 2027. It is also into some in 2028. That's from all parts of the business.

¶46Max: Excellent. Thank you very much.

¶47Ann-Sofie Nordh: Thank you. I'll take one question here from the online tool, which is linked to Electrification orders. Not on a year-on-year perspective, but rather sequentially. Were the sequential improvements across all end markets, or was this focused largely in data centers? The question comes from Benjamin.

¶48Morten Wierod: Yeah. As I said, what we looked at now is the year-over-year. If you look at the sequential development, there the biggest driver was clearly the data center industry. Again, strong performance on the utility sector there. I think we have more of a strong increase in this quarter versus Q1, while from last year there it was more flat. You're starting to get more complex now with the sequential and the last year, so we need to get all these numbers in place. Sequentially, the main driver for this quarter is in data center, if you look at the big picture for Electrification.

¶49Ann-Sofie Nordh: Yep. Then we open up the line for James Moore at Rothschild.

¶50James Moore: Good morning, everyone. My question's on Electrification and mix. Could you comment on the share of 2Q orders, the $7.2 billion, and 2Q sales for $5.2 billion from data centers as a percentage? Within the data center orders, can you comment on customer and product mix, both on customer, was the colo orders faster than neoclouds or Hyperscaler or the other way around? On product, is it that you're seeing a much higher growth in medium voltage, say, than low voltage UPS and PDU, or a different view of that, just to help understand the composition?

¶51Morten Wierod: When you talk about the product mix, there's nothing that stands out. Most of the project we do, we do medium voltage and low voltage switchgear. There are sometimes on the UPS side, there is a difference there. We are much stronger on the medium voltage side. There is no real shift between them there. Where we have gained solid traction and market share is in the medium-voltage UPS. I think that is a stronghold that we see more customer who likes that technology, and that we have booked more. If you look at the percentage for the quarter, I'm looking at Christian.

¶52Christian Nilsson: On order percentage split. Of course, with the triple digits growth in data centers, it's fair to say that data centers is growing at a faster pace, which mathematically makes the share bigger for Electrification in that space.

¶53Morten Wierod: What we don't see is, there is no change also in our mix between Hyperscalers-

¶54Christian Nilsson: No, colocation

¶55Morten Wierod: Colocation. That is also the same. It's more that it's a higher activity level, where it's a similar customer base, it's a similar, or the same, mix of products. There is no standout. It's just the whole segment is running faster. That goes also to geographies. If you look at the big picture, the United States still driving it, but we also made significant wins in the data center segment, both in Europe and also in Asia this quarter.

¶56Ann-Sofie Nordh: Okay.

¶57James Moore: Thanks very much.

¶58Ann-Sofie Nordh: Thanks, James. Then we have next in line, Jonathan at BNP Paribas.

¶59Jonathan: Hi. Thanks for fitting me in. Maybe just on the whole M&A, first of all, trying to understand the synergies. Do you have an idea what the bill of materials for an average Rotork actuator was? I'm particularly interested really in how much of those materials, those sub-components ABB will be able to make now. Do they buy much from you to begin with? Is there a big cost synergy angle? I'm thinking about motors, controllers, things like that. How much further will we take this? Do you have any interest in moving a layer even lower into valves, or is actuation as deep as you're willing to go? Just finally, also on M&A, more maybe on the exit side. I see e-mobility losses now are only $18 million. Are we still on track for, say, breakeven by the end of the year? If we get there, does that open up the possibility of an exit in 2027? Thank you.

¶60Morten Wierod: Yep. Thanks, Jonathan. On the synergy side, the synergy is really on the revenue side majority where we can combine our offering and coming up, as I say, a stronger end user preference and be able to drive the growth here as a combined offering. Also especially in the field of service with the very wide service network of ABB being present literally everywhere through ourselves or with service partner, I think opens quite a lot of new service opportunities for that offering. Of course, there are in the field also on procurement, when you talk about component level, it's more, as always, you will look at what's the best buy between the two and how you can leverage that bigger volume as part of ABB. That would also, as always, be part of it. That's how we will always look at to say how we can drive efficiency and competitiveness by also looking at, in the field of procurement, and manufacturing in all aspects of it. On the e-mobility side, we see, as you said, a much less losses in the Q2 compared to Q1. We are having a plan that gets us to that break even by end of the year. If the revenue plan as forecasted now can be met, we have that kind of line of sight to get there and that was always the plan. We are getting there. We will move on, that is more of a 2027 event, because as I always said, getting the upgraded product portfolio, which is done, getting the business to earn break even or profitable level, which is ongoing. Then we will take the final step when we are ready to that also. That's something we will come back to in 2027.

¶61Christian Nilsson: Maybe just to clarify, the break even would be at the end of a year for the individual quarter. Then we have, as we said, maybe estimate around $50 million of losses for the year.

¶62Ann-Sofie Nordh: Thank you. Then we take the next question from Karri at SB1 Markets.

¶63Karri: Yes, thank you. Karri at SB1 Markets. Yeah. Can you hear me?

¶64Ann-Sofie Nordh: Yes.

¶65Karri: Yeah, not surprising, I want to go back to Electrification and the data center order intake and that the rate of growth 100% plus for the first half of the year. Can you give us some indication of how much of that this volume or the underlying volume for the whole segment, how much of that is market share growth, given that you have added capacity, and how much of that growth is priced? If you can just rank those and give some indications of ballpark between those three drivers, that would be very helpful.

¶66Morten Wierod: Yeah. The price to start there, I say, is in line what we said earlier is about 2% for that is for the overall sum, and where it's not like it's one segment that is really sticking out. You can use that same, but a couple of percent for our 2% on price. When we're looking at the mix, as I said earlier, between geographies, we see good momentum both in Americas, but also Europe and Asia, on that side. Also the mix between customers, there is no real change there. It's just higher activity level in the segment. I can just to also say this, when we're working with the large partners that we have and our customers, to say the outlook when it comes to new projects is strong. You will see some of the capital commitments that's being made. Of course, we believe that we are in also strong future position to win those project. If we look back, we have gained market share in this segment, at least from the first quarter. I believe that trend will continue also in this quarter. I guess we need to see kind of the full reporting before we can make that claim, but we are on a track where the closeness to customers, the offering we have has been a winning combination in our perspective, and that's what our ambition is to keep on that journey and winning share in a good market.

¶67Karri: Can you help me understand why price is such a modest driver? Because it seems to be that the costs related to data center build-out are going up quite significantly in pretty much everything. Why is not your gear going up in price more?

¶68Morten Wierod: Well, as I said, when I talk about the 2% increase, as you said earlier, there are differences between regions, between China being lower than compared to United States. We also have to remember that many of the Hyperscalers are very large customers, and they have also leverage in a price negotiation. We believe with the pricing and how we have been running it, we have been able to kind of protect margin, but also winning share, and that has been the formula that we have followed and that we will follow as well. Of course, we're not leaving price on the table. On the other hand, you have to find the right balance, and we believe that we have a pretty good balance right now.

¶69Ann-Sofie Nordh: Thank you.

¶70Ann-Sofie Nordh: Thank you. And then we'll take one question here from the tool. Is from Thomas Jaeger, who says, your margin guidance for Q2 2026 of sequential improvement versus Q2 2023, what drives it, as historically, margins were largely flat Q3 versus Q2?

¶71Morten Wierod: Yep. No, it's correct. You would assume they're pretty flat because historically, I think the four last year has been very flat between Q2 and Q3. This time, we're guiding for a slightly, or what we expect, is a slightly better, or even an improvement in the third quarter. It really comes from the strong, revenue growth that we are guiding for as well, and normally a good drop through our margin, especially in the Electrification business or product-related businesses. That is what is the background for the guidance.

¶72Christian Nilsson: Yeah, it also fits what we said the whole time on the price to cost input trend that we saw have a bigger gap in Q1. We shrunk that gap now a little bit in Q2, then we expect to improve that, as we have said earlier, in the second half of the year too, which has also contributed to this.

¶73Morten Wierod: Yep.

¶74Ann-Sofie Nordh: Thank you. We take the next question from Sean at HSBC via the conference call line.

¶75Sean: Good morning. Thank you, for taking my question. I was intrigued to see that you are now specifying data center cooling as one of the order segments within Motion. Just keen to get a little bit more detail here. How much of total Motion is data center cooling now? What kind of growth rates do you see? Is this also a triple-digit growth area? Specifically, I believe you have talked about being a component supplier to cooling. Maybe a little bit where you see the key drivers of your growth ambitions in data center cooling. Thank you.

¶76Morten Wierod: Right. Yeah. I can start there. Where we play as Motion with our drives and motors is to be the, as you say, component provider to the cooling companies. We are partnering with all of the major cooling companies in the world who delivers those air cooling or large chiller units that sits in the data centers today. We are also part of the cooling when it comes to the liquid cooling or the units with. In the end, it is a pump that is pumping that liquid into the rack. You will also see a quite good benefit from us when it comes to, in the liquid cooling of motors, drives, and also electrification products that sits in. That is what is relevant for us. We are partnering with all the different cooling companies because we are not a cooling player ourselves, so we are more partnering. The end user or the hyperscaler will discuss which cooling company do they want to work with, and then we can do the electrical part, and they will do the cooling part. That is a partnership, how it works for us in cooling. In Motion, we saw a strong order intake growth also in this quarter, up comparable basis 18%. Part of that is also coming from the data center. It becomes more and more an important part through the HVAC or the cooling business of Motion. I do not think we have given out the exact percentage, as we have done for Electrification. It is a good part of both the drives and the motor business that goes into these cooling companies. It's very often a similar unit that sits in a data center that you will sit on top of a large commercial building, when you need to cool a building. That doesn't really matter if it's data center or a commercial building, as an example.

¶77Ann-Sofie Nordh: I think it's fair to say that the growth rates are not as high as you see in Electrification.

¶78Morten Wierod: No.

¶79Ann-Sofie Nordh: We take the next question from Daniela at Goldman. Please, your line should be open.

¶80Sean: Hi. Good morning. Hope you can hear me. I was wondering, following up on data center, more into the developments that are coming up where people discussed a lot 800 VDC. I think we've seen some of your Asian peers starting to sign 800 VDC related MOUs. Do you see any momentum on that? Are any of the orders already related to that, or should we be expecting them soon? Just curious how you see the development for that, if it is still far away or starting to materialize.

¶81Morten Wierod: We have zero order in the backlog for 800 volt DC data centers. Nobody has, because there is waiting for the availability of components from NVIDIA and the like. That's the next step. Of course, what we are working on is building up the complete portfolio, so we are ready to support that 800 volt DC data center architecture, which is coming more into the late 2027 or 2028 onwards. That's where this will start to have a commercial impact. The investment we are doing right now is on the technology side. DC has been a high focus and high attention for us for many, many years. We are already a leading player in the field of DC switches, DC breakers, DC components. We also see that more of this will move to some of the medium-voltage sides with the new architecture, which again, it will give new opportunities for our medium-voltage UPS. Here, this is a field that we are allocating quite a lot of our R&D investment into that area. We're also doing partnership we made, and also acquisitions we announced a couple of days ago, an acquisition in France, Advantics, that is coming in with DC technology, with silicon carbide technology, and joining the Electrification team, supporting also here DC and data center. It's an area of high attention for us. Most of the development work we'll do in-house, but then also with some acquisition and partnership. We believe this is a good opportunity for ABB because as you may know, DC technology and DC grid, we were one of the first companies here, or the first company to talk about DC grids in ships, which is today the standard, and we are using a lot of that knowhow and internal development, also now into that data center space. That is more to come on this topic throughout the year on how we're seeing that future.

¶82Ann-Sofie Nordh: Maybe a bit of a commercial break here for our webcast on the 24th of September on the DC topic. You'll find the details on the website, ABB Investor Relations. We open up for a question from Kulwinder at AlphaValue, please.

¶83Kulwinder: Good morning, everyone. My question was also on Rotork, and I wanted to actually just understand the service opportunity a bit better. What is the potential for you to increase the penetration of service within Rotork? Because as I understand, it's about 24% of 2025 sales, and the company was already on a trajectory to increase that. I just wanted to see where ABB could take it. Does Rotork also give you a sliver of opportunities on the data center cooling and nuclear side as well? Thank you.

¶84Morten Wierod: Thanks. As I say, I will not go into the numbers as that is for a later stage in this process. What I can say is that service is one of the areas where we believe that the ABB service network can help and accelerate a well-performing service business already, but to expand that even more. We believe that is one of the good opportunities. Of course, there are many areas you mentioned, for instance, both data center, where you do need actuators for cooling applications, the marine side. The nuclear side in power. There are all areas where actuators and electric actuators are needed and beneficial, and that is more of kind of for areas that needs to be, of course, explored. I will leave that to a later stage when we have closed the transaction and when we take this business together.

¶85Ann-Sofie Nordh: Very good. We have a couple of minutes left, let's see if we can squeeze one more question in. We open up the line for Alessandro at Octavian, please.

¶86Alessandro: Yes. Good morning. Thank you, everybody, for taking my question. It's on Rotork as well, I guess you might tell me that you postponed the answer here. I would like to mark the point, if I look at your indication for the acquisition multiple, ask the synergies in mid-teen level, I make a couple of calculation with a few assumptions on the depreciation, et cetera. I calculate a return on invested capital on this $5.5 billion, I don't know, between 5% and 10%, I would say. In my opinion, you kind of need to double EBIT on this acquisition going forward. Do you agree with this and do you have a plan to do that? Can you share some indications?

¶87Christian Nilsson: Well, maybe not to necessarily counter your calculation here, but like we said, if we look at the multiple at acquisition at 19.5x, we do feel that we have synergy opportunities that will bring that into the mid-teens. Those synergies, as we have referred to before, it's going to be both on the cost side, but majority on the commercial and growth side. I think, we certainly don't come to the calculation that we have to double the EBIT, if I understood your question right. This is a high-performing business that will be accretive to ABB, second year accretive to our EPS. It comes in at a high performance level, and we look forward to utilizing these synergies, like we said. Yeah, I think that's it.

¶88Ann-Sofie Nordh: That's it. That's also it for this call. We're up on the hour, so we close it here. Again, a reminder then about that commercial break for the webcast on 24th of September. I hope to see you there. Until then, have a nice summer.

¶1Operator: Good morning. This is the conference operator. Welcome to the Schneider Electric Half Year 2026. Results with Olivier Blum Chief Executive Officer; Nathan Fast, Chief Financial Officer; and Antoine Sage, Head of Investor Relations. [Operator Instructions] I would like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. At this time, I will hand you over to Mr. Antoine Sage. Please go ahead, sir.

¶2Antoine Sage: Hello, and good morning, everyone. Thank you for joining us for our 2026 half year result presentation. I'm joined today by Olivier, our CEO; and by Nathan, our CFO, here in Paris. When it comes to the agenda, so you have the slides as usual, we will walk through the presentation first, and then we'll make sure that we have ample time for your question. As always, I want to remind everyone about the disclaimer that you will find on the Page #2. And with that, Olivier, I hand over to you.

¶3Olivier Pascal Blum: Thank you, Antoine. Good morning to all of you, and thanks for joining us. So I will go straight into the results of H1. So we've delivered in Q2 a fairly high growth at 17%. What is very important for me is our 2 businesses are contributing to this high growth in the second quarter. You see Energy Management at 18%, but also Industrial Automation at 11%. That shows that really we are starting to be back on track and to deliver more and more to our customers by delivering really the strength of our 2 businesses. So great Q2, well on track for the rest of the year. When it comes to the market itself, you can see on the left-hand side really as a reminder, what is the exposure of Schneider Electric. So fairly good and balanced exposure between buildings, industry, data center and network, but also infrastructure. And it's a very, very interesting time for us because indeed, and I'm sure you will ask us a question today again on data center. Data center continue to be a leading part of our exposure. But what is very, very important, it's supported also with a triple-digit growth, also, demand in semiconductor. You can see that power grid, everything which is inside infrastructure continue to be very, very solid. So to get it short, you can see that all the segments of Schneider Electric from a demand standpoint are growing with a fairly high demand everywhere. And probably the only one which continue to be subdued is really the residential market. But all in all, that confirms that both with our strategic portfolio, but also with our exposure, we continue to be very well positioned and to be very, very resilient in terms of growth across the cycle. So as a result of that strategy and that exposure, we are very, very, very pleased to report a very strong growth in H1. For me, it's very, very important because I came in front of you last year, and in particular, during our Capital Market Day with our revised strategy, advancing energy tech to the next level of intelligence. But we also told you that we are launching internally our company program, which is really to align everyone inside Schneider Electric against what are the priority, what are the key transformation we want to deliver strategically in the long term, but also making sure we are back to a very strong level of operational excellence. And you can start to see in H1 that we are benefiting from that very strong focus. So the growth is at 14% organically for H1, but you see that it translates in a slight improvement of gross margin. We'll come back on that. We told you with Nathan, we will be slightly negative to neutral in our H1. So we are well in track with our plan. It translates also in an improvement of our adjusted EBITA margin by 120 bps. And what is very, very important, and that continues to be the signature of Schneider Electric, it translates into a very high level of free cash flow at EUR 1.6 billion. And what is equally important for me is always to measure how this is done, what is the contribution of the portfolio of Schneider Electric. And you know, we are a company when we'll come back on that, that want to connect the physical and the digital world. And that's why measuring the contribution of our digital portfolio through the flywheel is extremely important, and we continue to progress at 62%, well in line with our 70% plus ambition at the end of the cycle. So we'll come back, of course, with Nathan later on in details of -- on all those numbers. But what I wanted to give you is a quick update on where we are in delivering the next level of advancing energy tech to deliver more intelligence for our customers. As I told you, we translated that into a plan that we use, of course, to communicate with you, but which is really the vehicle internally to make sure we stay well on track. And I will go straight into the first part, which is what have been the key update in Q2 when it comes to technology leadership. So no change. When I say we want to connect the physical and the digital world, for 190 years, Schneider Electric has been a leader in hardware in all the sectors. We have expanded our portfolio everywhere in the world. And since more than 10 years, we were convinced that the acceleration of electrification and the acceleration of digitalization will help Schneider Electric to deliver more efficiency and sustainability to our customer. And that's why we have built this unique portfolio, which is made of hardware, edge layer and with a very strong digital layer. Now what we have learned also in the past 5 years, once you enter in the digital layer, there is something that is extremely important, which is the data. It's not only about putting software on top of hardware, it's about how you can capture data from the physical world, contextualize, federate those data and deliver more value to our customer. And we've been pursuing that goal. We refreshed that strategy with you and we are during the Capital Market Day. But that's what we do with the data cube. It's about how contextualizing, capturing all those data to be able to go to the next level of intelligence for our customer. And there is one thing that I'd like to mention, which is very, very important. At the end of the day, our customers are choosing where they want to work with Schneider Electric. They can work with us on the hardware side, they can work with us directly on the software side, they enter in that portfolio the way we want, they want. But for us, what is very important is to be able to give the most to our customer. So in line with that strategic direction, we progressed quite a lot, I have to say, in Q2. And I've made this announcement already a couple of weeks ago, but Cognite is coming as a very, very strategic acquisition for Schneider. When I say we connect the physical and the digital world, when I say we need to create a very, very, very strong data foundation, Cognite Data Fusion amplified by Atlas AI, which is their agentic layer, is a very, very rare asset in the market. It's a unique technology, unique capability that they have developed initially more for the industrial world, but we see a lot of opportunity for the energy world. And of course, we are still after signing, before closing and a bit too early to say more, but we wanted to make the most of that acquisition to accelerate our data cube and to accelerate all the AI capability that will help us to deliver the next level of intelligence for our customers. So extremely excited to onboard, hopefully very, very soon, Cognite. We have great people everywhere in the world, but in particular, with a very strong tech team in Europe, in Norway. Second update I wanted to give you today is we've made the decision also to accelerate Energy Intelligence in Power & Grid with utilities. We believe the next level of efficiency in electrification will be around the work you can do with Power & Grid. Again, here, we are present historically with all our hardware portfolio. We have also created a unique digital portfolio with our [ Smart Grid ] offering with our offer, which are also adapted for distributed energy. And with AiDASH, basically, we go again to the next level of intelligence by onboarding a company that will give us what you need to manage climate risk, which means when you have wildfire, which is unfortunately a big topic in country like France those days, but also any kind of risk which can be related to storm and so on and so forth, vegetation management. AiDASH brings those unique capabilities that help you to capture real time to anticipate those kind of events and that we can plug inside what we have been doing with Schneider Electric in our Smart Grid portfolio to deliver even more intelligence to our customers. But of course, our customer here, again, will have the choice to build the full solution of Schneider Electric or to continue to buy directly AiDASH capability, which are growing very, very fast every year. Third update I wanted to give you on the technology. I told you last year that a key part of our strategy will be really to accelerate through partnership. We don't need to do everything by ourselves. And we are extremely pleased, again, in the domain of infrastructure, utility, efficiency and flexibility with the partnership that we have announced with Kraken by combining our solution that will help us to unlock together grid flexibility at scale. So a very exciting time also in the field of infrastructure and in particular, grid flexibility. The third part, which is important, which is not new for you, we told you many times that we are very excited by, of course, the growth of AI infrastructure at the CapEx stage to build. But what was equally and even more important for us at Schneider Electric was really to be able to play across the life cycle at the design stage, at the build stage, but also at the operate and maintain stage. And that's where data is very important. And if I connect to my introduction, we will continue to develop the most competitive portfolio with the best possible supply chain to deliver at the build stage, but we want to play a bigger role at the design stage. And that's why we are very, very pleased to report that in Q2, we've made a lot of progress and in particular, with the new AVEVA DSX portfolio that help really to -- help to improve the efficiency for our customers. And I remind you, we've done a lot also in Q1 with ETAP to create unique digital twin. And we continue that journey, again, to capture data across the life cycle to deliver even more services for our customer. There is a shortage of manpower everywhere in the world. It's super important that we can deliver more and more digital services, condition-based maintenance services for our customer. And this is what we call EcoCare in the case of data center. But you can see really that, again, managing the data across the life cycle will be a unique differentiator when you want to connect the physical and the digital world. Staying on data center, we continue to be very active in organic R&D. You asked us in the past 2 years, a lot of question about the evolution of the architecture. Indeed, we see that with the increase of the demand of the GPU, which will be more and more intense that will require more and more density, power density, power rack it's very, very obvious that we will have to be able to provide different alternative in terms of architecture. It doesn't mean that everything will switch, first of all. It doesn't mean that it's going to happen overnight, but that will be one of the architecture that will be important in the future. And that's why we've been very, very active to build a very, very strong road map where we can really follow the demand in the market, the evolution of the market from what we started to do last year, this year and in the coming years. And of course, we've communicated a lot about what we have done with our power rack, what everyone call in the market the sidecar. But what is very, very, very important progressively in the next 2 coming years is to come with a very, very industrialized solution with what we call the power center with new SST solution that we have developed right now that we have prototyped and testing already with a couple of customers and to make sure that we are ready with industrialized solution when the demand in the market will accelerate. So a great progress done in R&D, and we'll continue to give you an update in the future on the way we are progressing. The second key pillar of Schneider Electric is really the way we want to deal with our customer. This slide, you've seen it, so I'll be very, very fast. But we want in a world which is more and more fragmented to build a unique model of differentiation, which is a regional model where we connect the way we innovate, we supply, we sell. And in every single region, we want to be differentiated. We want to leverage the ecosystem. We want to leverage our knowledge. We want to leverage our ecosystem of partner. And on top of that, for sure, there are a certain number of direction that will continue to be global on technology, platforming, on the way, of course, we manage our supply chain and we connect the different element of our supply chain, but the way we sell. Just to give you an example, while a large part of the portfolio is sold through local regional customer, we have an increasing part which is done with global customer. And here, it's important that we keep a global dimension. So that continues to be really the compass for Schneider on how we drive our differentiation in front of our customer. And just to report a couple of progress here again in Q2. We have announced in the month of June that unique partnership with SoftBank. We wanted to make a massive investment in France in the field of AI infrastructure. And I do believe that the unique knowledge and presence of Schneider Electric in France, again, our knowledge of the local ecosystem, which is both our customer, which is both government organization from the top of the country to the lowest level in the region, the connection of Schneider Electric with utility like EDF which has power available. So we are a kind of connector of all this ecosystem and becoming in the future, a partner of SoftBank, a technology partner, but where we will also commit on our side to build a new prefab factory, which will be close to the data center as soon as the deployment will start in the coming years. So that's a very, very interesting partnership. And I think it was only possible, thanks to the very strong presence of Schneider Electric in the local ecosystem. Another update I wanted to give you, we continue to make the most of the acquisition that we have done in the past, again, with this willingness to give even more to our customers in every region. Just the first example, as I told you already, Motivair has been growing very, very fast, in particular, in North America since we've made the acquisition. It was at the beginning of the acquisition, 95% of the sales of Motivair were done in North America. But our obsession since day 1 when we closed the acquisition was to get ready to expand. And now it's done. We are ready to manufacture our liquid cooling equipment, our CDU, both in Italy in Conselve, where we had historically chillers manufacturing, but also in India, in Bangalore, that will help us to serve the rest of the market. So it's a very, very interesting shift that we have prepared in the past 2 years to get ready now to bring those customers to the rest of the world on top of North America. Another example, which is interesting, you know that we've doubled down last year in Lauritz Knudsen, our acquisition in India, which gives us, of course, a unique presence in India, which is now the third largest country of Schneider Electric from a sales standpoint. But equally important for me is how we leverage India to create this fourth regional hub. We call it the international hub. But from India, we are leveraging the R&D capabilities of Lauritz Knudsen. We are leveraging the manufacturing capabilities. And you know that India is a very competitive market, very cost-effective market where we can now start to export those products to the rest of the world, but we'll go again in a very selective and progressive manner, and that will start by the region which are around India and in particular, Middle East. So that's the update that I wanted to give you when it comes to the customer differentiation. And the last one, which is very important to me, I've been extremely vocal last year in all our communication. We want to be seen as a very, very advanced company when it comes to technology. We want to be extremely close to our customers through our regional model, but also our global customer. But what is equally important for me is that we go to the next level of operational excellence, the next level of cost competitiveness across the board at Schneider. So we built this plan that we announced to you with our Executive Committee during our Capital Market Day, where on one side, we want to go to the next level of leadership, cost effectiveness on our portfolio. So for me, what is very, very important that we continue to deliver very strong productivity, very strong industrial productivity. Nathan will go more in detail, but we are extremely pleased to report EUR 535 million of industrial productivity in H1 2026. But it's equally not to say even more important that at the design stage, when you design the next level of offering, you are extremely cost competitive. And we are leveraging here a lot our R&D team in China, in India with a very, very strong knowledge, again, because they are living in a very cost competitive environment on how we can be more effective and we to deliver cost by design in all our new offer. And when you start to embed those concept, you build more competitiveness at the launching, but that help you also across the life cycle of those products to deliver more productivity if you have anticipated. So very, very, very important point. Last but not the least, I said last year that we will continue to collaborate to leverage partner on technology, but also on the supplier side because we don't need to do everything by ourselves, and we are very pleased to report the partnership with Foxconn that I will explain in a minute. Last but not the least, but Nathan will go extensively on the detail. We want to be more efficient. We want to be simpler as a company to operate. We have a fantastic growth opportunity in front of us. It's important that we build a model which is simple, which is scalable, which is cost effective. That's why we have this obsession to drive an improvement year-on-year on our SFC, on our SG&A on sales ratio. And you have seen, and that has been a question you asked us a lot last year in Q1, what are you doing in pricing? We've put a very, very strong methodology, process discipline in place. I told you we were ready January 1 to hit the market. And now you can clearly see that it comes and it flows to the P&L, and Nathan will elaborate a little bit more, but EUR 280 million of pricing on products that have been delivered in H1. Talking about our supplier collaboration, I just wanted to share with you that Foxconn agreement for North America will help us to improve, increase our capacity to deliver prefab for the data center industry. And that's very, very, very important because that's also a way for us to mitigate potential not, I would say, decline, but slowdown at one point of time in that industry. We don't need to manufacture everything by ourselves. And that help us, of course, to increase immediately our capacity to hit the market and to supply the increasing demand that we see in data center. So to close that first section, it's very, very important for us that we continue really to drive shareholder value with a consistent capital allocation. And we continue to be extremely focused, delivering strong investment credit rating, which is very important. We continue to be very, very, very solid on our balance sheet. As you've seen in May, we continue to have a very, very progressive policy in terms of distribution of dividend, progressive since 16 years, and we continue this year to increase our dividend for our shareholders. We continue to be extremely active in portfolio management, which is on one side, what are those assets which are less important strategically for the future that we will continue to divest. They are not big asset, but it's a sum of small, medium-sized assets, very important for me. And we'll continue, of course, to be extremely disciplined in capital allocation. like we've done in Motivair, Lauritz Knudsen, doubling down last year, but also the recent acquisition that I just announced about Cognite and AiDASH. But all of that being extremely focused and contributing to the acceleration of our strategy. Last but not the least, we told you end of last year that we want really to progressively increase and to be more systematic in share buyback. And in line with that strategy, we have started to develop -- to implement in H1 already EUR 250 million that have been repurchase. To finish my presentation, I'd like to give you a quick update on what makes Schneider Electric also a very, very different company, a very strong focus on our people, on the engagement of our people, but also the fact that we are an extremely reliable, responsible company and having sustainability always on top of the agenda. So just to give you some illustration of that focus, we just ran our employee engagement survey. We have an extremely high level of engagement, 88% of our people taking the time, 80% of employee engagement at a time where really the company is transforming, the world is extremely challenging. It's really, really good to see that level of engagement. More important is to see what are the driver of that engagement, the trust in the purpose of Schneider Electric, the North Star, the fact that we have been committed, we are reliable, very strong sense of ethic and the fact that we offer massive development opportunity in the career of our employee. And as a result of that, just to tell you, we have every year since many, many years, a worldwide employee shareholding plan. I think the trust of our employees is well illustrated in the 62% of employees who are investing at Schneider, who are investing in the company with 3 countries, China, France and India, even above 80%. So I think that gives a strong illustration of our commitment of our employees that I want to thank today again for the great job they are doing every day at Schneider Electric. Multiple recognition outside on that commitment to people and sustainability. And of course, always pleased to see when you are rewarded as the most sustainable company in the world in '26 for the third year in a row. As you know, we've launched our new Sustainability Impact program. This is a beginning of a new cycle. We are at the end of H1. I will not go into the detail, but we are tracking well with our target that we have fixed for year 1. And I will just finish by telling you that my priorities, the priority of the company are unchanged. It's very interesting. That's probably the first time since I've been appointed that I don't change one of my slide. This slide is exactly the slide we have used to enter in '26 with you, but also we are with our team. Everything that I said around technology, leading in this new energy landscape, being the most innovative company in this new electrical distribution world, going to the next level of intelligence by bringing this unique data layer that we need to deliver more intelligence for our customer. It's a combination of being more software defined in everything we do on our product portfolio, but delivering more value through AI, through software to our customer. And of course, continuing to have a very strong leadership in data center and all of that with more and more technology and supply chain partnership to accelerate our strategy. On customer differentiation, I've covered all the points. We will continue to be that unique company, which is extremely regional to be extremely close to the customer with a certain number of areas where we want to be really global when it comes to some very strategic important, strategic fundamentals. And a very strong obsession at my level on operational excellence, but I do believe that at the end of H1, we are proving to you that what we said last year start to work, start to impact our P&L with a very strong focus on price, delivering better margin and continue to be very focused on productivity and efficiency. And we are also investing in AI internally to make sure that we prepare the next level of efficiency for Schneider Electric, but we'll get back to you with more details in the future. On that, I'd like to hand over to you, Nathan, to go more in details into our financials.

¶4Nathan Fast: Perfect. Thanks, Olivier, and good morning, everyone. I'll start with our key financial highlights for the first half. Our H1 revenues are at EUR 21.2 billion, a record for first half. In gross margin, as Olivier already mentioned, we see net positive outcome of 10 bps organic with strong productivity and acceleration in gross pricing on products, offset by inflationary cost, tariffs and mix. After gross margin, we see strong positive evolution in our operating leverage, driving our adjusted EBITA margin up 120 bps organic, and we retain good control on our SFCs. Our net income and adjusted net income both show strong positive evolution. Finally, as Olivier mentioned, we delivered a record free cash flow for H1 at EUR 1.6 billion. Moving to H1 revenues. Both businesses are contributing to growth. In Energy Management, we delivered growth of 15.4% as we see continued strong demand across all of our end markets, led by data center, but with strong contributions from all. In Industrial Automation, we delivered growth of 7.7% with strong contribution from discrete as the recovery continues, and we're pleased that process turned positive in Q2 in the longer-cycle business after the demand had picked up in H2 of 2025. Scope impacts are now immaterial with Motivair considered for only 2 months in H1 as it is now part of our organic performance. And FX translation adversely impacted our revenues by close to EUR 750 million, mainly due to the weakening of the U.S. dollar and the Indian rupee against the euro. And as you can see at the bottom of the slide, if rates remain where they are now, we would expect ForEx impacts of minus EUR 450 million to minus EUR 500 million on revenues and negligible impact on adjusted EBITA margin for the full year. In total, we were up 14% organic in sales with strong momentum going into H2. Sticking with the H1 view for just one more slide, we'll show here our digital flywheel with the weightage in percentage of the group sales. We see the continued progression, up 2 points versus H1 last year to 62% as we execute on our strategy. And at Schneider, we really see the value in the flywheel and the strong growth in connectable products sets us up well to deliver the energy and industrial intelligence layers, which, of course, are more recurring in nature, deepening our relationships with customers throughout the ecosystem and make our revenues more predictable and resilient over time. Now moving to Q2 and the revenues. Revenues were up 16.5% organic to EUR 11.5 billion, a record for any quarter with all regions contributing. In particular, we have North America and China East Asia, both delivering growth around or above 20%. And I note India is also growing at similar levels. So our 3 largest geographic markets are all booming. Scope impacts in Q2 were immaterial, while ForEx eased in comparison to Q1. Turning to our mix of business models for Q2. Product growth accelerated to 13% organic. And as Olivier mentioned, price contribution increased sequentially versus Q1, represent approximately 4 points of product growth in Q2. The realization of price increases passed proactively at the start of the year now started to accelerate through the quarter. What that also means is that product volumes, therefore, also accelerated with contributions from both business units. If I go to systems, our systems business, where we primarily sell directly to end users, it continued with high demand and strong execution, translating into sales of 28% growth driven by data center, but again, with growth across all 4 end markets. Finally, on software and services, they grew plus 6% with double-digit ARR growth in AVEVA and single-digit organic growth. It's especially important for AVEVA as they now enter the completion of their transition to subscription, a journey that our EM software assets are still progressing along. Services inside grew mid-single digit overall, and we expect an improved growth contribution in H2. If I focus now on the geographic drivers that accelerated Energy Management to growth of 18% organic in Q2. North America, as you see at the top left, was up 25% with the U.S. driven by momentum in data centers, where we saw particularly strong growth from cooling, from prefabricated modular solutions, and 3-phase UPS, with also semicon and Energy & Chemical segments contributing to that growth. Canada grew double digit, while Mexico remained down due to certain trade uncertainty. In Europe, we grew at 8% organic, led by performance in Power & Grid and also in buildings. Data center demand in the region did remain strong, and we see that demand coming, while the sales growth was impacted by execution on some larger projects last year. In Europe, all 5 of the major European economies were growing at mid-single digits or higher, with Italy and Germany leading the growth. In China and East Asia, we were up a strong 20%. Inside of that, China was up double digit, led by data center, semicon and renewable power. Whereas in East Asia, we also grew strong double digit, but it was primarily led by data center, which is a reflection of the broadening in geographies boosted by the AI demand. In South Asia and International, we grew 13%, and it's a bit contrasted in performance by region. But as I mentioned earlier, India remains very strong with broad-based growth across the end markets. Australia was also very strong, benefiting from data center trends. While the growth in South America was a bit more subdued with some good traction in grid-related projects with a bit softness in the more short-cycle product exposure there. Finally, on Middle East, it remains, of course, subject to considerable uncertainty. And while we have adapted, the situation remains volatile and has impacted growth. Turning now to the geographic drivers of Industrial Automation, which grew 11% in Q2, showing the good momentum and return to revenue growth in process. North America grew 8% with the U.S. up mid-single digits, led by growth in discrete and returning to growth in process, which we would expect to continue based on the backlog we've built and discussed in previous quarters. Canada grew double digits also in this business unit with strong contribution from the process segments, while Mexico, in fact, turned -- returned to growth, sorry, against a low baseline of comparison. In Europe, we also grew 8% with AVEVA up strong double digits with contributions from various countries. There was good growth overall in discrete, led by strong growth in Germany and Italy, which are 2 of our largest markets there, while process also grew, although the market recovery in Europe was not quite as progressed as in North America. Moving in the circle, China and East Asia delivered very strong growth at 20%. Across the region, we saw strong double-digit growth in discrete markets and encouraging signs in process markets in some of the countries within East Asia. China grew strong double digit, led by good traction with OEMs, while East Asia grew double digit with semicon segment as a key driver. Finally, on South Asia and International, we grew 9% in the quarter, with India seeing strong growth in discrete and strong performance from AVEVA in Australia. Like for EM, the Middle East remains subject to considerable uncertainty. Across both businesses, we see this as a challenge in H2 2026, but in the longer term, there are clearly strong opportunities to participate in the post-conflict recovery. Turning now to income statement and our first half income statement here. We finished H1 with adjusted EBITA of EUR 4.1 billion, a record for an H1 with organic growth of 22%, taking us to a margin of 19.3% of sales and growing 120 bps organic. This was driven by our strong top line growth. Our focus, as Olivier mentioned, on operational excellence, driving strong productivity, driving strong product price with acceleration in Q2 and significant operating leverage. Our adjusted EBITA margin in Energy Management was up 100 bps organic, broadly reflecting those same dynamics as the group. The adjusted EBITA in Industrial Automation also improved year-over-year by 50 bps organic as we implement the margin recovery plan there to reach 18% by 2028. The last thing I'll notice at the bottom of the slide, R&D costs in the P&L remained stable at close to 6% of sales, representing our sustained commitment to innovation as we deployed around EUR 1.2 billion on R&D in H1. Turning now to our gross margin bridge for the first year of the half. We finished H1, as I already said, with gross margin of 42.5%, up 10 bps. If I focus on a couple of levers. On net price, we see the benefit from those proactive pricing actions taken at the start of the year, which really accelerated strongly in Q2, but were still insufficient to offset the raw material inflation and tariff impacts we faced which is a good moment to remind you that the impact from RMI and tariffs in H1 last year was close to 0. Related to tariffs, we saw the benefit of around EUR 100 million coming from tariff refunds in Q2. For the full year, we are unchanged in our expectation that we will offset the impact of RMI inflations in value through our pricing actions. Moving to the second lever. Productivity was particularly strong, as Olivier mentioned, above EUR 500 million impact in H1, showing good sequential improvement driven by several factors, including technical productivity, supplier negotiation and leveraging our capacity investment of recent years. One note of caution is that we delivered more than 70% of our full year 2025 productivity in H2, so the baseline does become a bit more challenging as we progress along the year. Mix was negative in gross margin as expected, given the very strong growth in our systems business model. Moving on to support function costs. These grew at 8% organic compared to the top line growth of 14%, thereby, as Olivier also mentioned earlier, demonstrating considerable leverage with our SFC to sales ratio improving by 1.1 points. We continue to maintain tight control over discretionary costs and start to see the benefit of the structural actions we have taken to improve efficiency. And alongside this discipline on one side, we do continue to invest, as I already mentioned, in R&D, but not only, we also invest in our digital transformations and AI initiatives. Turning now to net income. On a reported basis, including scope and ForEx, our adjusted EBITA was up 17% below the line, I'll pick just a few items to cover. In OOIE, we have an impairment of capitalized development costs. As you know, we have a strong emphasis on refocusing the Industrial Automation business as part of our overall operational excellence a pillar. Part of that initiative involves simplification of our AI -- sorry, IA offer ranges, and we've been making progress on this in H1. If I move to the second line, on restructuring costs, we do see the uptick that we've previously communicated, and you see the savings of that from the previous chart. There is no change to our expectation around the total envelope of incremental charges, but we do expect those to peak in 2026 with total restructuring charges of around EUR 450 million this year. On net financial costs, the increase there just basically represents our bond refinancing and financing undertaken in 2025. And all in at the bottom, our net income lands at EUR 2.5 billion, up 30%, while our adjusted net income, which removes those onetime charges we had last year, grows 21% or 29% at constant currency. If I move then to cash flows, our operating cash flow for H1 grew 28% year-over-year, reaching around EUR 3.8 billion, primarily due to the strong P&L performance. Free cash flow was a record for an H1 at EUR 1.6 billion, including the usual H1 buildup in working capital, which reflects the rapidly growing nature of our business. On non-trade working capital, we see the impact of a much stronger H1 performance, both on bonus accruals plus the onetime charges we had taken last year. We expect our cash conversion ratio to be around 100% for full year, which was in line with our communicated expectations. Finally, and Olivier mentioned the strength of the balance sheet, our debt ratios remain strong, supported by our continued strong results. And you will see in this slide that our credit ratings with S&P and Moody's have been reconfirmed following the proposed acquisition of Cognite. With that, Olivier, maybe I'll turn it back over to you.

¶5Olivier Pascal Blum: Thank you very much, Nathan. And as usual, look, we'd like to finish that presentation to tell you what are -- what do we see for H2, what are the trends and what are the financial target of the company. First of all, what I'd like to say is what do we expect in terms of trend? We will continue to live in a very, very complex environment. I think we've been used to for the past years, we are living in a world which is more and more fragmented. And for us, what is very, very important is to make sure we can navigate through that level of uncertainty. So we don't believe it will reduce in the next 6 months, in the next 12 months, we have to be used to that. When you are living in this kind of environment, what makes Schneider Electric really very, very different is the fact that we have this very, very balanced exposure. So what we expect in H2 basically is to have a strong contribution from our 4 end markets. from all our 4 business model and from our 4 regions. So the triple 4 will contribute really to that in H2. If I go a little bit more in detail from an end market standpoint, of course, data center continue to be a great opportunity. Short term, midterm, we want to be really a very, very, very strong player in that market across the life cycle. We see that the trend will continue to be positive. We see -- and it's extremely important for me that the other segment of Schneider are also contributing Industry infrastructure. You've seen that Industrial Automation is really growing fast again in Q2. So that's great to see that we'll be living in a market that will continue to contribute strongly and also with building and probably residential a little bit behind, but still a very positive outlook where our portfolio make a lot of sense. From a geographical standpoint, as I said, all the regions will contribute with a particular contribution from U.S. and India, but we said it in Q1, we see it again today. China contributes, Europe also contribute pretty well. But here, we cannot be helped too much by the environment. It's about us to be more differentiated. And of course, as we said, we are still living in a very uncertain world when it comes to the Middle East crisis, and we'll have to continue to navigate, which impact potentially put pressure in the region from a business standpoint, but also that has impact, as you know, on the entire supply chain inflation. But we've demonstrated in H1 that we know how to navigate. All our business model will continue to contribute to the growth, fast growth in system, fast growth in product. And of course, we want to continue to make sure that everything is translating by an increase of our digital flywheel and with an extreme focus on everything that comes from software and services. And last but not the least, I said it already several times today, it's super important that we continue to execute our company program. The priority we fixed end of last year are the right one and obsessed really focused on gross margin improvement with 2 particular drivers, pricing and industrial productivity, continue to be very disciplined in our SG&A, and we've demonstrated for more than 1 year now that we are extremely disciplined. And as a result of that, that gives us the possibility to continue to be very ambitious when it comes really to profitability. So as a result of that, in that environment, where Schneider Electric has delivered a very, very strong H1. We are coming to you with a revised target, a target that has been upgraded where we believe we can deliver between 14% and 19% of organic improvement of adjusted EBITA, which is supported by 2 very strong drivers, as you know. So we are revising our guidance up in terms of revenue from 7% to 10% to 10% to 13% organic, and we are revising up also our adjusted EBITA margin from 50 to 80 to 70 to 100 bps by the end of the year. As I said to my team, we are at the half time of the game. We are extremely ambitious. We have to stay humble to continue to be very focused and making sure that we can really exceed our target this year and deliver that new guidance we are presenting to all of you. Thank you very much for your attention, and I hand over back to you for the Q&A, Antoine.

¶6Antoine Sage: All right. Thanks a lot, Olivier. So indeed, there will be time for us to open the Q&A. I'm sure that after what Nathan and Olivier presented, we will have plenty of questions. So just to make sure that we'll be able to give you the capacity to speak each of you. We'll try to keep it to one question at a time. So with that, operator, let's get started.

¶7Operator: [Operator Instructions] The first question comes from Phil Buller of JPMorgan.

¶8Philip Buller: Congratulations on the results. There's a lot in there, but the gross margin development was not expected or what was guided to, I guess, being positive in the first half and 120 bps of adjusted EBITA margin is also better than expected. And I think that the original guide was that there was going to be an H2 weighting this year. You're now expecting the opposite profile as implied by the guidance. So what has changed other than costs, which actually went up? And was this price realization or price increases being above plan? Or were there things like tactical cost savings that we should assume come back in H2? Or how do we reconcile that sequentially lower H2 EBIT margin progression in the second half of the year beyond conservatism?

¶9Olivier Pascal Blum: Thank you very much for your question. I'll start. And of course, Nathan, I'll let you complete. Look, number one, if you remember all our discussion last year, I was extremely open with you. By the way, all of you guys were pretty challenging on the capacity to Schneider to deliver a really strong operational performance. I think many of you gave us a feedback in our CMD that you liked really the strategic direction, the differentiation of the company, but we were telling us, look, you need to be back to very strong operational excellence. I've been very transparent since I've been appointed. We put a plan last year. We've communicated to our leadership internally, and then we work hard. Now when you manage such a large company in such a level of uncertainty, it's very difficult to predict at which point of time everything is going to scale. So when I entered in 2026, I had a very high level of confidence that we were very well aligned in the team. In multiple calls, I told you we were ready this time January 1 to hit the market when it comes to pricing. I knew we were increasing our focus on initial productivity, but it's always difficult in such large organization to predict at which -- I mean, at which speed it will scale up. And we definitely see across H1, month after month, it's getting better and better. We finished very well in Q2. Of course, everything being amplified and all the work you do on operational excellence is amplified with, of course, more volume, more growth. And as a result of that, we definitely finished H1 a bit in advance versus what was the initial plan, clearly. And in a market where we continue also to grow fast. And if you go in the details of our numbers, you will see that on the growth, and we are always living in a competitive environment, we do pretty well. We were also challenged last year on a certain number of metrics. We say with [ net ] triple-digit growth in semicon, in data center. So all this volume also is accelerating, which demonstrate the great job of our salespeople everywhere in the world. And managing P&L is very, very simple. At the end, if you have great volume and you do a great job on operational excellence, of course, the results are better. So always difficult to predict at which speed we will be back to business. But I think we are demonstrating that the plan is working, and that gives us the confidence to raise the guidance for H2. Do you want to go a little bit more in detail?

¶10Nathan Fast: Yes. Maybe the only thing I'll supplement for you, Phil, is because I don't want to repeat what Olivier said, but we view H1 performance as primarily in line with what we had guided and what we've been discussing with you over the last months and quarters, and we see the good progress in productivity, in pricing. Now the one thing I mentioned earlier is there's still -- and Olivier said, we live in an uncertain environment, and we continue to monitor. I mentioned the tariff refund. So that element, certainly, we weren't considering back in February when we're talking about the shaping of the P&L across the H1. And otherwise, I mean, inside of our guidance, we're taking multiple scenarios. We're looking at the underlying run rate. We're looking at the operational excellence programs that we have in place, and we're pretty confident that this is the right level at the 70 to 100 bps with the growth of 10% to 13% that put us in a healthy range to be able to deliver at the full year of 2026.

¶11Operator: The next question is from Alasdair Leslie of Bernstein.

¶12Alasdair Leslie: So my question is on data centers. One of your closest peers yesterday highlighted challenges in scaling more integrated solutions. They talked about being on a learning curve. You're developing similar solutions. You kind of sort of showcased some of those in the slides. How comfortable kind of do you feel about execution risk as these, kind of, AI deployments become larger, more complex, more modular? And how do you ensure, I suppose, that this doesn't become a constraint on growth or margins, particularly as you're kind of building momentum around execution again?

¶13Olivier Pascal Blum: Look, that's a great question. And we've been in this data center industry for more than 20 years. As you rightly said, the past years, we've seen an acceleration. And if you remember every time what we've explained with Nathan, the way we look at the market, number one, we speak to our customer. We have the privilege to work with 200 customers in the world. Of course, a couple of them represent a large part of the opportunity, but not all because you have the hyperscaler, you have the colo, you have the neocloud in North America, everywhere in the world. And we like to work with them and say, "Hey, give us basically what is your own forecast in terms of gigawatt to be built for the coming years." And from there, that give us a kind of idea where we could be in 2030, but more important, where we are in the next 2 to 3 years. And we cross that, of course, with our pipeline, with our backlog. And since, I would say, forever, that's the way we really predict the future, and we try to anticipate the acceleration. It doesn't mean that we are always right. But we have a possibility to increase capacity if we have visibility for 2 to 3 years, we can in less than 2 years, increase capacity. And that's what we've been doing since basically the past year and especially since 2 years where we see the acceleration. So of course, we know that at one point of time, the market will be constrained, constrained sometimes by component, by memory. That's why also on our side, we increased our safety stock in all those components. That's why we increased our capacity with Foxconn and to make sure we can make the most of that opportunity at the right level of margin. Also, this is very important to me. The opportunity is massive, but we want to deliver strong return to our investor. So we make sure also we select those customers that wants to build a long-term partnership with Schneider with the right level of economics where we balance all those factors. And when it comes to technology, as I said before, what is very important for us is to have all the architecture, which are important for that market. You don't need to be ready 3 years in advance. You need to be ready when the first customer wants to have the first quotation and place order. And on that part, I think we are doing extremely well and getting ready for the next wave. So your question is absolutely valid. I'm not saying it's easy when you look at the exponential growth, but we try to be extremely disciplined from the long-term planning to the short term and the way we manage and execute and deliver great service to our customer. And at the end of the day, what you can look -- see through our H1 results is so far, it seems to be working very well, but we need to stay attentive because indeed, the world is so unpredictable that you can have always issue in that area. But so far, so good, I would say.

¶14Operator: The next question is from Andre Kukhnin of UBS.

¶15Andre Kukhnin: I'd like to come back to net price, just to clarify a few things. Could you firstly clarify the net tariff impact? Because it shows us minus EUR 104 million in the bridge. And is that net of EUR 100 million refund? And I guess more importantly, how did the net price evolve in Q2 versus Q1? You said it improved, but did it come already to breakeven or positive? And if not, do you expect it to be already in the positive in Q3?

¶16Olivier Pascal Blum: Yes. Well, look, I'll let Nathan give you all the details of the waterfall. What you can see through H1 is basically we are doing what we said end of last year, which is hitting the market. And definitely, pricing has been extremely positive to us in H1. But you want to go through the detail of tariff impact and pricing, Nathan?

¶17Nathan Fast: Maybe I can go through a bit more details for you. Yes, from your mechanical read, so I answer the easy one first, your mechanical read, yes, you can add EUR 100 million to EUR 104 million. Now in a broader sense, though, we're monitoring and adapting to this net tariff world. There's still uncertainty in tariffs. You saw the announcements even last week. So we're monitoring that one on all dimensions. Now you asked a specific question also on the ramp-up of the price. We told you in Q4 and in Q1 that price was approximately 2% of the transactional. Now at 4 points, it's basically a 2.5x price realization in Q2 versus Q1. So this is really good ramp-up that we're seeing. It's what we've been talking about this acceleration and the proactive price increase in Q1. And mechanically, that's giving us, again, 2.5x price realization in Q2 versus Q1.

¶18Olivier Pascal Blum: And I think it would be fair to say, Nathan, that when we look at where we are at the end of H1 in June, if we are able to repeat that in H2, we'll be in a great position to compensate the impact of raw material impact and tariff impact in our P&L.

¶19Operator: The next question is from Jonathan Mounsey of BNP.

¶20Jonathan Mounsey: Obviously, lots of good stuff in there. Maybe I'll talk about IA though. Obviously, revenue up strongly, double digits Q2, I think 7.7% organically to H1. I think that's about EUR 265 million of organic sales expansion. Margin is only up 30 bps. I mean we've waited a long time for this business to start growing. In the second quarter, they're double digits. And yet the organic profit expansion is still pretty anemic. I was really expecting -- if I had known sales were going to be this strong, I'd have expected a strong expansion. Why is that? And I guess more interestingly, why and when will it get better? And what are you doing to improve IA's drop-through?

¶21Olivier Pascal Blum: Yes. Thank you very much for the question. I'll start, and Nathan, feel free to complete. What is really important, and of course, as you know, in our Industrial Automation portfolio, we have our software business from AVEVA, and we have also our Legacy Industrial Automation business. Both are extremely important strategically for Schneider. And when you go to the IA, Industrial Automation legacy business, I have appointed, as you know, Gwen in H2 last year really to come and to have a new view on that business, how we can make it more synergistic with the rest of Schneider Electric. And we are working on a strategic plan turnaround with 2 horizons, a long-term horizon and a short-term horizon to deliver strong return. The mandate that I give really to Gwen is let's make sure that Industrial Automation contributes strategically in the future to Schneider. So the long-term horizon is priority one, which means that we have to make a certain number of decision on where we refocus our portfolio, what we want to accelerate, double down, the place which are probably less strategic. And all of that, we try to do it with an economic equation where we accelerate the growth, and we are returning back to profitability. Our commitment with Nathan and Gwen during the CMD was to say we'll turn around that business to be back to the profitability we used to have. Actually, on the other side, AVEVA is contributing well. They are almost at the end of their transition, and we see the positive impact on the profitability. When it comes to the IA legacy business, we are well on track with the plan, and you said it yourself, you can see it already through the growth. When it comes to the profitability, it's on track as well. But again, it's a plan that will take a couple of months, maybe 2 years really to be back to the level where we want to be. Nathan, anything you want to add?

¶22Nathan Fast: No, I think what we can say generally there is it's on track to our 18% by 2028, which we communicated. Gwen is working on the portfolio. As Olivier alludes, we took the write-off for some capitalized R&D projects in the past in H1, and we continue to progress. Now we don't give you the details, but we saw basically the same level of leverage on the base cost, and we continue to work on the gross margin, but we consider that we're on track with our commitments there in the medium term.

¶23Operator: The next question is from James Moore of Rothschild & Co.

¶24James Moore: Look, I understand your fortunes are not one end market. But just on data center, there's clearly been a fade in equity markets globally around AI in recent months, concerns about end users not achieving ROI, moving from tokenmaxxing to tokenminning, the pace of Anthropic ARR fading on a sort of month-on-month basis. How do you feel about the wider debate on AI and the path for the next 5 years? I mean you talk about asking your customers the gigawatts. But it's interesting. I mean, you've talked about 10% growth in the past, but here we are delivering triple-digit growth as a kind of industry. So did those gigawatt plans basically not give you the correct predictions 1, 2, 3 years ago? And how are you feeling about the customer pipeline today? Basically, the question is how are you feeling about the overall AI environment? And do you think the high level of orders being enjoyed this year can grow again next year or we going to normalize?

¶25Olivier Pascal Blum: Thank you very much. I think this is a question that everyone would like to answer with a lot of precision. What I would start to tell you, if you look at, first of all, the way we are using AI at Schneider, you know that we have announced, and I told you we are very excited by the acquisition of Cognite, why? Because when you want really to connect the physical and digital world and to deliver more intelligence, we are at a unique point of time. If we are able in the industrial world, process, energy to capture those data, to structure, contextualize, leverage OSIsoft to capture those data in the industrial world, operational real-time data. And we need to contextualize, and deliver more intelligence to our customer, I mean we deliver eventually what we wanted to deliver at Schneider Electric for more than 10 years. What does it mean as a result? It means as a company, we will consume more AI. Our customer will consume more AI because that will go really to a level of intelligence, driving efficiency, sustainability that we have never seen before. So on the consumption of AI, if you look at what we do Schneider as a company for our customer, if I go to the efficiency part of what AI can do to make Schneider Electric simpler, we talked already about pricing today. We are starting to experiment AI in pricing. We are experimenting AI in forecasting. We are experimenting AI to amplify ourselves. I can tell you as the CEO of Schneider Electric, if you will ask me, what is your level of consumption of AI today versus what it will be in 5 years from now? I will tell you maybe 1% only. Now I cannot predict about the world or the other company. But when you go to the infrastructure side, we need the right level of infrastructure to support that acceleration. It has been the case in the past. We see an acceleration this year in the U.S., but we see also a big acceleration in the rest of the world, which was completely disconnected because when you look at data center in the world to support cloud, it's fairly balanced by geography. When it comes to AI, Europe, rest of the world, we are really behind. So that's also a place where people are catching up. Now is it too much compared to what the people will need? I don't think it will stay at that level for the next 5, 10 years, but there is a very, very solid growth. And I do believe the demand is just increasing. Now you raised another point that I face as a CEO. It's going to cost you more and more because token are not free. The company have -- who are selling those model have to be profitable. So on our side, we make sure, first of all, we have a good deal and we have the right partner. And on the other side, we have to get ready also for that level of efficiency, we need to invest in token. So we are, by the way, not increasing our headcount this year. We are extremely strict on our SG&A because we want to make sure step by step, we can also increase our spend of token where the return on investment will come maybe after 1 year, 2 years or 3 years. So your question is probably the most important question we have all to address. But I think we are very strict on the way I said it already, we predict the market, talking to customers, and we try to stick as much as possible to the demand. And as long as those signals give us an indication for the next 2 to 3 years, we know how to be agile to serve the demand. And that's what we are trying to manage. And as an overall question on the AI structure. But definitely, this is a question, probably the most important one and the one for a company like Schneider in our industry that will really create a strong differentiation in your capacity to deliver, to execute to serve the demand of your customer. So, so far, we believe it's manageable. We believe it makes sense. But of course, we'll have to be all very, very attentive of the evolution in the coming years, especially on the evolution of the model, the technology and how it could change the mix in the future.

¶26Antoine Sage: Thank you, Olivier. Thank you, James. Look, I'm conscious of time. We are already at the top of the hour. So we may have the time for a couple of questions more.

¶27Operator: The next question is from Daniela Costa of Goldman Sachs.

¶28Daniela Costa: I wanted to ask you a little bit if you could give us some color on how should we think about, sort of, your capital allocation M&A strategy now? Obviously, you did Cognite and with sort of there's a lot of other rumors out there in the press. Should we be expecting sort of a period where you will accelerate M&A growth along with organic? And on Cognite specifically, maybe some color on sort of how you envisage growth and margin profile going forward to contextualize the multiple?

¶29Olivier Pascal Blum: Look, thank you very much for the question. I'm afraid I'm going to be a bit boring and repeating what I've said already several times. Number one, we have to keep in mind that when you look at the guidance for this year or when you look at the guidance we presented to you during the Capital Market Day, we said most of it will come organically because we do believe that when it comes really to go to the next level of intelligence, physical, digital world, we have a lot in-house to deliver most of the growth that we see in the next chapter. As I said in multiple presentation, I'm obsessed by bringing this technology to the next level, advancing energy tech, the combination of physical and digital. And I want really to make sure we do it at speed. We do it with the best technology. And for instance, when we did Motivair a bit more than 2 years ago now, that was a good example where we know the market is going to accelerate. GPU are going to accelerate. Liquid cooling will become essential. Two options in front of me. We develop organically 4, 5 years before you get really competitive or you do it through Motivair. We find a great company, great people. We have a good deal. We go for it. Cognite, you understood that it's the brain of the next cycle of Schneider because this is where you will create this unique data foundation for energy and process. It's a company which has developed a unique rare technology. When you speak to the customer of Cognite, you are really extremely -- I mean, they are extremely positive about the feedback of the product. Now what do we expect from Cognite is a dual mission, keep developing Cognite for customer because some customers love to buy that data layer. They want an agnostic platform, and they will continue to sell it and develop it for the customer. At the same time, we want to leverage that technology to be inside all the offer that will deliver intelligence to our customers. So you can imagine that we will sell more and more solution in the Schneider Electric solution that will be amplified by Cognite technology. And likewise, it will be the same on the AVEVA side. So we are very, very excited. That will be definitely a fast growth on both sides, but that's really something that will be really a foundation of the next cycle of Schneider. So very excited by that acquisition.

¶30Operator: The next question is from Gael de-Bray of Deutsche Bank.

¶31Gael de-Bray: Can I get back quickly to the margin performance, please? I think I remember at the CMD last year, you set an industrial productivity target of between EUR 2 billion and EUR 2.5 billion cumulatively by 2030. So that's around EUR 500 million annually. I mean in the first 6 months, you delivered more than EUR 500 million of productivity. So I'm now wondering if that performance was kind of exceptional or is rather the beginning of a new trend for you with a stronger productivity improvement run rate than previously assumed?

¶32Nathan Fast: Yes, Gael, it's a good question. Thank you for the question. Clearly, we're -- let's not mix the 2 time lines, and I'll be precise on how we feel about it. But from a long-term perspective, we're absolutely continue to be committed that productivity will be an absolute obsession for the group. Now getting to the short term in H1, yes, we're really -- we really like the performance in productivity. We see the attention, the detail from the organization on the different levers, whether it's cost by design, whether it's technical productivity, whether it's negotiation. Now I reminded you in the financial section, last year, H1, we're always talking about year-over-year. So last year, H1 was a pretty low basis of compare. But absolutely, this is the type of productivity actions we're trying to drive. Now does that equate to the same linear over a 5-year period? Probably not, but we're super excited about the operational excellence and productivity into the H1 of 2026.

¶33Antoine Sage: Thank you, Nathan. Thank you, Gael. I think that we have the time for one last question before I give back the floor to Olivier for conclusion.

¶34Operator: The final question is from Ben Uglow of Oxcap.

¶35Benedict Uglow: Can I ask around China? It's kind of interrelated question, I guess. You're up 20% in Industrial Automation, up 20% in Energy Management. It's clearly going extremely well. I guess my question is, when you think about it and when you think about the growth, is this kind of all related to either semiconductor and data centers? Or is it something more broad-based? And the reason I ask, even in your press release, you call out packaging, material handling and stuff like that. And what I want to know is, is this all just a giant pull-through from the AI effect? Or are you actually seeing something more granular in, let's call it, the old traditional Industrial Automation part of China?

¶36Olivier Pascal Blum: No, that's a great question, and there is probably a lot in your question to cover. First of all, if I just step back a little bit and I give you a global answer, we are at a very, very interesting time where electrification is accelerating everywhere, and it's even amplified with the Middle East conflict with more and more, it's a topic of sovereignty. It was a topic of sustainability. Now it's sustainability, sovereignty, and we see a truly acceleration in electrification everywhere in home, in building, in transportation, in industry, more and more electrification of process. And of course, you combine that with the boom of digital, the boom of AI, which for a company like us give a lot of opportunity. So that gives us very, very strong fundamental of growth for us, growth opportunity, strong driver for Schneider Electric. And of course, data center is probably the most visible. You're absolutely right to say that a large part of semicon is related to data center, but not only. But we see also -- and I've given the information about AiDASH, we see that when you are, for instance, in Power & Grid, the fact that there will be a raise of electrification everywhere. And let's make no mistake, data center represents only 1.5% of electricity consumption, even with this boom that will go to 3%, 3% plus, but 97% of the electricity consumption in the world come from the other segment, your home, my home, this building where I am today, factories, infrastructure. So this is a very strong driver of growth for the future. Data center is the fastest one, semicon is equally high. But across the value chain, you see a large number of opportunity. And we are at a unique point of time, and that's for us definitely to maximize. Now when it goes to China, China, it's a bit more complicated because you have a very strong demand for the export market at that point of time in China. So that's why we are really doing a good job in the industrial sector. As you know, China as a country has been extremely focused on the electrification. So Power & Grid, process, industrial electrification is also very, very high demand. Semicon is growing. Data center is also growing in China. So everything which is more infra is growing. And of course, the only part of China, which continues to be very slow is the building and residential market. But we reduced drastically our exposure. We have a much lower exposure in residential and building in China that we have in the rest of the world. So at the mix, that gives us a favorable position. So I would say this is the answer I can give you globally with some different color in China. But the good news for us, Schneider Electric, is, again, data center is an accelerator. But what we see and the change for us since 12 months is we see all segments contributing, and that's what we want to do because what is super important for me that we keep a very, very balanced exposure to make sure we are extremely resilient across the life cycle. And I think this is what we are demonstrating probably today through our H1 results.

¶37Antoine Sage: Thank you, Olivier. Thank you, Ben. So with that, we are closing the Q&A. So obviously, we have not been able to take all of the questions. So we'll engage with you separately. But before we finish, maybe Olivier, can I give you back the floor for some conclusion words.

¶38Olivier Pascal Blum: Thank you, Antoine. And again, thank you for all of you for being with us today. If I summarize, it's, again, I just said it, but it's a very, very interesting time where I've never seen so many uncertainty in the world. The geopolitics are not helping. There are a lot of big transformation. We put a lot of pressure on company, especially global company. As I said, we have to live with that. We have to learn how to navigate and to be faster and more agile than the others. And at the same time, for Schneider Electric, I think if we look at the way we positioned the company for the past 10 years, electrification is accelerating. Digitalization is coming even to the next level with AI. And that's really for me, a unique opportunity for Schneider in all our segments to give more to our customer, to give more intelligence to our customers. And that's why we are also doubling down in digital capabilities in AI, in Cognite, in AiDASH, in strategic partnership with Kraken because we really want to make sure we get ready for the next cycle. And that's very, very important. As a CEO, you have always really to deliver strong results in the short term, always get prepared for the next cycle. And that's exactly what we are doing with our new strategic plan and our company program. I think the H1 results demonstrate that our customers are confident we are doing the right solution. We are the right partner for the short term, for the long term. The H1 results show also that our team has been extremely resilient at Schneider Electric. We know we were really challenged, but they are working hard to deliver really this company program, and I want really to thank all our employees. And as a result of that, I think we do a better job to deliver a strong return to all of you with always a very strong discipline in capital allocation. But I would just conclude, I love sport practicing, watching. We are at half time of the game. So let's say, extremely ambitious, equally humble. We are in the right track to deliver a record year for '26. We are at half time of the game. Great job. We are happy. Thank you for your support. And let's continue to be focused to deliver a great job in the second part of the year. Thank you very much for being with us today.

¶39Antoine Sage: Thank you. Thank you, Olivier. Thank you all, and thank you for your support, as Olivier said. Goodbye. Have a good rest of the day.

¶1Operator: Good morning, ladies and gentlemen, and welcome to the Siemens 2026 Second Quarter Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the safe harbor statement on Page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

¶2Tobias Atzler: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 '26 conference call. All documents were released this morning and can be found also on our IR website. I'm here today with our CEO, Roland Busch; and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results. After the presentation, we will have time for Q&A. With that, over to you, Roland.

¶3Roland Busch: Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our second quarter performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders despite an overall environment that was geopolitically demanding. In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3% to 4% in fiscal year 2026. Direct supply exposure at around 1% of purchasing volume is very low and mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains and investment sentiment. So far, however, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets. Now let me walk you through the key highlights. Book-to-bill reached a strong 1.22, lifting orders backlog to a record high level of EUR 124 billion. Nominal top line growth rates were again materially impacted by the strong euro as anticipated. Group orders reached EUR 24.1 billion, up 18% on the prior year, with double-digit growth in all 3 core businesses. Smart Infrastructure again reached a quarterly order record with strong demand across most end markets. SI's data center vertical clearly stood out with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1. Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure. Digital Industries continued its growth path. The market environment has shown some early signs of improvement that are now being challenged by renewed geopolitical volatility. The ICE automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customer base. Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3. We will deliver up to 200 double-deck trains based on the Desiro platform to SBB. This is the Swiss Bundesbahn for the Swiss commuter rail networks. The order value is around CHF 2 billion. Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's electrification business, up 18%. The software business at Digital Industries achieved compelling 14%. It is good to see that revenue was up in all regions. The Americas led the way, up 10%, fueled by strong momentum in the United States. EMEA grew by 2% and Asia, Australia was up 8%, driven by India, which was up 21%. Industrial business profit reached EUR 3 billion, translating to a profit margin of 15.4%. We saw operational strength at Digital Industries and Smart Infrastructure, while Mobility was impacted by U.S. tariffs. Currency headwinds amounted to 80 basis points and are expected to ease in the second half. These results translated into earnings per share pre PPA of EUR 2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the U.S. Compared to the first quarter, free cash flow picked up to EUR 1.7 billion. We confirm our outlook for fiscal year 2026 on the group level with some adjustments in the individual businesses, Veronika will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the time line for the spin-off of Siemens Healthineers shares. The shareholder vote is now planned for our next ordinary Annual Shareholders Meeting in February 2027. Four key levers drive our growth ambitions as one tech company. First, digital growth. In the first half of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November. Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator's software and digital service offerings combined with a strong growth trajectory of our recent software acquisitions. Second, grow regions. A great example of where Siemens strengths across business come together as one is Vulcan Energy's project Lionheart in Germany's Upper Rhine Valley. This is Europe's first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany. The backbone of Lionheart will be our advanced automation and digitalization technologies as well as smart buildings solutions. Bringing them together will help in ramping up production faster. As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing. Third, grow verticals. Data center demand has been soaring and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in the first half year by more than 45% to EUR 1.8 billion. We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low and medium voltage production capacities in the U.S. at several locations in the Carolinas. And we are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal: we are creating more flexibility across compute, energy and infrastructure systems. Data center operators can connect to the grid faster, scale efficiently and operate reliably in a power-constrained world. Fourth growth lever: grow AI. Bringing AI to the real world was our key theme at our first RXD Summit held in Beijing, which was a major customer and partner event. We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities. Now engineering teams at our customers in China can flexibly run complex simulations more efficiently. And we introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in its infrastructure. These products were locally developed at China speed, as we say, for the Chinese market and beyond. Those of you who visited our booth in Hanover saw firsthand how we are bringing industrial AI to the shop floor together with our partners. Let me highlight just a few examples. First, we launched our Eigen engineering agent, with which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks. The impact is impressive with up to 50% greater engineering efficiency and up to 80% higher solution quality, proven in more than 100 global pilot deployments. Second, we showed that physical AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions. A huge opportunity to address the scarcity of skilled labor. With KION, we entered a strategic partnership to shape the supply chains of the future. Using comprehensive digital twins and our digital twin composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain. A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions. All these applications will lead to increasing demand for electricity for AI factories. We launched a comprehensive new direct protection and switching portfolio, the basis for offerings more efficient and sustainable DC grid solutions. I'm very pleased with the momentum and performance of our DI software business. Organic ARR growth trended upwards to a very healthy level of 11% over the prior year. The integration of our Altair and Dotmatics acquisitions is progressing very well. We have achieved an important milestone by implementing the targeted cost savings measures of $150 million following the Altair integration. The bottom line impact will follow subsequently. At the same time, we are working on accelerating cross-selling revenue synergies where customer opportunities are gaining more and more traction. As AI capabilities are evolving rapidly, our top priority is ensuring that all our teams fully embrace AI to leverage the full productivity gains of AI-powered coding. We are uniquely positioned to build on our strengths and meet key customer needs when implementing AI-powered industrial software. First, deterministic. Our customers require the management of physical laws and deterministic outcomes. Embedding AI in our physics-based solutions enables better and faster deterministic intelligence that unlike probabilistic results can be trusted. Our tools have the capability for sign-off and verification. Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent and all of our product configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships. Third, multi-domain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products. Customers require AI to be built on systems that understand the multi-domain design intent across the enterprise. We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. And fourth, live. Real-time intelligence that will drive action requires a live digital twin that is infused with real-world physical data. Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster real-time intelligence and government actions. With focused investments, we are speeding up the development of AI-enhanced products and new applications in 3 ways. First, faster engines. Our physics AI solution doesn't replace deterministic CRA resolvers -- solvers. It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. Then they run full deterministic solvers on only the top few. The result, dramatic faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes and validates. We have stress tested this capability where the stakes are at the absolute highest, which is in the semiconductor design. The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools, and it delivers real engineering productivity for industry leaders such as TSMC and NVIDIA. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our product software portfolio. Third, increased design intelligence. One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems. Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience. You saw this compelling concept in Hanover, with PepsiCo and KION examples. We enabled those companies to build an ever-evolving engineering mirror of the physical product and factory constantly driving operational improvement. Customer interest is massive. So far, we have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong. It's built on team center, the industry's #1 trusted and secure system of records. On this basis, we are bringing the benefits of faster engines, faster engineers and enhanced design intelligence to life. We are building an AI native experience that is secure, trusted and governed. We aim to lead this transformation. And now over to you, Veronika.

¶4Veronika Bienert: Thank you, Roland, and good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year. Orders for Digital Industries at EUR 4.8 billion were 12% above the prior year with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving. At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year with orders close to EUR 1.8 billion. Book-to-bill was clearly above 1, driven by structural tailwinds from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to EUR 10.2 billion with a gradually increasing software share. Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation and EDA. DI's automation revenue was up by 6% to EUR 3 billion, led by the short-cycle factory automation business. Process automation was up modestly. DI's profitability was higher than expected at 18.5% with a strong contribution from its software business. DI is increasingly reaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies in connection with Altair. A favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remain the engine for a clearly net positive economic equation in Q2. Integration-related costs for Altair and Dotmatics had a magnitude of 90 basis points in the second quarter, in line with expectations. We now expect this number to reach around 80 basis points for full fiscal 2026. Finally, as anticipated, negative currency effects weighed on DI's margin development with around 90 basis points. I am pleased that Digital Industries improved its free cash flow performance to EUR 760 million. Looking at the regional top line perspective, DI's Automation business grew across the board. China was robust, clearly up in orders and revenue after a strong first quarter, which was supported by some pull-forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth. Our local China portfolio is well on track, growing by a rate in the mid-20s. Germany showed 13% order growth on easy comps, while revenue was up modestly. The U.S. showed positive trends driven by brownfield modernization and greenfield activity in selected industries. Among them were semiconductors, data center, power generation, grid modernization as well as aerospace and defense-related manufacturing. After a successful first half year, we raised our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrowed range of 7% to 10%. We now expect DI's profit range to reach 17% to 19%, up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation and ensuring stringent post-merger integration. For the third quarter, we see DI orders clearly up over the prior year level with a strong contribution from its automation business. DI software will grow moderately on lower order volume from EDA year-over-year. The sales funnel for EDA is skewed towards the fourth quarter again. We anticipate that DI revenue growth will see a high single-digit increase, supported by growth in automation and software. And we expect a profit margin of around 18%. Now let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics. Orders were up 35%, reaching a new record level of EUR 7.5 billion. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business. Both businesses benefited from surging contract wins from hyperscalers and colocation providers, but also from leading semiconductor firms. Data Center orders amounted to a record high EUR 1.9 billion with customers globally building out capacities for surging AI workloads. Book-to-bill reached an outstanding 1.27. SI's record order backlog of EUR 22 billion now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%. The largest contribution came from the electrification business up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year-over-year to 18.6%. SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points as well as higher commodity costs. For the second half of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02 with a reduction in operating working capital despite strong top line growth. Looking at the regional top line development, there was healthy demand across the board and stringent backlog execution drove revenue. The U.S. demonstrated exceptional order momentum, up 72%, led by data center demand. It was also good to see bookings in buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins. SI's top line in China showed further improvement, driven by electrification and electrical products despite a continuously soft real estate market. The service business delivered 7% growth, clearly up across all regions. We anticipate that the service business will accelerate in the second half year. Our teams continue to expect very consistent end market dynamics with data centers and power utilities as key pillars for growth. After delivering 10% revenue growth in the first half of fiscal year 2026, and given high visibility from backlog, we raised our guidance for the full fiscal year. For SI, we now expect comparable revenue growth in the range of 8% to 10%, up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%. For the third quarter, we anticipate that SI's revenue growth will be at the upper end of the full year range and profit margin in line with full year expectations. Mobility recorded a mixed set of results in the second quarter. Strong orders at EUR 5.3 billion were well above the prior year with a book-to-bill of 1.76. Order backlog stands at EUR 53.5 billion with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising. Revenue in Q2 came in 2% below the strong prior year level on tough comparables, held back by the impact of U.S. tariffs mainly in rolling stock. In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements, especially in Europe. The U.S. Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the U.S. The result of this assessment impacted both top and bottom line equally. The negative impact on Mobility's profit margin of 6.9% was 170 basis points. In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft as expected because the timing of milestone payments led to a temporary buildup of operating working capital. Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in the second half of fiscal 2026. After the first half year, we take a prudent perspective on the current geopolitical challenges and having taken into consideration the current situation of U.S. tariffs, as a result, we lower our full year outlook for revenue growth at Mobility to the range of 5% to 7%. Despite this change, we confirm the full year margin outlook in the range of 8% to 10%. Also, it is now expected to be towards the lower end. For the third quarter, we see Mobility's revenue growth and margin within its full year guidance. Our below IB performance, as shown on Page 19 in the appendix was as expected. The results included a gain of EUR 172 million from the sale of our airport logistics business in the U.S. Free cash flow of EUR 1.7 billion in the second quarter was well above the prior year. As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line. We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026. With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength. Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March, and we have almost finished our current EUR 6 billion buyback program after less than 2.5 years. Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to EUR 6 billion over a period of up to 5 years. These parameters allow sufficient flexibility. However, we have built a track record of accelerated execution when feasible. Now let me point out our updated outlook assumptions for full fiscal 2026. Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year. We will continue to support midterm growth momentum by increasing CapEx in targeted growth fields to expand capacities. Severance costs are now expected in the range of EUR 300 million to EUR 350 million. We will continue working on ensuring competitiveness across our businesses and functions, primarily with regard to Digital Industries. As expected, FX was a strong burden in the first half of fiscal 2026. However, based on current rates, we expect the headwinds to ease over the second half year. Finally, let me conclude with a confirmed outlook for the Siemens Group and the updated guidance for the businesses at a glance. We continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%, and we anticipate that we will reach EPS pre PPA in the range of EUR 10.70 to EUR 11.10. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow. With that, I hand it back to Tobias for Q&A.

¶5Tobias Atzler: Thank you, Veronika. We are now ready for Q&A. [Operator Instructions] Operator, please open the Q&A now.

¶6Operator: [Operator Instructions] The first question comes from the line of Philip Buller from JPMorgan.

¶7Philip Buller: I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp? Is it a one-off? Or are you gaining share? And if so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great.

¶8Roland Busch: So we do our homework when we compare our growth as far as we can, obviously, see it from -- we call it electrification. So this is a some of medium-volt, low-voltage. And from that perspective, we -- I would say we slightly gained market share, but we are growing, let's say, with the key competitors likewise, maybe a little bit stronger in that quarter. So I mean, this is all about delivering capabilities. So you know that we continuously expand our manufacturing footprint in the United States in Carolinas. We invested more. We are ramping up high-quality manufacturing, very much automated. So we are able to do that. We have our supply chain under control, and we are having a strong focus on that. And so therefore, this is the way to keep momentum. The other part is that we are not only growing with the hyperscalers. We are diversifying also to others -- data center builders. And the last point is, and that's more looking forward, we are launching new products. You saw that 800-volt DC switching technology, which hits the market anytime soon, launched right now, so which gives hopefully another momentum going forward.

¶9Philip Buller: And is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book, please?

¶10Roland Busch: No, it's supporting a great margin in that business.

¶11Operator: The next question comes from the line of James Moore from Rothschild & Co. Redburn.

¶12James Moore: I wondered if I could ask a little bit about the automation momentum and broadly similar environment to last quarter. And the Chinese environment could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China. Was it that a year ago, you've done the launch, so it was a tougher comparative. You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well?

¶13Roland Busch: Okay. Well done. So let me start and maybe that's one of the key message we are also looking for is that April shows really another strong growth, which is even above our forecast. I mean, just to give you that sense. And this is automation globally. So let me start maybe in China. The -- in general, the industrial market is recovering. In particular, you know that China is going more for high-tech manufacturing, but they're also driving export for eco semiconductors and the like. We see stable distributor stock levels, which is good. And what's really exciting is our China new products they grow extremely well. They hit the market really to the point. And here we talk about broad portfolio, edge drives and controls. I'm super excited about our Smart PLC, which was part of the last 26 products we launched, but also switching technology. So it's not only automation, it's also electrification and FI business there. So we continue to see China new product growth. And this growth is really gaining -- we're gaining market share definitely in that case and a strong growth in OEM business, too. So the -- if you ask for the verticals, there are a couple of government-supported verticals, AI semiconductors, obviously, e-car, solar, batteries, logistics, marine, and at the other level, maybe a short one on pricing. You saw that there was a price increase in Q1. Currently, the pricing is on a stable level. So all in all, that's doing well. Regarding prebuy, we currently see indicators which suggest that prebuying may be partly driven by our order dynamics, fueled by maybe component scarcity or a price increase. So we cannot rule out some of these effects. However, if we look at our KPIs, we see no meaningful shifts in order patterns or requested lead times that would point out prebuy distortions in our performance. So that's very, very important to say, but we are staying obviously very vigilant on this point. On a global basis, if you ask for the automation, we see in the automotive space, there is, I mean, limited growth in early '26, partially U.S. recovery. Europe, Japan, flat. China softened sequentially. It's overcapacities in China. So therefore, cautions in CapEx spending. Machinery, there's a moderate moment ahead of us. The Europe is slightly positive and the automation demand is expected to grow modestly, low single digit to mid-single digit. Chemicals, we see chemical output shows moderate growth driven by China, Europe weakening further. Pharma, solid growth there, led by China, Japan. Pricing remains under pressure, I mean, also from this by tariffs. Food and beverage production growth remains modest. So there's a more cautious near-term outlook. Electronic semiconductors, super strong exceptional momentum due to the AI chip demand and aerospace and defense, likewise here, key growth drivers. Aerosense is a high dynamic market, and Siemens can play a key role in scaling up capacities and in a closed-loop production. So I hope that covers your question somehow.

¶14Operator: The next question comes from the line of Ben Uglow from Oxcap Analytics.

¶15Benedict Uglow: Unsurprisingly, it's also about China. I guess my puzzle here is what is new and what could be driving this? In terms of your conversations, Roland, I guess, with either the customers or government, et cetera, why do we think we may now finally be seeing some form of improvement in China? I -- is this to do with the 15th 5-year plan? Is this to do with just catch-up? Is it stimulus? Just your sense of what might be going on? And then could you just talk a little bit specifically about the machine building segment, one of your end markets, which I see on your slides are kind of flattish, but other people are calling out Germany getting better, Italy getting better. Could we just drill into that vertical a little bit more?

¶16Roland Busch: Yes. So talking about China. On a high level, we said it over the last quarters, remember, is that we expect China to improve gradually. There will be no V-cycle, whatever, it will improve gradually. And this is a combination of, let's say, getting step-by-step more consumer confidence of having the Chinese government strategy working out, remember, high-quality manufacturing, but also being able to divert their export to -- away from United States to other regions, Asia, in particular, but also Europe. So this is a combination which somewhat drives it. And the last one I would say is, I mean, China is really good in embracing new technologies. So AI technologies, and let me take that now one by one. So the -- let me talk about the exports. And this is cars, for example, but also machines. They are quite competitive. They diverted their export to other markets, as I said, amazingly fast. So their export is increasing despite the tariffs and, let's say, the throttling of export to the United States. So this was a surprisingly fast way to really find new ways that helps. The other one is there's clearly a kind of a pivot to this high-quality manufacturing, which is also higher price, higher value added. So if you go away from, let's say, clothing to a machine, that makes a big difference. And that goes along with technology, the embracement of technology. I mean we see that for local competitors, but also the international ones acting there. And maybe here, that's something what I really believe we are sticking out if we look around and compare ourselves to number one, local Chinese competitors, and we really -- we win customers back. I mean our RXD Summit was extremely successful. We had roughly 3,000 people, 42 partners exhibiting in our summit. I mean we had, I think, more than 1 million streamings that really hit the market, including forging partnerships. I had Alibaba on stage. We are going now offering our software in China on the cloud, so it can be deployed super fast, and we see a lot of interest there. So this is coming together. And coming to your point about machine building, you know that, Ben, that the machine builders in China, they really made a step up, super competitive. Would I see them already in the super high-end market? So the -- let's say, the DMG MORIs or the high-end TRUMPF machines, maybe not. But the working horses, standard machines, they are quite good and they take advantage out of that. So overall -- and coming back maybe to the customer sentiment, so the private consumption, we believe that this comes back gradually, as we say. I mean, another sideline, obviously, the real estate thing is improving also gradually. Don't expect any kind of fast pivot here. But this package, what I was talking about seems to be a very, let's say, somewhat slow but gradually improving momentum there.

¶17Benedict Uglow: Super interesting.

¶18Veronika Bienert: And maybe, Ben, just to add to the China performance really in the way how we are really monitoring that in a very prudent way. So therefore, what is really important for us that we look at the distributor stock levels. And here, we see for the -- for Q2, really a stable distributor level. And what is as well quite interesting that if we look at the market development that what was really driving was the high-tech manufacturing, what Roland mentioned, but as well the export growth, for instance, really for e-cars in semis, which is a very important element. And that is something which we expect as well to develop going forward in this.

¶19Roland Busch: And since we are talking about it another one is, I mean Q1 is normally strong Q2, normally, we see a little bit weak. This is not the case going into April, again, you see a good momentum there. So that's really encouraging.

¶20Operator: The next question comes from the line of Benjamin Heelan from Bank of America.

¶21Benjamin Heelan: I wanted to touch on M&A. There were some reports yesterday and you were linked to a potential rail acquisition. If you could maybe comment on that. But just broader, how are you thinking about M&A? Can you talk about the pipeline? Are there any divisions that you're particularly focused on right now?

¶22Roland Busch: The first part of your question, I can make very short. We do not comment on that. On the second one, I can speak a little bit longer. I mean we -- number one is, obviously, we have a lot of focus, which is supporting our strategy, which is combining the really in the digital world. Any kind of digital asset, I mean, software assets is super interesting. It's getting harder. The more -- I mean, the more market leadership you're expanding with Altair, for example, then the harder it gets. But there's another space we call operational software, which is really I think going away from the design world of software into the operational world that's super interesting. I mean, obviously, we're looking also into any kind of AI or data-related assets, which is interesting. But we do not shy away from also going into hardware, particularly connected hardware, hardware, which supports our electrification growth. I mean, is it bolt-on acquisitions or looking also into adjacencies? I mean you know that the AI factory market is very fast changing. We see a change in technology. You have to control data AI factory differently from a data center. That has an impact on the controls itself, on the -- so the evolves the mechanics, the controls, but also the DC technology, which you see there, we're looking in that space as well. So anything what is -- and we love connected hardware. The hardware who delivers data is connected is super relevant for us because finally, it has not only memory on it, but also silicon, so you can really run AI technology on it. So therefore, broader space to look at. And regional expansion, obviously, India is a place we always would like to do more. Remember, our CNS acquisition, we love it. This was low-voltage stuff. If we find any other options there, we will do this as well.

¶23Operator: The next question comes from the line of Andre Kukhnin from UBS.

¶24Andre Kukhnin: Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups? And also, could you talk about if your stance has changed at all on the potential AI impact on the space I think at Hanover Fair, we actually talked to a lot of people who are excited about prospects for simulation and how much can be done with agents. Are you ready to price for that hike in consumption?

¶25Roland Busch: Yes. So let me start with the industrial software. Number one is -- and I said it in my presentation and I spend a little bit more time on that, that we have -- we are developing software, industrial software is based on physics. It is -- has a difference between AI technology, which is nondeterministic to that one which you require. For us, the combination is making the beauty. So having simulation, which you can enrich with AI. By the way, also rewriting and running on a different hardware on GPUs makes it already faster, but AI is really making a big difference. So -- and with our software and the combination, you can make non-deterministic AI suggestions to deterministic and roll it in the real world. Is it on the shop floor, but also on the design. You cannot make a mistake in the design of your semiconductors that costs you billions if you make a mistake there. So that's what we love. The other one is General PLM Team Center. This is the trusted secure system of records. It also contextualizes. So -- and this is super important because if you throw AI on nonstructured, nonconextualized data, it doesn't really do well. If you work it on a contextualized way, you really do magic. And this is the reason why Team Center is such a powerful platform, and we offer it not only also with the X version for small and medium-sized enterprises to scale it faster. Now we are developing an agent platform and an agent studio to supply a variety of agents that enhance team center capabilities for customers and for all products. So AI stack an own agent framework across and now listen EDA, PLM and simulation. That's unique -- that's unique in the market. And again, with our X expansions, we're offering that also from the cloud. So that's kind of a competitive edge. The other elements are going then across now moving from the design space to the operations space. Our digital twin composer, for example, you have digital twins of products and manufacturing and compose it into one, which creates this digital thread, which is unique. And then we make it able, make it open for a round-trip of data. So real-time data going into that and have a chance to really operate them out of the cloud. So this is another unique element, which requires actually having an enhance-on operations and getting real-time data into our software stack. So we believe that we have, number one, a super strong position there, including -- I mean, Altair was really closing a gap in our simulation. Now we go cross domains, so to speak, super relevant cross domains and domains is either the supply chain, as I said, EDA, PRM simulation, but also cross disciplines like hardware, software, electronics and the like. And the other one is the capabilities to increase it. Maybe 2 more things. One is we're writing our software also in a sense for the -- how our customers use it. Currently, it's engineering using our software. In the future, it will be a blend of engineers and agents, which is obviously you can imagine a different way. And this now to your other question, this spills over to the way how we monetize -- we also look into AI-driven monetization, tokens usage-based, which is changing the model. And that's something which is -- it's premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about also into the way how we monetize it. I talked a lot, but I don't know whether I hit all your -- the points you wanted to know.

¶26Andre Kukhnin: No, that's really helpful. And I guess in H1 performance, do you feel like you've taken share or performed more in line with the market?

¶27Roland Busch: No, I would say we took share. I mean, remember, for the first half, our digital business grew by 19% in the quarter now Q2, our cluster by 14. So we feel very confident we were happy about the performance...

¶28Veronika Bienert: And maybe just to briefly add to monetization. So we are convinced that user-based licenses will continue to exist. But if required for AI, we can really fully leverage new monetization models, and we are testing this on new AI solutions and our AI capabilities in the product. So therefore, we are convinced that the mix of both will really help to grow our top and bottom line.

¶29Roland Busch: I'll give you one more since this is so exciting. Engineering agent. I don't know whether you have a chance to be at our Hanover trade fair, but what is it? It is an agent which really helps engineers programming industrial PLCs, typically using our TIA portal, but that can go much, much broader. What it does, I mean, it receives -- actually, you interact with a prompt. This is the first thing. And you go for a task. For example, I would like to give you a welding task, including the clamping, the welding and the unclambing and moving on. And then the agent goes out and checks out for all the necessary documents, I mean whatever you need in order to do that for your machine. So it looks around in all the documents, upload it, creates a software to run on your PLC, validate it over and over again until it really works. And then it comes back and say, okay, here's the ready-to-release software. And finally, a human can decide and push a box and upload it. And guess what? It works. I mean this is so amazing. And that's something what was really done by our Seattle team based on a prework for our team here in Germany. They did made it work. And this is first of its kind engineering agent. And by the way, we call it Eigen because, number one, it's yours and Eigen is a German, it's yours. Number two, it's linked to the state of in physics, which means that -- and this is a very interesting point because physics is nonderministic if it comes to quantum but an eigenstate is deterministic. So -- and that's the beauty of it. We make out of a nonderministic technology and deterministic output, which is hardened and can run on the shop floor. Sorry for being a little bit technological here, but we love it. And our customers, too, they have very strong interest.

¶30Operator: The next question comes from Max Yates from Morgan Stanley.

¶31Max Yates: I just wanted to ask about the Healthineers spin. Obviously, in the quarter, you made the announcement that the vote would take place at the AGM next year. I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an extraordinary general meeting earlier? And then maybe sort of once the vote happens at the AGM, what kind of time line after that would we expect the transaction actually to take place? What are the hurdles that need to happen once it kind of -- that we need to get through once it has shareholder approval?

¶32Veronika Bienert: Yes, I'm happy to take your question. So we are working on an unprecedented transaction. And while such processes naturally take time, the alignment with the tax authorities is progressing well and in a very constructive and positive manner. And we cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well. And so we are very confident there. So -- and I assume you are as well aware that there are certain key contractual aspects, which need to be solved between Siemens Healthineers and Siemens AG. So all existing contractual relationships like service contracts, rent leasing contracts or financing agreements, they have been checked. And their continuation or termination evaluated from both sides. So we are confident that we will have satisfactory solutions to the questions at the time of the spin-off. And so we have a very straightforward approach. So we will go to the regular AGM and then execute on the relevant spin-off activities. That's how we move forward. So you are aware, we currently hold 67%, and we will deconsolidate with the effectiveness of the spin-off. And while reductions are planned in the midterm, as previously communicated, we are in no rush and we'll approach reductions as we always do with a very steady hand and taking into account that the market and operational development of Siemens Healthineers.

¶33Operator: The next question comes from the line of Alexander Virgo from Evercore ISI.

¶34Alexander Virgo: I wondered if you could just talk a little bit about DI margins. And in particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds, FX, price cost, in particular, I suppose, in the full year guide. And then I guess really what I'm getting at is thinking as we exit this year, we're looking at well north of 20% on an underlying basis. So I'm just sort of trying to get a framework for thinking about 2027.

¶35Veronika Bienert: Yes. So as previously explained, so for Q2, we see 80 basis points impact in terms of FX. And then for the entire fiscal year, 50 basis points. So our expectation is that in the Q3, Q4 and the difference to previous year will kind of flatten out. And with regards to the different impacts in terms of supply chain inflation and alike. So we are heavily working to keep economic equation up and to compensate in different areas so that we have a very strong purchase price approach here. So therefore, we are quite confident to fulfill our targets for the course of the fiscal year.

¶36Operator: The next question comes from the line of Daniela Costa from Goldman Sachs.

¶37Daniela Costa: I just wanted to follow up on some -- there were some news articles a couple of weeks ago regarding sort of you considering reorganizing how the divisions, DI and SI are structured. I just wanted to check sort of like whether you've considered anything of that sort or if we should dismiss those. And in case you would consider what is the logic behind?

¶38Roland Busch: Yes. Thanks, Daniela, for asking that one. So for the time, dismiss it, we keep on going with what we do. But we do -- it's maybe behind the scenes to give you a little bit of background. So there's -- and remember, we had our -- with our One Technology program, we also had -- which is targeted for 3 elements. Number one is stronger customer focus; number two, faster innovation, so increasing our innovation velocity. And number three is ultimately going for -- gearing for higher profitable growth. So -- and we thought of what do we need to do in order to make a step up. And to give you a little bit of background and some things -- there is a reason why I say disregarded because hopefully, you don't see what we do because while delivering, we're increasing our performance. Take you an example. We basically reworked our sales organization in the automation business. It was -- currently, it was driven by actually 4 business units and segments, and this whole structure was duplicated in the regions. We don't think that this is a good idea. So we bring that now under one control. It's one CRM, so one sales organization, which is really having a much, much more better grip on what products to sell, how to sell it. It's a common way to address it. It goes live. I mean we already work in that direction. It goes live then 1st of October, but we are ready to do that. And we believe that with the same portfolio, we can do better impact because we have better transparency. We get our productivity of our salespeople up. This includes also how we steer new products when we go to the market. But then we're also strengthening our marketing -- product marketing. So once we are launching products, you saw that in China, that we have a product marketing and a campaigning behind to really create impact much, much faster. So in short, this is professionalizing the CRM, our sales organization in automation as an example. That's what we do. And the other one is -- we're working on our -- the way how we are delivering products and I'm still on automation so that we don't have redundant platforms, which creates, kind of, a headroom for investing in new innovations like I mean, China new products, super successful. We keep on going. We talk about virtual PLC software-defined automation, which already starts hitting the market. So we need that headroom to deliver and grow faster in doing that. And then the next thing is that we -- once you start doing that, you think also about what is it what our functions can do. And so we create a fabric of functions, which are able to scale also technology. We talk IT and AI technologies across the company much faster while having a clear focus on supporting the businesses. So world-class support for businesses in scaling. I give you one detail, one idea behind. We have currently -- because we didn't really put too much attention on it, I mean, I think something like 600, 700 engineering tools in our company, which is maybe not the right idea to really scale productivity also. I mean, using GitHub and all the new technologies and AI. So we are consolidating that now and driving them within doing that, not only operational productivity of our coders, but also developers, but also having a tool chain, which is supporting them to be much, much more productive. On top comes scaling that for the company, it makes us also more productive if we move people around and the like. So this is what we do. We do not touch things which are not broken. So you don't see a very limited change in our medium voltage, low-voltage business. You see an improvement in our building business. So therefore, we are very selective, but we are very clear what we want to do and how we want to do it to come again back stronger customer focus, faster innovations and higher profitable growth.

¶39Tobias Atzler: We have time for 2 short questions.

¶40Operator: The next question comes from Martin Wilkie from Citi.

¶41Martin Wilkie: It's Martin from Citi. Just to come back to the margin in DI and particularly on software. I think you said that software was an important part of that margin improvement inside DI. Can you remind us where we are in the SaaS transition in terms of the drag from that sort of beginning to reverse or improve? And just to understand, was it largely driven by the timing around that? Or is there also an underlying pickup in profitability inside software?

¶42Veronika Bienert: So we are on our way with the SaaS transition as planned and -- but still some activities are underway, but we are progressing very well. And you're very well aware that we are not disclosing the software margins. But what we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well the translation into profitability. So therefore, we are very confident in the overall SaaS transition.

¶43Roland Busch: And maybe to add, coming back to when we started off also taking you with us on the SaaS transition, this is something what is really -- I mean, high credit to our team. They execute as planned. I mean this goes back now, I don't know, 4 years or whatever, 5 years. They deliver as planned. So you will see the expected pickup in margins. They deliver on the integration of Altair and Dotmatics measures for the $150 million savings are in place, which are kicking in, in our bottom line going forward. So from that perspective, we are very happy that they pick up as planned and also on the top line, so we see the pipeline building up for our cross-selling and upselling.

¶44Tobias Atzler: We take one last question, please.

¶45Operator: Today's last question is from Gael de-Bray from Deutsche Bank.

¶46Gael de-Bray: My question is for Veronika. I'd be really interested in hearing about your early observations in the role. Where are your priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? And if I may, in terms of the capital allocation strategy, why only EUR 6 billion of buybacks given the strength of the balance sheet and the expected deconsolidation of the debt from Healthineers in less than a year's time?

¶47Veronika Bienert: Yes. So happy to take your question. And with regards -- you mentioned it on your own.

¶48Roland Busch: You make me stay tuned now.

¶49Veronika Bienert: Capital allocation is, of course, one of the focus areas, which is on top of my mind. But in addition, as well, stringent execution in terms of delivering our free cash flow. That is something which is very important to show the healthiness of our businesses. And another area is something, in particular, in this challenging geopolitical environment. And if you think about increasing inflation and volatility in different areas, it's, of course, our economic equation because that is something which shows as well whether our different businesses are healthy and resilient in order to navigate in challenging environments. And yes, to come back to capital allocation -- this goes into different directions. So of course, our announced share buyback program, it's one of the building blocks. So it's more or less a one instrument which we are looking at. But capital allocation goes into the direction when we look in a very prudent manner at M&A activities. So of course, we are doing that in the same manner as before. So no change, yes, a very prudent approach. However, if you look at the multiples in different areas, we are in industries we are acting in. So therefore, we really need to show or to see evaluating such targets, how does it look like with synergies about revenue, cost synergies and is it the strategic fit in terms of top, bottom line and many other areas, you are very well aware of our 5 to 6 focus areas from a strategic point. So that is something which we further pursue. But when we talk about capital allocation, it's not only about share buybacks and M&A activities. It is as well if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner and the way how we allocate resources. So just to translate it into a resilience of our company, so we really need to diversify. We need to diversify the way -- where are our production locations, where are we running our R&D activities, and that is something which we started to do, but we will do that in an even more focused manner that we really ensure in a very stringent way, but in a very forward-looking way for the value creation of our company. So I hope this gives you a certain insight on my focus areas going forward.

¶50Tobias Atzler: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We're looking forward to our sell-side meeting, I should say, call later today and meeting many of you on our roadshows over the upcoming weeks. Have a wonderful day, and goodbye.

¶51Operator: Ladies and gentlemen, that will conclude today's conference call, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.

¶1Operator: Good day, and thank you for standing by. Welcome to the Legrand 2025 Full Year Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Benoit Coquart, CEO of Legrand. Please go ahead.

¶2Benoît Coquart: Thank you. Good morning, everybody. Franck Lemery, Ronan Marc and myself are happy to welcome you to the Legrand 2025 Full Year Results Conference Call and Webcast. As you know, this call is recorded. We have published today our press release, financial statements and a slide show to which we will refer. I begin on Page 4 with the 3 key highlights of this release. First, Legrand delivered a remarkable performance with record sales growth, high profitability and a strong achievement of its CSR objectives. Second, the group continued the successful deployment of its strategic road map towards EUR 15 billion of sales by 2030. Third, Legrand is targeting further sales growth of between plus 10% and plus 15% in 2026, excluding currency effects. Starting on Page 6 of the deck, we fully achieved our annual targets for 2025, which we will detail further by key topic during this presentation. Moving to Page 7, I will start with an overview of sales. In 2025, excluding currency effects, our sales grew by plus 13.1%. This includes an organic growth of plus 7.7%. This growth is driven by an outstanding performance in data centers with an organic growth of close to plus 40% this year. And regarding our sales in buildings, we are resisting very well despite a still muted market over the year. On top of organic growth, we benefit from a positive scope effect of plus 5.1%. I will come back later on acquisitions. Of course, now based on the acquisitions announced and the likely date of consolidation, the 2026 full year scope impact would be close to plus 6%. As for exchange rates, the effect was a negative minus 3.1% in 2025. And based on the rates of the month of Jan, it will be around minus 2.5% for the full year 2026. On Page 8, you will find the key takeaways per geography on a like-for-like basis. In Europe, in a market that remains mixed overall, sales were up plus 1.9% over the year, including, for example, in Germany, Italy, the Netherlands and the U.K. In North and Central America, sales were up a strong plus 16%, driven by an outstanding performance in data centers. Finally, in the Rest of the World, sales increased by plus 2.7% with good growth in Asia Pacific, Africa and the Middle East, partly offset by a retreat in South America. These were the main comments I wanted to share on sales. I will now hand over to Franck for more color on our financial performance.

¶3Franck Lemery: Thank you, Benoit, and good morning to all of you. I will start on Page 9 with adjusted operating margin. We recorded in 2025 a very solid adjusted operating margin of 20.7% of sales after acquisitions. This represents a plus 20 basis point increase year-on-year, including a 10 basis point organic improvement and a plus 10 basis point favorable impact from acquisitions. The group's high profitability demonstrates once again the strength of our strategic model and our solid capacity to execute and adapt I think notably of the volatile environment linked to the U.S. custom policies, which increased the group cost base by around $100 million. Going now to Page 10. The net profit attributable to the group stood at EUR 1.2 billion, represented 13.1% of our sales. The increase coming from the operating profit is partially offset by the impact of financial results, while the corporate income tax rate remained stable. The free cash flow came to a solid EUR 1.3 billion at 14% of sales and a conversion rate of 107% supporting the sustained acquisition momentum of Legrand while preserving balance sheet strength with financial leverage kept under control at 1.9 at the end of December 2025. This is it with the key financial topics I wanted to share with you this morning. I'm now handing over back to Benoit.

¶4Benoît Coquart: Thank you, Franck. Let me now move to our 2025 CSR performance. On Page 11, in 2025, Legrand reached an achievement rate of 110% on the targets set for the first year of its 2025-2027 CSR road map. You will find on Page 12, a few illustrative examples highlighting this performance. For example, Legrand outperformed its targets in terms of Scope 1 and 2 CO2 emission reduction, plastic packaging reduction or use of sustainable materials. All the achievements confirm the strong integration of sustainability into the group's strategy. I'm now moving to Page 13 to conclude on 2025 performance with our dividend. The approval of the payment of a dividend of EUR 2.38 per share will be proposed to the next General Meeting of Shareholders. This represents a rise of plus 8.2% from 2024 and a payout ratio of 50%. Let's now move to the second key topic of this release, our strategic road map. In 2025, Legrand actively deployed its strategic road map towards EUR 15 billion of sales by 2030, combining accelerated growth and value creation. As shown on Page 15, this is first illustrated by the reinforced positioning of the group in energy and digital transition offerings which now represent 53% of our sales compared with 47% for essential infrastructure solutions. Data centers at the heart of the group's growth strategy represented sales of EUR 2.4 billion at year-end 2025, i.e., 26% of group sales to compare with EUR 0.7 billion in 2020. Legrand is recognized as an undisputed major player in this field of activity with a deep offering that is perfectly suited to the deployment of infrastructure for artificial intelligence. Building on nearly 30 acquisitions completed in this field, Legrand has become a leading player and a preferred partner for major industry participants. The side positive impact of all the acquisitions we made in data centers is that they also strengthened the group's existing position in critical power with other verticals driven by electrification, such as infrastructure, industry, telecom, oil and gas and microgrids. I am now moving to Page 16 to 18. As you know, innovation is really the DNA of Legrand. We highlight on those slides a number of product launches carried out in 2025, which illustrates the sustained momentum in innovation across the group's segments and geographies. On Page 19, we underline the group's continued focus on digital initiatives and customer experience with high and improving customer satisfaction in 2025. Finally, on Page 20, we detail Legrand's particularly active M&A strategy with 7 acquisitions announced in 2025, representing EUR 500 million of annualized sales, all in the fields of energy and digital transition. This momentum extends into 2026, as shown on Page 21, with the announcement today of 2 additional acquisitions in data center in the U.S. with Curtis Industries and in Brazil with Green4T. Maybe one thing to add that is not in the slide actually, but in the press release, we recently invested in Accelsius in the U.S., a pioneer in 2-phase direct-to-chip liquid cooling. This investment will further strengthen the group's portfolio of solutions for AI and HPC data centers. Let's now move quickly to the third part of this release with our targets. On Page 23, regarding '26, Legrand will continue to accelerate its profitable and responsible growth momentum in line with its strategic road map. Taking into account the current global macroeconomic outlook, a very strong data center market and a modest recovery in the building sector, Legrand is targeting the following in 2026, sales growth, excluding currency effects of between plus 10% and plus 15%, comprising organic growth of between plus 4% and plus 7% and growth through acquisitions of between plus 6% and plus 8%. Adjusted operating margin after acquisitions of 20.5% to 21% of sales, CSR achievement rate of at least 100% for the second year of its 2025-2027 road map. On Page 24, regarding our 2030 ambitions -- sorry, building on its achievements and taking into account both observed and expected market trends, Legrand is confident in its ability to reach the upper end of its 2030 sales target range around EUR 15 billion with average annual sales growth of close to 10%, excluding exchange rate effects and average adjusted operating margin above 20% of sales compared with the previously targeted level of around 20% in average. This is it for the key topics of this release. Last word before we move to the Q&A session. You will find on Page 26 to 28, our corporate access agenda for 2026 should you wish [Technical Difficulty] management. Let's now switch to Q&A.

¶5Operator: [Operator Instructions] And we're going to take our first question. And it comes from the line of Daniela Costa from Goldman Sachs.

¶6Daniela Costa: Thank you so much for taking my question and the follow-up. I will do them one at a time. But starting on the guidance for 2026, can you give us some help on the building blocks, particularly how much data center growth are you factoring in? And how much of that comes from a backlog you already have? And what pricing are you factoring in there?

¶7Benoît Coquart: Daniela, so our organic guidance, the 4% to 7% growth is basically built this way, a growth in data center of between plus 10% and plus 20% and for the rest of the activity, i.e., the building activity, something basically more or less flat in volume with a bit of pricing. Those are the building blocks. Well, how confident are we on the fact that we're going to grow from plus 10% to plus 20% in data center? I have to say that we are very confident. Not much based on the orders. The lesson of last year is that it's difficult to anticipate what we're going to do based on the orders in hand. Last year in Feb, we -- based on the orders we had in hand, we targeted plus 10% to plus 20%. And at the end of the year, we did plus 40% or close to plus 40%. So it's a bit difficult to that. So we have to rely not only on orders, which are very good, not only on the book-to-bill, which is above 1, but we also have to rely on the feedback we get from the market and the CapEx plans announced by the hyperscalers and so on and so forth. And based on those information, we are very confident on our ability to do something between plus 10% and plus 20%. As far as pricing is concerned, overall, not specifically on data center nor specifically on building, we are shooting for pricing somewhere between plus 1% and plus 2%. Now it is based on our scenario when it comes to the raw mats and components. So we believe that the price of raw mats and components will be up between plus 1% and plus 2% this year. But of course, it can change. And if for whatever reason, the price of raw mats and components was to be higher than expected, of course, we would do a bit more pricing. But based on the scenario we have in hand today, we believe that the plus 1% to plus 2% price should be enough.

¶8Daniela Costa: And then just following up just a bit on the acquisitions and the investments that you have been doing. I think one of the deals today has more of a power distribution medium voltage component, which I believe you hadn't done too much in the past. And then the Accelsius was into liquid cooling, although I guess it's just an investment rather than a full consolidation. But can you talk us through sort of how you're pivoting the portfolio in data centers? Do you want to go into medium voltage? How far out are you in the gray space right now, just to get a bit of a shift on the mix?

¶9Benoît Coquart: Well, it's -- thank you for asking the question that you have because I sometimes feel that we haven't done a job good enough in explaining how deep our portfolio in data center was. So a few numbers. For example, we are already a bit in medium voltage. We've been selling for quite some time, medium voltage, low voltage transformers, cascading transformers to data centers and to a number of other spaces. So -- but maybe let me give you a few numbers. The split between white space and gray space would be something like in 2025, 75% white space, 25% gray space. You could note that gray space was 5% 3 years back, and it's now 25%. So we've been able to rebalance, if I may say, our portfolio as we committed to do at the last CMD. Now the split between gray and white doesn't give full justice to the breadth of portfolio we've been able to build, which is composed of close to 55,000 SKUs for data centers, standard SKUs. And if we put together the customized SKUs, close to 100,000 SKUs. So maybe the best way to look at it is to break down it by type of applications. So in 2025, we had about 35% of our data center sales, which was for critical power. So critical power, it's medium voltage, low-voltage transformers. It's UPS, switchgear, busbar, busway, remote power panels and a few other products. So 35% critical power. 50% of our sales relates to compute infrastructure with approximately half of that would typically be physical infrastructure. So racks, tap-off box, feeders, cable management, stuff like that. And half of that would be typically compute management. It's about monitoring PDU, rPDUs, KVM, consoles, transceivers and a few other products. So 35%, 50%. We have 5% of advanced cooling, which is rear door exchangers, containment, and now we have the ability to be more active on 2 phase direct to chip. And then we have 10% which is testing and life cycle services. That's where we have the power banks, have [indiscernible] power banks, but we also have installation, commissioning, monitoring, field services and so on and so forth. So you see we really have a complete set of products. So yes, we are a bit into medium voltage switchgear. We are already a bit into medium voltage transformers, but it goes down to rack components and even field services. I believe today, we have probably one of the most comprehensive range in the data center industry. And it is set to continue. We have a lot of ideas, both organically and inorganically to continue to build a strong catalog.

¶10Operator: Now we take our next question. And the question comes from the line of George Featherstone from Barclays.

¶11George Featherstone: Maybe I'll start with a follow-up because the color you just gave there was super interesting. And in the context maybe of the way the business will evolve to the 800-volt DC architecture. And perhaps you could give a little bit of color on what that means for you and how you're going to address this new technology in the future.

¶12Benoît Coquart: Well, thank you very much for asking this question because I sometimes feel that the analyst community is a bit lost with these new architectures, and it's the opportunity to maybe a bit fear. So what is basically 800-volt architecture. You have a concept, which is sort of grid-to-chip concept, which we call in the industry, the holy grail, which is still on the drawing board and won't be at scale before 2030, 2031, 2032. What is currently almost ready, if I may say, is a sort of is 800-volt architecture, but slightly different than this grid-to-chip. It is based on what we call a side car. So how does it work? Basically, you have a powertrain with AC components that feed a power side car, which is located in the white space. This power side car convert from AC to DC, then feed a number of racks, and that's where you have the compute components, the cooling and so on and so forth. So 3 characteristics: increased power density up to 500 or 600 kilowatt per rack, use of DC components in addition to AC in the electrical powertrain and a sort of decoupling of power and energy storage from the IT rack and those components are moved into a side car serving one or several racks. So this is the architecture, which is almost ready and possibly at scale in a few years. How will the architecture impact Legrand? We have made a number of analyses, and we think that it will have a neutral to negative impact on about 20% of Legrand sales and a neutral to positive impact on 80% of Legrand sales. So the negative impact typically could be on rack PDUs, for example. It could be on UPS because UPS is replaced by sort of battery storage within the side car. It could be on a few other components. And the positive impact, well, it's on the AC powertrain because you will need more power, more amperage. It could be on the physical compute infrastructure because you'll have a wider racks. It will be on cooling, of course. And especially, it will push 2-phase direct-to-chip cooling. You will have rear door cooling for residual cooling, including actually in the side car. It will be good for commissioning and for Avtron products because not only you will need to commission the electrical infrastructure. But on top of that, you need to commission heat rejection units, CDUs and so on and so forth. So to summarize the impact it could have on Legrand, it could imply for us the theoretical accessible market, let's say, would be between USD 3 million and USD 4 million per megawatt. Now this being said, I wouldn't like you to get too excited by the opportunity because it won't be at scale before '20 or you won't hit our P&L before, let's say, '28 or '29. And more importantly, this is one amongst many architecture. And you have to understand that we are in a world where you have tens and tens of different architecture. And what is important is not for a company like Legrand is to be architecture agnostic. In other words, to have the ability to work with all the hyperscalers, all -- every single co-locators so that our product launches stick to the architecture that they're going to launch rather than betting that the winning architecture will be X, X or Y. And I have the feeling that we have the right relationship with all of those guys. I mean we are working with Meta, the Google, the Oracle, the Microsoft, the [indiscernible] of the world and the QTS and the Equinix and so on and so forth. So in a nutshell, it should have quite a positive impact on Legrand, but not for now, within 2 or 3 years. And again, it will be one amongst many different architecture. Sorry, I've been a bit long, but I thought it was worth taking some time because those topics are complex topics, and we need to bring as much clarity as we can to the market.

¶13George Featherstone: That's very helpful. Maybe just another question on your guidance for data center growth this year. Previously, you've sort of benchmarked yourself to Vertiv and their growth is quite a bit above what you're saying that yours will be this year. Perhaps could you explain what the difference would be this year for you?

¶14Benoît Coquart: Well, I hope they are right. To make a long story short. But I mean, well, this year, we grew close to 40%, which is significantly higher than their growth, right? Because if my reading was correct, they grew 26%. So we did a fantastic performance. And actually, this plus -- close to plus 40% is probably significantly above the market growth. Well, if the market is not growing 10%, 12%, 14% next -- this year in 2026, but much more than that, then fine. Our objective, as we did last year, is to overperform the market. So if the market is growing 20% instead of growing 10%, all good for Legrand. There's no structural reason why Vertiv should grow faster than Legrand. In '26, we grew 40% against '26. And if you look at the past 2 years, the performance is also significant. So again, we are all different animals in this business. So comparing one with the other might not be the right way to do. What I can confirm is that again, we're going to experience a nice growth in 2026 in data centers. We have the right product offering. We have the ability, should we miss something, we have the ability to develop it organically or to buy it. And I think we have developed a great expertise in buying data center assets at reasonable prices. We have the right relationships with the customers. We've been able to scale our business by adding capacity whenever needed. So we are ready to capture any market growth that will come.

¶15Operator: The next question comes from the line of Phil Buller from JPMorgan.

¶16Philip Buller: Thank you for all of the data center disclosure. Just to try and extract one more data point, if I can. You mentioned $3 million to $4 million per megawatt in a higher density architecture, if I heard that correctly. What is the current megawatt in a current architecture, if you will?

¶17Benoît Coquart: Well, it's probably -- now it's between $2 million and $3 million, but probably closer to $3 million now than to $2 million, given the latest acquisitions we have made. So -- well, between $2 million and $3 million, but closer to $3 million.

¶18Philip Buller: Perfect. And then on the guidance, I understood that we are expecting flat volume in buildings. I think that, that makes sense as a planning assumption. Would you see any signs from the ground that there's an improving situation in end markets such as residential in Europe or U.S. office? Any kind of on-the-ground commentary on some of those key markets would be great, please.

¶19Benoît Coquart: Well, you're right to say that the world shouldn't be limited to data centers. It's worth also having a look at building. Well, we're a bit more optimistic for buildings, we're a bit more optimistic for Europe than for the U.S. Typically, for the U.S., we believe that -- and we have embedded into our guidance a slightly negative building market overall. We see no short-term positive signals on resi. But it's only 15% of our sales in the U.S. As far as non-resi is concerned, we also remain quite cautious and the statistics tend to show that the market should be slightly down. So overall, building in the U.S., slightly negative. Now bear in mind that in the U.S., 40% to 45% of our sales is now represented by data centers. So only slightly more than 50% is represented by building. As far as Europe is concerned, we have embedded something flat to slightly positive if you look at the various KPIs, as far as the resi is concerned, well, completions are moving from minus 9% in 2025 or should move from minus 9% in 2025 to plus 2% in '26. Permit should be slightly up by plus 4% in 2026. Renovation should be slightly up by plus 1%. So we start to see positive indicators that of course, we are late cycle. So those indicators do not immediately translate into Legrand sales, but those are rather positive signs that the market should get better. As far as non-resi is concerned, recent updates from experts also suggest some sort of recovery in 2026 with renovation remaining slightly positive and new build also. So in other words, negative building -- slightly negative building business in the U.S. and flat to slightly positive in Europe. As far as the rest of the world is concerned, what is quite a mixed situation. We don't expect a recovery in China yet on the building side. And Africa, Middle East and India should remain quite supportive.

¶20Philip Buller: That's great. There's no pocket of the business that you're concerned about being in a significant contraction territory.

¶21Benoît Coquart: No. I mean it depends what you call significant contraction. The risk is always a bit China because China has experienced a minus 50% decline in the residential business over the past 3 or 4 years. Now China, it's only 2% of our sales. So whatever happens to the resi market in China won't impact much Legrand numbers. So I don't see any reason why there would be contraction somewhere.

¶22Operator: And we'll proceed with our next question, just moment. And the question comes from the line of Gael de-Bray from Deutsche Bank.

¶23Gael de-Bray: Can I follow up on the 800-volt DC discussion? I wondered how you're addressing this potential shift from a technological standpoint, I mean, especially around the potential change from electromechanical circuit breakers to solid-state circuit breakers. And also still in relation to 800-volt DC, can I -- can you go a bit deeper into the breakdown you provided, I mean, especially around the revenue base you have in the rack PDU segment and what the impact could be on this part of the portfolio going forward?

¶24Benoît Coquart: Of course, again, Gael, there's a misunderstanding between what the 800-volt DC architecture, which is ready for deployment, which is the one with the side car and the sort of full DC holy grail type of architecture, which is not ready for deployment, won't be before 2030, 2031, if it is, and which is a full DC architecture. We are addressing both by 2 ways. Number one, by developing products whenever needed. So for example, we are developing OCP type of -- and we presented well actually 6 months back at the trade show of racks by working on DC busways and a number of other things. And number two, whenever we feel that we have a gap, then we fulfill the gap by partnering or buying companies. Good example being the 2-phase direct-to-chip liquid cooling investment we made in Accelsius, which is not only an investment, financial investments, but which is also a commercial and technological partnership that will give us the ability to sell a very interesting product offering to high-density data centers. So you have to keep in mind that Legrand is the only company in this business, which has built from scratch a product offering which is AI ready. Our competitors were either pure play of data centers ready or ready [indiscernible] and so on and so forth. When we started back in 2017, we were doing sales of EUR 300 million in data centers, of which a few PDUs and a few racks. But it was 9 years ago. Since then, we have built product offering almost from scratch by doing 30 acquisitions by developing organic products, which, again, is very suited to high-density data centers. So I don't have the best answer to tell you. We're going to keep developing products. We will keep working hard with the design teams of our customers to make sure that our products are suitable to their needs. We do a lot of ETO engineering to orders. And whenever needed, we'll partner, we'll invest in partners if needed or we'll buy companies, and it will make Legrand perfectly in good shape to tackle the challenges of the new architecture that are going to come. Now as far as PDUs, I cannot be more precise than I was. I don't want to give you sales by product families. I told you that everything which was related to compute management was about 25% of our sales. And within this 25% of data center sales, you have many things, including rPDUs, but not only rPDUs, you have also monitoring devices. You have keyboard video mouse, you have transceivers, you have the console business that we bought a couple of years back. That's it. And it's -- the PDU business is part of the 20% of our sales that should be negatively impacted by indeed 800-volt architecture. But again, you have many products or families of products that will be positively impacted, 80% of our sales. This is our estimate today.

¶25Gael de-Bray: That's great. Can I also ask about what happened in Q4? I think the outcome in terms of organic growth was certainly a bit higher than what you had anticipated yourself. So what surprised you on the upside? Was it just data center related? Or are you also already seeing residential demand in Europe taking higher here relative to the last time as well.

¶26Benoît Coquart: Yes, it's mostly data center again. Yes, the Q4 is optically better in Europe than the full year, but it also comes from data center actually. Don't forget that data center, it's not only a U.S. business, but it's also Europe and rest of the world. And actually, -- maybe data that I can share with you. I told you that we grew in data center close to 40%. This growth is close to 50% in the U.S. and it's about 20% plus in Europe and 20% in the rest of the world. So we are growing significantly everywhere in data center, even though the growth is stronger in the U.S. and elsewhere. Now to answer -- short answer to your question, we did not anticipate so much sales and actually so much orders in data center in Q4.

¶27Operator: The next question comes from the line of Max Yates from Morgan Stanley.

¶28Max Yates: Just my first question is around your pricing. And when you say that's based on your kind of current assumptions, could you give us a feel for kind of what those current assumptions are? Because obviously, it's difficult with kind of copper prices and silver prices. We know they're quite sort of big drivers of direct raw materials. So could you give us a feel of -- are you doing that with kind of $13,000, $14,000 copper in mind? Are you doing that with current steel prices? Or if we do see raw materials stay at current prices, will that number be quite a bit higher?

¶29Benoît Coquart: Well, Max, it's a fair question because -- but frankly speaking, we have so many different -- we are not dependent upon one single raw mat, copper, silver or something else. And bear in mind that the vast majority of our purchases are components. Out of the 35% of raw mats and components, it's about 10% raw mats and 25% components. So it's a mix of many, many things. So we do it with our purchasing team on a very professional manner. We look at experts, specialists. We embed, of course, productivity into that, and it leads to a central scenario. And based on this central scenario, we do the appropriate pricing. The end of the game would be to adapt. The best analogy I can give you is what we did last year for tariff, U.S. tariff. I remember when we did the same call a year ago, we told you that we have embedded only USD 30 million of tariff into our guidance. But I also told you that should there be more tariff we will do more pricing. And that's what happened. At the end of the year, we had USD 100 million of tariff to compensate for. It's actually the reality is that we had $140 million. We compensated $40 million by optimizing our supply chain, making sure that more products were eligible to the USMCA agreement and so on. And the remaining $100 million of tariff were compensated through pricing in value. So the same story with raw mats and components, we have a central scenario. We might be wrong, we may be right. If copper price was to go even up and then the steel and plastic, oil, components, labor and so on and so forth. And if we needed to do more pricing in order to deliver our profitability target, we will do more pricing. And I mean, we've been demonstrating over the years that we have the ability to do so.

¶30Max Yates: Okay. And just maybe a very quick follow-up on your North America growth rate of 7% in the quarter. I'm really trying or really struggling to understand that because you're sort of saying that data centers was better. If I look at your kind of full year data center number for the group, it feels like you did roughly 30% in the fourth quarter for the group. So U.S. must have been higher than that. You're now saying data centers is sort of 40% of your business in the U.S. I know it wasn't that last year, but your data center business should have been growing -- like that should have been a double-digit contributor to growth. So I'm trying to back out how we get back to 7%.

¶31Benoît Coquart: No, no. Actually, in Q4, our data center grew by about 10%. The reason -- so it seems to be slow. But bear in mind that we had a very, very strong Q4 2024. So as early as July '25, we told you that in H2, you would have an optical deceleration, but which was not a deceleration, which was purely coming from the basis for comparison. So this is the point. I mean, about plus 10% in Q4 on a plus 30% last year, I mean, the year before and full year close to plus 40%.

¶32Max Yates: Okay. So -- but then was your -- is your 40% data center growth this year, is that an organic number? Or is that a...

¶33Benoît Coquart: Yes, close to 40% is for the full year, it's an organic number.

¶34Max Yates: [indiscernible] in the fourth quarter.

¶35Benoît Coquart: Yes. But again, the basis for comparison makes the number a bit tricky because we had a very, very easy Q1 comp because of the great pause, which happened back in Q1 2024. And we had a very, very demanding Q4. Now be careful, don't extrapolate one way or the other, there's no such concept as an exit rate in data center, right? So don't extrapolate good Q4 or slow Q4 into 2026. I can confirm that the performance was great in the U.S. and elsewhere in Q4 that we have a lot of orders that are sustaining our guidance for 2026 and that we should see very exciting growth in data centers this year.

¶36Operator: The next question comes from the line of Kulwinder Rajpal from AlphaValue.

¶37Kulwinder Rajpal: So I also wanted to follow up a little bit on the data center side. So we have been discussing about the 800-volt system, but I wanted to actually dig a little bit into the PUE side of things. I mean I know the demand for standard offerings is high. But are you also seeing a traction for your PUE offerings because we know that Europe is already short on power -- to power all the data centers. And then is there a dedicated part of the portfolio that is dedicated to these high-efficiency offerings? And is there something that you can add through acquisitions also?

¶38Benoît Coquart: It's a good question. Indeed, we estimate that we have approximately 40% of our data center sales, which help or can be used to reduce the energy bill of a data center. And it's not only about compute monitoring. It's also, of course, about efficiency within the powertrain and amongst another -- a number of companies. So today, I think the average PUE on a worldwide basis is probably something like 1.5. We know that theoretically, it can go down -- I mean, the best PUE ever, I think, was recorded was 1.025, if I'm correct. So we have a lot of opportunities to help our customers cutting their PUE from 1.5, 1.6 down to 1.4, 1.3, 1.2 if needed. So it is clearly a very important driver behind our data center business, and it should continue to be. Now this being said, it is a fact that you have geographies where access to grid is a constraint. And we -- there are some countries where it can take up to 2, 3, 4 years for a data center to get connected to the grid. That's why you have to take with a certain cautiousness, the numbers, the CapEx numbers, which are disclosed by our customers because some of those CapEx will not be spent in 2026 or not even in 2027 just because they will need to get the access to the grid. So to make a long story short, I confirm that it is an industry challenge to get the energy. It may translate into some data centers being opened rather in '28 than in '26. But we are part of the solution, not of the problem because a large part of our product portfolio help cutting down the PUE.

¶39Kulwinder Rajpal: Right. And so just to follow up a little bit on this. So is there a specific treatment that you get in terms of pricing with the portfolio and also if it helps the profitability? I know that most of the products are centered around the group profitability, but I just wanted to understand if there is a specific advantage that you can get from this particular set of products.

¶40Benoît Coquart: No. I mean we -- I'm not aware of any significant pricing approach between data center and building. Of course, our products in data center are mission-critical. They are extremely important for our customers to deliver their performance, not only in terms of PUE, but also in terms of reliability, compute performance and so on and so forth. But at the same time, there are big customers are negotiating tough on price, and they want to make sure that they have good value for money. So we are not taking advantage of product shortage or the criticality of our products to do additional pricing. We are doing the same pricing. We are doing elsewhere.

¶41Operator: The next question comes from the line of Eric Lemarie from CIC CIB.

¶42Eric Lemarié: My first question on the construction cycle. You mentioned that Legrand is more late cycle, and it's certainly very true for the new build. But is it really the case for renovation? Because I suspect that if I need to renovate my house, I will probably start with some electrical equipment.

¶43Benoît Coquart: No, you are right, Eric. Indeed, for new, you have to -- it depends on the building, but it could be 6, 12 or 18 months lag between the time a permit is issued and the time we sell our products. For renovation, the shorter -- the cycles are a lot shorter even though it depends on the type of renovation. If it is renovating one room, it's almost immediate. If it is renovating a full house, then it takes a full -- a few months now. This being said, the renovation numbers for Europe in 2026 are not very bullish. According to, I think it's your construct. They plan for the residential renovation to be up 1%. So it's a very light increase, let's say. Again, we can have good surprises. We'll see. But so far, nobody expects the renovation market in Europe to rebound sharply. That's not what we have embedded in our guidance. We have embedded, as I said, flat to slightly positive building market in Europe.

¶44Eric Lemarié: And a follow-up on data center. You mentioned this close to 40% growth for the full year in 2025 and 10% for Q4. Could you remind us Q1, Q2, Q3, how was it the growth on an organic basis for data centers for Legrand?

¶45Benoît Coquart: Yes. So we said that it was well above 30% in Q1, well above 30% in H1. So I'll let you, Eric, do your own computation, above 30% in 9 months and 10% in Q4. And that everything was coming from the basis for comparison and that we have kept building a very nice order book over the year. And again, we have a very strong backlog and order book at the end of 2025, which give us full confidence in our ability to deliver our data center targets for '26. And maybe just a word because I want you to avoid a misunderstanding. So the close to plus 40% is really organic. If you were to put together FX and acquisitions, this close to plus 40% would become plus 50%. So the close to plus 40% is really purely like-for-like sales increase in data centers in 2025.

¶46Eric Lemarié: Okay. But the close -- well above 30% you mentioned for the 9 months, it was actually well above 40%, I suspect?

¶47Benoît Coquart: 40% is above 30%.

¶48Eric Lemarié: And just if I may...

¶49Benoît Coquart: I'm glad to give you more disclosure, Eric, but you should have the same level of disclosure to all companies. I have the feeling that we sometimes disclose a lot more than anybody else in data centers.

¶50Eric Lemarié: This is certainly true. And if I may, a last one on margin. Your guidance on margin, do you include in your margin guidance for 2026, some positive impact from acquisition or negative impact from acquisition?

¶51Benoît Coquart: Well, actually -- so first comment, when looking at our guidance, we start from a high base, which is a 2025 margin. And we basically include a bit of leverage, organic leverage, not a lot, I have to admit. But I have to say that we have given a clear priority to growth in 2026 and to sustain growth while you have inefficiencies, you have amortization, you have expenses to do. So a bit of leverage and a few 10 bps of dilution coming from acquisitions. It could be minus 10, it could be minus 20. Those are the order of magnitude. And all that leads to the 20.5% to 21% adjusted EBIT margin after acquisitions, which we have embedded into our guidance. And I'm sure that you have also noticed, Eric, that we have upgraded a bit our 2030 EBIT margin target because at the CMD, we said that we were looking for an average EBIT margin of about 20%. And now we make it clear that the average will be above 20%.

¶52Operator: The next question comes from the line of Martin Wilkie from Citi.

¶53Martin Wilkie: It's Martin from Citi. I don't want to labor the point too much, but just to come back to the data center growth in the fourth quarter, and I appreciate there are obviously some comp effects, both from the very high growth in Q4 and also because of some of the acquisition effects as well. Could you give us -- you've obviously given the EUR 2.4 billion in absolute terms for the year. But in euro terms for Q4, are we right in thinking that data center sales in euro terms were sort of close to EUR 700 million? Just so we can make sure we sort of square the circle in terms of how big data center was in the fourth quarter.

¶54Benoît Coquart: Well, actually, I don't have this level of granularity. And it's a bit complicated because you have to embed FX, which is strongly negative in Q4 because of the dollar versus euro. You have to embed acquisitions and -- so it's a bit complicated to say. But it seems like you are surprised by the plus 10% in Q4, which is far better than what we guided for back in November for the last. And again, you shouldn't look at the data center business as if it was a distributed business, right? One quarter is impacted by the comps by the project and so on. If your question is, is your target plus 10% in data center in 2026? The answer is no. Our guidance is 10% to 20%. But of course, we are targeting to grow as fast as possible. So I wouldn't read the plus 10% in Q4 as any indication of what it would be for 2026. What I can tell you, again, and this is confirmed by the publication of our peers, this is confirmed by the huge CapEx plan from hyperscalers where the CapEx is growing from 50% to 100% between '25 and '26. It is confirmed by industry experts. It is confirmed by the backlog we have. It is confirmed by the book which we have. 2026 is going to be another very good year in data centers.

¶55Martin Wilkie: We obviously see the strength of the orders. I think the debate or the confusion with the Q4 numbers is that the full year seems to be a lot better than people had expected. And therefore, we would have thought the Q4 growth rate would have been higher. But I'll go through the math afterwards. I know there's a lot of moving parts on acquisitions and foreign exchange and these kind of things. Perhaps if I could just have one follow-up on data center. Obviously, you started off the year with a lower guidance. When the surprise comes, is it literally sort of an overnight surprise to you? Just -- I mean, I know obviously, there's a difference between backlog and pipeline. But in terms of when you're having those conversations with your customers, what sort of pipeline visibility do you have?

¶56Benoît Coquart: Well, it's very complicated because, again, we are not as experts as others in reading the pipeline. But again, the connection between backlog and sales it's not that easy because orders are -- can be canceled, they can be moved. If we have to -- most of the contracts do have a pricing clause whereby you can adjust the price up or down depending on the price of raw material and components. The orders we have are usually not 3 years orders. We have an ability -- our lead times are typically 8, 10 or 12 weeks for most of our products. We have almost no products where you have a longer lead time or lead time as high as 8 months, 10 months or 12 months. So customers do not need to pass orders 1.5 years in advance. So most of the backlog we have will have to be delivered in 2026, not in '27 and '28. So it's not solid enough as a leading indicator to tell you precisely, yes, we intend to grow 18.5% in data centers in 2026 because the backlog would support that kind of growth. It's more a trend topic. And this trend topic, again, confirmed the very good '26. I cannot be more precise than that. So in other words, to make the long story short, number one, we shouldn't try to read too much from the backlog even though the numbers are very good. Number two, having a backlog of orders in hand is not a problem to pass on price increase if we needed to.

¶57Operator: Now we're going to take our next question and the question comes from the line of Alasdair Leslie from Bernstein.

¶58Alasdair Leslie: So a couple of follow-up ones on data centers, please. I mean, obviously, it sounds like you saw a similar surge in data center demand to your peers. I kind of -- I appreciate the comments about not overstating the importance of the backlog, but you obviously do talk about a promising order book there. Does that surge in Q4 demand, does that really give you a sort of fast start to 2026 as well? I was just wondering what the outlook for Q1 data center growth was. Obviously, just last year, reflecting on 2025, it can be a little bit lumpy from one quarter to another. So just to help us kind of calibrate expectations for the first quarter.

¶59Benoît Coquart: Well, we're not guiding on quarterly sales or profit, neither on data centers nor for the rest. And again, an exit rate doesn't mean much in the data center business. So no specific guidance to give you, Alasdair, for Q1. We stick to our yearly guidance.

¶60Alasdair Leslie: Okay. And then maybe just the second question was on capacity to meet higher demand in data centers. I mean we hear commentary, it sounds like constraints are creeping back in and on the rise again, obviously, because of the surge in demand. But one of your slides mentioned solid capacity to execute and adapt. I appreciate that's probably a broader level across the group. But -- and it feels like the ability to meet demand, short lead times, that's still very much a kind of competitive advantage right now in the industry. So just wondering if you could comment there in terms of how you assess yourselves relative to the competition on industry.

¶61Benoît Coquart: Yes. So far, the teams have done a very good job, I have to say. So we have doubled our capacity investment on data center in '24 compared to '23 and doubled again in '25 compared to '24, still remaining actually within the 3% to 3.5% CapEx to sales level. So we are not increasing the CapEx guidance. And we believe we will still do a good job. So yes, it's a challenge, and the teams are working hard to meet the demand. But this is a business which is not capital intensive. So you can increase capacity by working on your supply chain, by working with a subcontractor, by adding shifts. You don't have to spend millions and millions in CapEx. So it remains a challenge. We've been able to do a good job in the past 2 or 3 years, and I'm fully confident that it will not be a bottleneck for our business in '26.

¶62Operator: Now we'll proceed with our next question, and it comes from the line of Andre Kukhnin from UBS.

¶63Andre Kukhnin: Can I just clarify a couple of things first, and then I have one question. On -- and sorry to come back to 800-volt DC. But in terms of -- when you talked about AC powertrain being neutral to positive within the 80% of your business, do you see that as in dollars per megawatt or just in absolute terms, given there's going to be a lot more megawatts when we go to that architecture?

¶64Benoît Coquart: Well, it's also dollar per megawatt but again, I'm ready to have the discussion with your experts if you wish to. But yes, we see much more solid redundant with more intensity AC powertrain. So it should contribute to the higher -- slightly higher dollar per megawatt. And on top of that, you will have gigawatt data centers and not megawatt data centers. So for data centers as a whole, it's also a good news.

¶65Andre Kukhnin: Yes, we have no doubt in the growth in megawatts or gigawatts in absolute. It's just a couple of people we spoke to basically suggest that there's at least one stage of switching that disappears in the DC 800V architecture, and that's the AC switching. So I was just intrigued to hear that you see that...

¶66Benoît Coquart: So you have a bit more -- you have less UPS, which is true. But we are not -- we have a very small market share in UPS in data centers, I have to say. But again, it depends which DC architecture you're talking to. If it is the next grid to chip, then it's about DC and no longer AC. But again, this architecture is in the books today. And yes -- so in the architecture, which is currently considered for '28, '29 in some of the data centers, it's still an AC powertrain.

¶67Andre Kukhnin: Got it. And just related to that...

¶68Benoît Coquart: There's a focus on this new architecture, which again is a pretty good news for Legrand, not a bad news, which is too strong from the financial community. You are missing, I think, one point. which is the fact that, number one, many architectures will continue. And even if this one has a meaningful market share, this market share is going to be 10%, 12%, 15%, not 100%. And it will probably be made of different type of sub-architecture. So many architecture will coexist. If you take one hyperscaler, if you talk to one hyperscaler, I will tell you that over the past 10 or 12 years, they probably have 6, 7, 8 different architectures by hyperscaler. So in total, you have 10 different architecture coexisting. There's not one that's going to prevail in the years to come, number one. Number two, you consider a company such as Legrand as static animals, which do have a product portfolio, which we're not able to adapt and to adjust. Again, look at what Legrand did over the past 8 years. So if there's something new coming, in the architecture, if there's one piece missing that we don't have, we will develop it, we'll partner to get it or we will buy it by [indiscernible] company. It shouldn't be such a concern. So it's interesting to see that 1/4 of the questions on this call were on 800-volt DC. I think there's too much emphasis putting on that topic.

¶69Andre Kukhnin: Fair enough. I completely take it. I just -- on that kind of nonstatic animal, I guess that's what you're saying on the solid-state switching and braking that you do not have it right now, but you're confident you will develop it or be able to buy it.

¶70Benoît Coquart: Well, I don't want to be specific on one product family or the other. But again, if we feel that there's something that we absolutely need to have, we will have it. But most importantly, the current Legrand portfolio can address 99% of the needs for the next -- at least the next 5 years. That's a very important message that I want to channel to you. Now what will come in 6 or 7 years, it's a different story, but we will adapt. We will adapt. And if we are ready to tackle only 70% or 80% of the architecture that will come in 8 years, but we will do what it takes to address the remaining 20%, and that's it. But we have a product offering, which is suitable for 99% of the architecture that will come in the next 4, 5 years.

¶71Andre Kukhnin: Can I just ask on that change to the margin ambition for 2030 from around 20% to above 20%. I guess we learned on this call, above 30% can be 45%. So just wanted to understand whether that above 20% is an ambition to continuously improve margin from here? Or is it kind of, hey, the margin is above 20% now and we are kind of okay with it now?

¶72Benoît Coquart: No, we are not guiding more precisely than that because, of course, it depends on the acquisitions we're going to do. I mean, last year, our acquisitions were accretive, but they could very much be dilutive by 30, 40 bps. It depends on the growth rate and so on and so forth. So I don't want to shoot a number. If you look at the past 6 years, -- so '21 to '25, we've been consistently above 20%. And the average of the 5 years, if I'm correct, is 20.6%. I'm not saying that this is a new standard or new benchmark, but it means that it could be 20.2%, it could be 20.5%, it could be 21%. It will not be 35%, if this is your question. So no, we're not shooting a new target, just that it's going to be above 20%.

¶73Operator: The next question comes from the line of Ben Uglow from Oxcap Analytics.

¶74Benedict Uglow: I had a couple. I think a previous question assumed or sort of said you've had an order surge. Maybe I missed it in your opening remarks. But can you just give us a sense of your order development, obviously, in data centers in the fourth quarter? And the reason why we ask is your phasing and your time line in projects can be a little bit different from others. If I look at Eaton, Vertiv others that have reported, they've seen a kind of almost doubling of their orders between the third and fourth quarters and up by 200% plus year-over-year. I guess my question is, have you seen -- I don't want a specific number, but are you seeing exactly that kind of trend qualitatively? And when I think about the phasing of your growth in the current year, is it correct to assume that, that growth, whether it's 10% to 20% or 30% is back-end loaded? I guess what I'm thinking about is how quickly we see any orders come through in the next 6 months.

¶75Benoît Coquart: Ben, well, I'm a bit embarrassed because -- we have seen some order flowing, some backlog building, but I don't want to shoot a number because, again, I don't believe that it will help in any way to forecast what the 2026 sales is going to be. And actually, when we look at our competitors, I don't know, yes, ABB shot an increase in backlog, but they are guiding for growth in data center, which is in the teens. Vertiv, if I correct, is saying that you shouldn't extrapolate anymore the orders and that they will not give it anymore on quarter-by-quarter basis. So I think everybody is more in line to tell you, be careful. You cannot extrapolate an order inflow, a backlog or an order book into the next 12 months sales. Also more for Legrand, as again, we don't have the same order pattern as an ABB, Eaton, Schneider or Vertiv. We don't have orders, and we've never had in data centers orders above a year. 95% of our orders should be in even '26. So it's the very nature of our business, the fact that we have short lead time, maybe the products we are in, I don't know, maybe the geographies we are in, that makes it -- that makes me a bit uncomfortable to extrapolate the orders we have into sales. So I know you don't like the answer, but unfortunately, I cannot give a better answer than that.

¶76Benedict Uglow: No, understood. And by the way, I appreciate all the disclosure. It goes around and around in circles, but I think we're all trying to get to the same thing. The second kind of question is just around North America on the margin side putting 4Q to one side, it's a pretty healthy evolution year-over-year, but we do have -- still have moving parts in terms of raw material tariffs, et cetera. Is there any reason for us to think about the drop-through or the potential growth in North American margin, obviously, given your top line. Is there any reason to think about it differently this year than last year, i.e., that all else equal, we should be seeing some decent drop-through to your margin? Or are there any qualifying effects?

¶77Benoît Coquart: Well, I will let Franck to take this one. Go ahead, Franck.

¶78Franck Lemery: Yes. Ben. Well, as you noted, effectively, the margin on Q4 alone for North and South America is a little bit weak. There is absolutely nothing sustainable. There are many moving pieces in that margin with the mix of business with new acquisition with some one-timers. So what I would -- the way I'm reading the performance is more looking at H2 with the gross margin around 50%, with adjusted EBIT around 20%, which makes North and Central America very profitable. And on a year-on-year basis, the margin is improving a lot despite the tariff challenge that we already shared. And second, as you rightly said interestingly, it's the value, the year-on-year growth, 24% of improvement in value of the adjusted EBIT margin between '25 and '24, and that's in euros, it's close to 30%. So bottom line, a very good performance of our U.S. colleagues.

¶79Operator: Now we take our next question and the question comes from the line of William Mackie from Kepler Cheuvreux.

¶80William Mackie: I have 2 questions, one relating to the structure of your guidance. One, if I can harness your continued generosity on the data center discussion to talk about the definition of the business. So firstly, with data -- you've talked a lot about the profile of the business here and the growth rates. Could you just touch on the customer profile? We've seen a lot of growth across an announcements from hyperscalers, but there's a broad base of customers. So how is your customer footprint positioned between the large scale and the broader cloud providers and other providers? And how is the growth trends differing between the different DC type customers?

¶81Benoît Coquart: Yes. Well, we are a mix of customers that more or less replicate the market that the feeling we have. So it's probably -- it's not always easy to know them, but it's probably 1/3, a big 1/3 to half on the hyperscaler and then cloud 20%, 25% and then on-premise, maybe 25%, 30%. Those are the orders of magnitude. But if you take the market, there's no reason why our sales wouldn't replicate the market. Of course, the hyperscalers have been the one investing the most. So we are growing very nicely on hyperscalers. Now the growth is also very good on co-locators, either serving hyperscalers or retail co-locators. The one segment of the market, which is not growing at the same pace is clearly on-premise data centers, which have a much slower growth rate. But when it comes to cloud, new cloud, hyperscalers, [indiscernible] retail or, those are growing very nicely.

¶82William Mackie: And then maybe moving across to the segmentation detail that you provide annually on Slide 15. Could you talk a little about your expectations going forward for the growth rates across the energy transition category? We've talked about buildings, which largely fall for essential infrastructure.

¶83Benoît Coquart: Yes. Well, let's maybe a word on '25. So on '25, I told you that the data center grew close to 40%, which implies that the rest is slightly growing only. And out of the rest, you have energy transition growing a little bit more. You have digital lifestyle down with Connected Health growing, but Connected Home being down, and this is a result of the housing market in Europe. And essential infrastructure is basically flat. So plus for energy transition, flat for essential, slightly down for digital lifestyle. When it comes to 2026, it's difficult to be very precise because it will depend on the underlying markets. Now I see no reason why energy transition shouldn't do better than essential because it is boosted by structural trend. The fact that the world is electrifying and moving from fossil energies to electricity is a structural trend that is here to last. So it should do a bit better than essential, but by a few points, not by 10 or 15 points. This is our central scenario. A word -- I'm not sure it was completely clear on the press release, which is very interesting. When we buy companies related to the critical power into data centers, it's Linkk company we bought in Malaysia. It's Avtron in the U.S. it's Curtis Industries in the U.S. and it's a few others. Usually, they're not doing 100% of their sales in data center. They are doing 50%, 60%, 70% of their sales in data center and the rest of their sales is made in microgrids, in infra, in industries and so on and so forth. So it helps us building an energy transition footprint in verticals in which we were not. We already had critical power in education, commercial buildings, office buildings, but we did not have critical power into microgrid or industries. So it's a sort of side effect of our acquisitions in data centers, not only builds our position in data centers. But on top of that, it also reinforces and build our position in energy transition.

¶84William Mackie: Maybe a last final follow-up relating to prospects. We've talked broadly about Europe, but I think Rexel last night printed 3.3% growth in France. I know they win market share. What are your thoughts about some of the major European companies -- countries and particularly France?

¶85Benoît Coquart: For 2026, well, number one, we are not growing in France but we're not losing market share. And clearly, Rexel has been massively gaining market share in France for quite some time. So it's a tribute to the teams. For '26, we start to be somehow a bit more positive than we were on France. I'm sure you have heard about this [indiscernible], this housing plan, the so-called Bazooka plan, which the French authorities have stated that they intend to build 400,000 houses a year, which would be a surge compared to the current 270,000. Now we are a bit cautious because so far, it's an announcement. We don't know yet the specifics about this plan, how will it be financed? What will be the measures that will be implemented in order to support this plan. But at least, it signals a change of mood in France and the fact that now housing is considered again as a priority where it was not. So we are slightly more positive on the mood at least. We'll see about the numbers. When it comes to Germany, the Bazooka plan should start to have a bit of impact. Southern Europe has been pretty healthy. We did nice growth last year in Italy, for example. Spain is okay. So again, I don't want to sound too optimistic because we've been waiting for the rebound for 2 years, and it did not really happen yet. But again, the signals start to be a bit more positive. Now before starting to upload, we have to wait for the construction KPIs to flow into our numbers, which is not yet the case.

¶86Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Benoit Coquart, for any closing remarks.

¶87Benoît Coquart: Well, I just wanted to thank you for your interest in Legrand. Thank you for the clarity of your questions. And should you have more questions and not only on the 800-volt DC, do not hesitate to call the IR team. We'll be happy to answer. Thanks a lot.

¶88Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.

¶1Operator: Good morning. My name is Lucas Penner, and I will be your conference operator today. At this time, I would like to welcome everyone to Vertiv's Second Quarter 26 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Please note that this call is being recorded. I would now like to turn the program over to your host for today's conference call, Lynne Maxeiner, vice president Investor Relations.

¶2Lynne Maxeiner: Great. Thank you, Lucas. Good morning, and welcome to Vertiv's Second Quarter 26 Earnings Conference Call. Joining me today are Vertiv's Executive Chairman, David Cote Chief Executive Officer, Giordano Albertazzi and Chief Financial Officer, Craig Chamberlin. We have 1 hour for the call today, During the Q and A portion of the call, please be mindful of others in the queue and limit yourself to 1 And if you have a follow-up question, please rejoin the queue. Before we begin, I would like to point out that during the course of this call, we will make forward-looking statements regarding future events including the future financial and operating performance of Vertiv. Forward looking statements are subject to material risks and uncertainties, that could cause actual results to differ materially from those in the forward-looking statements. We refer you to the cautionary language included in today's earnings release and you can learn more about these risks in our annual and quarterly reports and other filings made with the SEC. Any forward-looking statements that we make today are based on a assumptions that we believe to be reasonable as of this date. Undertake no obligation to update these statements as a result of new information or future events. During this call, we will also present both GAAP and non GAAP financial measures, Our GAAP results and GAAP to non GAAP reconciliations can be found in our earnings press release and in the investor slide deck found on our website at investors.vertiv.com. With that, I will turn the call over to Executive Chairman, David Cote.

¶3David Cote: I am incredibly pleased by our second quarter performance and outlook for the rest of the year and beyond. We have a great position in a good industry and continue to execute very well. Gio and his team stay at the forefront of technology with organic investments and acquisitions. The industry outlook is incredibly good because the digital age has decades to go. Our outlook is incredibly good and deservedly so. As we provide the picks and shovels for the digital age. The seed planning Giordano and his team have been doing continues to pay off and will do so even more in the future as the benefits from our technology investments unfold over time. And with all that goodness, we still have opportunity to further improve. As Gio likes to say, we are still far from our full potential. The future is so bright we have to wear shades. I love it. With that, I now turn it over to Giordano Albertazzi.

¶4Giordano Albertazzi: Well, thank you, David, and, welcome, everyone. Let us go to slide 3. A strong quarter EPS, margin, profit and cash convincingly strong. Continuing on a trajectory of strong sales growth even with some timing elements. Pleased with what we see in July and full confidence in h 2 execution and backlog. As a result, we have raised our full year outlook Net sales were up 24% versus Q2 25 driven by continued strength in The Americas which grew 29%, and APAC also up 29%. Importantly, EMEA returned to positive net sales growth with a 2% year-on-year increase, On an organic basis, net sales grew 18% with additional 5% from acquisitions and 1% from favorable currency. Adjusted operating margin came in at 22.6%, exceeding our guidance and growing 410 basis points year-on-year. The strong margin performance translated into adjusted operating profit of $738 million up 51% from a year ago. Adjusted diluted EPS were $1.52 or 60% up from second quarter 25 driven primarily by high volume and continued operational productivity. Adjusted free cash flow came in at 925 million a very strong 234% year on year growth. Driven by higher operating profit and working capital efficiency. Free cash flow conversion exceeded 150% in the quarter. We are raising our full year guidance across all key metrics. Net sales raised to $14 billion, a $250 million increase from previous guidance, up 37% year-on-year. Adjusted diluted EPS now at $6.70. A 60% increase from 2025. AOP now expected almost 60% up year-on-year. And adjusted free cash flow expected at $2.5 billion and we achieved a net cash position at the end of Q2. Let's now move to slide 4. And let's start with the market environment. On the left. Our global pipeline momentum remains very strong. And we expect another year of robust orders growth. Demand signals are clear and broad based. Regionally, let's start with The Americas where market continues to be strong. Pipeline is actually accelerating. Corroborating the long term growth trajectory of our business. EMEA's momentum is further strengthening. This reinforces our confidence in the acceleration for the second half of the year. APAC showed broad based strength pipeline expansion and favorable market conditions. This supports continued growth across the region. Pricing continues to be favorable We expect positive price cost in 2026, including the current impact of tariffs and countermeasures. Now to the right side of this slide, Q2 revenue showed strong growth year-on-year, quarter-to-quarter. We are executing on further acceleration in Q3 and Q4, on strong backlog. Additional capacity is online globally. Examples are Johor in Malaysia, 5 large plants expansions in The Americas, chiller capacity increases in EMEA, and then more. During investor day, you saw that this expansion is rapid and broad based. At speed but always in a very disciplined fashion. We are delivering data center infrastructure solution at an increasing scale and level of complexity, that is exactly where we want to be. We experienced some minor timing shifts in Q2 revenue, primarily driven by multiphase project execution and temporary supply chain dynamics. But the demand is there and the trajectory is strong. Keep in mind, there are increasingly large projects underway, Think Smartron and think even bigger with 1 core. These come with significant interdependencies, a lot of coordination, a lot of rapid learning, I like the pace of our progress. And we get stronger every day. On capital expenditures, we now expect to be at the high end of our range 4% of 2026 sales, As we further expand the global capabilities and capacity going into 2027. We continue to invest for the long term, in a disciplined manner in future power architecture, advanced thermal systems, services, converged infrastructure. These are the building blocks that enable the next-generation AI data centers and factories and we intend to continue to lead the industry. Let's now go to slide 5. I am sure many of you will recall our CTO Scott Armul's power architecture presentation at our Investor Day in May. I want to reiterate and build on what, we shared there. Multiple partner architectures will coexist in the future. Virtu supports each 1 of them through a complete orchestrated powertrain. On the left side of the slide, you see the different architectures. Our AC foundation with as an example, Vertiv Trinergy and energy Core battery storage system and the rest of the Vertiv powertrain, of course. This architecture is broadly deployed, growing, and will continue to be used by many categories of customers. The next architecture serving even higher density has a medium voltage AC source that feeds low voltage AC to deliver 800V DC at rack and port level. Here you see new VERTIV technologies like medium voltage pass UPS, and Vertiv 800 volt DC sidecars. This is under customer validation in 2026 with deployment planned in 2027. Then the 800V DC architecture at data hall level. Here, Vertiv solutions will include MV DC UPS and solid state transformer. To cover the multiple ways to address the end to end powertrain. Where active in the development with plan 2027 customer validation supporting 2028 deployment. As stated, rather than transitioning to a single architecture, the market is expected to leverage both AC and DC solutions as power requirements continue to evolve for years to come. Now the right side of the slide. This is an example of deploying multiple power architectures at sites, sites evolve and expand. I am thrilled to highlight our collaboration with NVIDIA and VisionBay AI. Foxconn's business unit focused on AI supercomputing. At their site in Kaohsiang, Taiwan. For the initial phase, of this site, VisionBay AI awarded the power thermal and services business to Vertiv for what is Taiwan's first AI data center featuring NVIDIA GB 300. On top of this, we are collaborating for the world's first AI data center adopting 800V DC, well, DC architectures at the rack and pod level featuring NVIDIA 'Vera Rubin'. This is an example of early customer validation of our roadmap and supports the broad power architecture evolution. This is real. This has happened. In a nutshell, as a number of viable power architectures expand and AC and DC coexist to deliver on the 800V DC, Vertiv's content opportunity per megawatt expands. And we are leading this transition. Let us now go to page 6. And let's continue on the topic of technology. I want to spend a moment talking about Vertiv's data center cooling architectures and our unique fluid management services. When the 2 are coupled and combined, we ensure our customers to use nearly zero water. As they scale, many customers have been and are adopting closed loop cooling architectures. As they optimize power and water use. A closed loop cooling architecture is just that. Closed or sealed with water recirculating. Typically, it does not require additional water after the fill at start up. Vertiv's end to end thermal chain technologies for both the primary and secondary cooling loops Examples are Vertiv Liebert Trim Cooler, Vertiv Liebert CoolChip CDUs, to name a few, fully enable this approach. This architecture enables a data center to run on no water consumption. Now let's take the focus on water use a step further. Let's also address the initial system fill. And this is where PurgeRite's near-zero comes into the equation. As part of our unique fluid management technology and services, our PerchRite near zero utilizes a closed loop recirculation system to capture, treat, and reuse water during start up. This reduces the water normally used in the process by up to 90% during the startup of a data center. For our customers, this means a faster and more cost effective deployment and commissioning of liquid cooling system and chilled water circuits. This means a significantly less waste and less disruption on-site. More broadly, this expands vertex differentiation thermal management services, and we are managing fluid performance from the start and throughout decades of operational life. PurgeRite near-zero is scaling through our existing service network a capability we believe no 1 else can replicate at our scale. And with that, over to you, Craig Chamberlin.

¶5Craig Chamberlin: Thanks, Giordano. Turn to slide 7. Let's walk through our second quarter financial results in more detail. On adjusted diluted EPS, we delivered $1.52 that is up $0.57 or 60% versus prior year. And $0.12 above guidance. The year over year improvement was driven by $0.58 from higher adjusted after tax adjusted operating profit which was driven primarily from higher sales volume and increased profitability. Looking at net sales, we delivered $3.274 billion in the quarter, that is up $636 million or 24% versus prior year. Organic sales growth was 18%, with 5% additional growth contribution from acquisitions and an additional 1% growth contribution from favorable foreign exchange. By regions, Americas grew 21% organically APAC grew 26% organically, and EMEA was down 2% organically. Moving to adjusted operating profit. We delivered $738 million that is up $249 million or 51% versus prior year, and $28 million above the midpoint of our guidance. Adjusted operating margin of 22.6% expanded 410 basis points year-over-year and came in 140 basis points above guidance. The margin expansion was driven by strong operational execution, continued productivity gains, and favorable price cost execution, partially offset by tariff impacts. We are also continuing to invest in capacity and engineering R&D to support future business growth. To round out the quarter, adjusted free cash flow momentum was outstanding. With the quarter ending at $925 million $648 million or 234% from prior year. The improvement was driven by higher adjusted operating profit, strong working capital performance, including project milestone collections, is inclusive of initial advanced payments, and lower cash interest. These items were partially offset by higher cash taxes and higher spending on CapEx investments. At our quarter end, our net leverage is at negative 0.1x, providing even more flexibility. Just a quick note on our deferred revenue. You will see an increase in the quarter, and that is driven by project advanced payments and ongoing milestone collection. We are very happy with our execution on project milestone development, and what you are seeing in deferred revenue is a combination of payments at project initiation, order placement, and ongoing project milestone execution. Moving to slide 8, let's look at segment performance. In Americas, net sales were $2.071 billion up 29% with organic growth of 21%. Organic sales growth remained strong in the quarter. As Gio mentioned earlier, some minor timing shifts in Q2 revenue. These shifts were reflected in The Americas revenue numbers and were primarily driven by multiphase project execution and temporary supply chain congestion. However, we expect the associated timing delay to resolve in the second half of 2026. Adjusted operating profit was $571 million driving 360 basis points in adjusted operating margin percentage. The margin expansion was delivered by ongoing commercial excellence and strong operational execution. Moving to APAC, the region had strong results. With net sales of $720 million up 29% with organic growth of 26%. We continue to see strong end market demand and the commercial execution across the team gives us confidence going forward. Adjusted operating margin percentage grew 270 basis points in the quarter, due to strong operating leverage realized in the region. In EMEA, net sales were $484 million up 2%, with organic sales down 2%. We continue to see a strengthening market, which supports our position for the region to return to organic sales growth in the second half of 2026. EMEA also saw strong growth in adjusted operating margin percent, up 380 basis points year-on-year. The team continues to drive improved operational execution, which came through in this strong margin performance. Turning to slide 9. Let's walk through our third-quarter 2026 guidance. For 3Q, we are projecting adjusted diluted EPS of $1.80 at the midpoint that represents 45% growth versus prior year. That year over year improvement is driven by continued volume growth and ongoing margin expansion. On net sales, we expect $3.75 billion at the midpoint that is up $1.074 billion or 40% versus prior year. Organic sales growth is expected to be up approximately 35% with an additional 5% from acquisitions. By region, we expect Americas organic growth in the high 30s APAC in the high 30s, and EMEA in the mid- to high teens. Adjusted operating profit is expected to be $918 million at the midpoint, that is up $322 million or 54% versus prior year. Adjusted operating margin is expected to be 24.5% at the midpoint, that is up 220 basis points year-over-year and is driven by strong organic sales growth continued operational leverage, and ongoing productivity realization. Let's turn to slide 10. For our updated full-year 2026 guidance. We are raising our outlook across all key metrics. Starting with adjusted diluted EPS, we now expect $6.70 at the midpoint, that is up $2.50 or 60% versus 2025. The updated range is now at $6.65 to $6.75. This is an increase of $0.35 at the midpoint versus prior guidance. The year over year improvement is driven by continued volume growth and ongoing margin expansion. For net sales, we now expect $14 billion at the midpoint. that is up $3.77 billion or 37% versus 2025. This represents an increase of $250 million versus our prior guidance. Organic sales growth is expected to be at 31%, with 5% growth from acquisitions and 1% growth from favorable currency. By region, we expect Americas organic growth in the high thirties, APAC in the low 30s, and EMEA in the low single digits. Moving to adjusted operating profit, we now expect $3.325 billion at the midpoint, that is up approximately $1.235 billion or 59% versus 2025. This is an increase of $125 million versus our prior guidance. Adjusted operating margin is expected to be 23.8% at the midpoint, expanding approximately 340 basis points from 2025 and up 50 basis points versus our prior guidance. The margin expansion is driven by continued operational leverage and positive price cost execution which is offsetting some tariff headwinds. Finally, adjusted free cash flow is expected to be $2.5 billion at the midpoint. that is up $1.613 billion or 182% versus 2025. The year over year improvement is driven by higher adjusted operating profit and lower cash interest, partially offset by higher cash taxes and higher investments in CapEx. Capital expenditures. We are delivering strong results. Raising our outlooks, and executing with discipline. Based on our performance and momentum, we are very confident in our ability to continue driving results throughout the balance of the With that, I will send it back to you, Giordano Albertazzi.

¶6Giordano Albertazzi: Well, thank you. Thank you, thank you, Craig, let's go to slide 11. To wrap up. Strong Q2 performance. We are delivering and the team continues to raise the bar on what is possible. We raised our full year 2026 guidance across all key metrics. The momentum is strong. it is broad based and it is accelerating. We continue to invest with discipline. Not just for the 45% growth we are expecting in the second half, but for the years beyond. Capacity innovation services. On m and a, we closed the Thermo King acquisition strengthening our heat-rejection capabilities. We closed the acquisition of Thermal-Lube in April, we are adding server-side liquid cooling and cold plate expertise for high density thermal management. Together, these 2 are positions expand what we offer across the full thermal spectrum. From heat rejection to direct-to-chip cooling. Allow me 2 additional spotlights. At the naval Postgraduate School in partnership with NVIDIA, we delivered a fully engineered packaged rack, power, and cooling system into an existing on prem facility. This includes liquid cooling integration, commissioning, and deployment and deployment support. This is a repeatable at scale reference architecture for NVIDIA GB 300, we call this Vertiv smart IT solution. The project establish an advanced locally operated AI environment for education, research, engineering, modeling, and simulation. This also shows how an existing facility can rapidly be transformed to support next-generation accelerated computing. Easy for enterprise and sovereign customers to adopt. In EMEA, Germany, our collaboration with Dataforce is a great example of the momentum we are seeing in that region. Vertiv delivers a complete powertrain, including switchgear, UPS, and battery systems, etcetera, and a thermal chain like chilled-water units, free cooling chillers, and our industry leading services it all will enable Dataforce's new Frankfurt site. Is exactly the kind of optimized end to end system deployment where Vertiv excels. To conclude, I am more confident in our trajectory today than I have ever been. We are executing, we are investing ahead of the curve, and increasingly, our customers are asking us to help them architect their most complex infrastructures. that is the role we have earned. And it is the role we intend to further strengthen. With that, let's go to the Q&A.

¶7Operator: We will now begin the question and answer session. In order to ask a question, press star, then the number 1 on your telephone keypad. In the interest of time, please limit yourself to 1 question. And if you have a follow-up question, please rejoin the queue. We will pause for just a moment to compile the Q&A. The first question comes from the line of Scott Davis from Melius Research. Scott, please go ahead. A reminder to unmute locally.

¶8Scott Davis: Oh, yes. Thanks for the reminder, operator. I have not figured out my phone yet. it is anyway, sorry, guys, and good morning. Still good morning. Look. I just wanna address a little bit of the issue that may be hurting you a little bit today with the timing shifts in Q2 revenues, the supply chain congestion comment. What can you give us a little bit more detail on that? And more explicitly, is this something I mean, complexity is something that I would imagine is gonna just do nothing but increase over the next 5 years and perhaps forever. Is this potentially gonna be an ongoing issue not just a 1-off? And if so,, how do you how do you mitigate or kinda manage through it so that it really does not disrupt quarters the way that perhaps it can?

¶9Giordano Albertazzi: Well, thanks, Scott, for the question and you are right. Complexity is increasing Some of the projects are not only bigger but multidimensional. There could be a lot of supply chain interdependencies. And this supply chain is necessarily an external supply chain. It can be very often an internal, within-Vertiv supply chain. Now clearly, like everything, and like we have done so far, there is a learning curve. I am pleased with the speed at which we are progressing in this learning curve. And this learning curve is a learning curve of the execution. On this complexity. So I am pretty I am pretty confident about, our direction of travel. And, and, again, these are the first very large projects with this level of, of complexity. And, and we are, more and more equipped for this, just from a technology standpoint, but from a logistics and operations in general. When it comes to the part of your question, so what could be the, there an ongoing impact on the future? Well, certainly, as I said, there is a learning curve that we are progressing on, at speed. But there is also the fact that we are prudent. Anyway in our, second half guidance. This is true in general also for the for the future. So, if you think about our h 2 guidance, we are not assuming all stars align. We have a wiggle room for, this progress on the learning curve not to be perfect. Though of course, speed and perfection is, is our goal.

¶10Scott Davis: Okay. Fair point. And then just a quick 1. Would is there a price where you would start buying back stock a little bit more aggressively just given the pullback we are seeing in the entire complex right now?

¶11Craig Chamberlin: I mean, I think we always look at it opportunistically, Scott, and that is the thing that we have talked about even at Investor Day. Again, you know, given today, it is a good time to look at it, but I think it is always something that we evaluate and take a you know, what do we consider our capital deployment, and it is 1 of the areas we look at.

¶12Scott Davis: So Fair enough. Wish you all the best, guys. Good luck, and I will pass it on.

¶13Operator: The next question comes from the line of Jeffrey Sprague. With Vertical Research. Jeffrey, please go ahead.

¶14Jeffrey Sprague: Hey. Thanks. Good morning. Hey, Giordano. Just on the comment that the pipeline is actually accelerating, I assume that is sort of all hyperscale, but can you give a little bit more context on sort of the nature of the acceleration? Is it is it is it scope to burden? Is it kind of additional customers? Is it existing customers? Looking to do more quickly? And it seems to support the comment you are making about robust orders for the year, but just love a little bit more color there if you could.

¶15Giordano Albertazzi: And, let's start from the end. Yes. Let's start from, from the end. Yes. Of course, it is this is support certainly supporting our comments about the about orders. When I talk about pipeline, always like to talk about magnitude of the pipeline, if you will, and the speed of the pipeline. If I talk about the speed of the pipeline, we talk about acceleration. It means that the sales cycle within the within the pipeline can be faster or slower. So we noticed an acceleration. So it is becoming faster sales cycle. But at the same time, just to be extremely clear, the strength is also in sheer size of the pipeline in terms of a quarter to quarter, year-on-year, year-on-year growth, and this is broad-based. it is pretty much across the world, but also it is broad based across the various customer categories. So certainly, the whole range of hyperscalers. It is true for enterprise. it is certainly true for colo, neocloud. So pretty, pretty broad based.

¶16Craig Chamberlin: And just to add on to that, Jeffrey, I would also just say, again, as hyperscalers and colos hyperscalers are sometimes deploying through colos. So to look at it that way, you might get a little bit of a mix there. So just to ensure going back to what Giordano said, we are seeing it, it, again, across regions, across products, and that is the way we really look at it, but that is the way we would view our pipeline. And see it, accelerating in all those spaces.

¶17Jeffrey Sprague: And just a quick 1 if I could. Do you have a solid state transformer solution at scale at this point? Where do you stand on that product's evolution?

¶18Giordano Albertazzi: Just like, 1 of the slides was describing, the solid state is currently a matter of project development for us. it is in project development phase. Thank you. Yep. Thanks.

¶19Operator: Your next question comes from Amit Daryanani with Evercore. Amit, please go ahead.

¶20Amit Daryanani: Yep. Good afternoon, everyone. Thanks for taking my question. I guess, Giordano, if you just go back to the supply chain issues delays, can you just talk about how much revenues actually pushed out due to these challenges you had in the quarter? I think you missed the Street numbers by $100 million but I am actually wondering if the supply issues were perhaps much larger than that from a dollar perspective. And maybe just on the same lines, can you just talk about, you know, was it a Vertiv specific issue or something at the customer side that led to this impact? And then how do you see this flowing back into the model into the back half? Thank you.

¶21Giordano Albertazzi: So good afternoon. First of all, is it is it customer, or is it is it veritiv? On the customer side, pretty much we see the same dynamics that we have seen historically. So no big, no big differences. When it comes to the Vertiv side and the exact amount, well, that will not be too specific. But the majority of what we are seeing is really coming from, those dynamics that I have described, during, while I was going through my opening remarks, but also the conversation with Scott. That is pretty much the dynamics that we see Is it on the supply chain? You know, the supply chain is, is always a matter of, of working the sequence of things. Is nothing different than what we have experienced, historically. And we are pleased with how we are strengthening our the resilience of our business in general.

¶22Craig Chamberlin: And, Amit, I would just add that just to clarify, we are talking about the large project deployments and the learning curve around that, which has confounding effects from both the external supply chain, and our own internal supply chain. So there are some, I would say, gray areas in there when, you know, we typically can recover from a late part and our and our smaller supply chains. When it becomes a larger supply chain, it becomes more confounding. So, again, not to define that specifically, but that is the areas where we are seeing it, and they are large project deployments. And we are learning and understanding what that takes to go forward and how to iron those out. And then also, again, as we talked about thinking of not always that being perfect in the second half as we look into guidance.

¶23Operator: The next question comes from the line of Deane Dray with RBC Capital Markets. Deane, please go ahead.

¶24Deane Dray: Thank you. Good morning, everyone. I will keep it to 1 question. Really good performance on free cash flow conversion this quarter. But for Craig, I would be interested in hearing was there any contribution from customer deposits on orders I know that is something you all have been looking at. And Dave Cote knows from his aerospace and defense days that is pretty standard. To require deposits on larger orders. So any contribution there?

¶25Craig Chamberlin: Yeah, Deane. And, again, I wanna congratulate you; I know you are retiring in September. So congratulations. A great career. Fantastic career. But to your question, yeah, if you look at the face of the balance sheet, and the face of the balance sheet, you will see that our deferred revenue did go up. And our deferred revenue is a read through in terms of those advanced deposits on orders, but it is also ongoing deposits as we go through the milestones of delivering those larger projects. So it is a combination of both. But that is driving the working capital and the great cash performance when you look at it across the entire balance sheet. So definitely an indicator of strong commercial performance on both sides.

¶26Deane Dray: Great. Thank you for those kind words, and I appreciate all the support from the team and wish you all continued success. Thanks. Thank you.

¶27Operator: The next question comes from Nigel Coe with Wolfe Research. Nigel, please go ahead.

¶28Nigel Coe: Thanks. Good morning, everyone. Just wanna pick up on that topic. I think this is the first time maybe I am wrong, but the first time I have heard progress collections you know, kind of staged payments. Maybe just touch on that. I know your assortment is changing with, you know, OneCore and Smartron. So maybe just talk about that. You know, what kind of percentage of revenues that we are talking about now that actually have progress collections? And then just it is not a second question, by the way. it is more of a kind of add-on to the first 1. The balance sheet numbers moved quite a lot this quarter. So, I mean, the Thermo Key acquisition seemed quite small, but did it come with quite a big balance sheet? Thanks.

¶29Operator: Thermo King did not come with a large balance sheet, so I will answer that 1 first, and then we can go a little bit I will double click on as we go further into the your question, Nigel.

¶30Craig Chamberlin: But in terms of the actual progress collections, yeah, there is a portion that we get up front, and there is a portion as we deliver milestones. And a lot of that is related to delivering products to the end project. And so that is how you would start phasing it in. And sometimes you get those a couple, like a month before you deliver projects. Sometimes you get those at the end of design. So they are all phased in different ways. So we would get a portion upfront. We would get a portion at the delivery milestones that we set forth. Always, in our view, staying ahead of the curve in terms of a cash position in that project. So some of it is going to be related to deliveries where you would see revenue incurred Some of it might be delivered on terms of a design point, which should be a secondary milestone before revenue occurs. And, again, they are all a little different in how we look through them, all the goal being staying ahead of the cash curve and being cash positive on that. On the other phases of the balance sheet, you mentioned lots of movement. We do have a significant ramp in the second half, so you would see some inventory come on. And as that comes on, you will see AP come on as well. And we did have a good quarter in terms of sales. So that is where our AR is going up as well. So all of this is a reflection of the volume you are seeing. ThermoKey had little impact to that. Alright. Thank you.

¶31Operator: The next question comes from Andrew Kaplowitz with Citigroup. Andrew, please go ahead.

¶32Andrew Kaplowitz: Morning, everyone. Good day to you, Andrew. Good morning So, Gio, you updated us again regarding the evolution toward 800V DC potentially in the start. To impact Vertiv in 2027. And I know you commented on an SST and product development to Jeffrey. But when you step back, how confident are you that Vertiv's content per megawatt could go up as 800 VDC technologies adopted, as I think you reiterated today? And would you surmise that Vertiv's 800-volt DC offering could be toward the higher end of that 3.25 million to 3.75 million per megawatt range you gave us at the Analyst Day.

¶33Giordano Albertazzi: Yeah. We are pretty convinced about that. And we are also when we look at all the elements of the powertrain, in the various architectures, And, and when we think what happens inside the white space, in the gray space, we see value there for Vertiv and an expansion of revenue per TAM per megawatt. So not differently from our conversations or what we shared at Investor Day. it is 2 months ago. We continue to go through that math, and that math is corroborated by, of course, all the progress that we are doing on the on the product development, but also on the on the activity that we are we are conducting with customers. So we would need to go element by element in that in that chain. But, again, think about the entire, powertrain, all the elements, vis a vis what we have today, and see that with that, density, with that complexity, our content is impacted favorably. You too.

¶34Operator: The next question comes from Andrew Obin with Bank of America. Andrew, please go ahead.

¶35Andrew Obin: Yes. Good morning. Good morning, Andrew. Just maybe another question on this deferred revenue So, you know, we have been getting lots of questions on this topic. it is a large number, but I guess what folks are trying to figure out, and I know of some people have been asking a similar question: Has the structure of your deferred revenue sort of change materially from what it was like. I am not asking I know that it fluctuates quarter to quarter. I totally get that. But has the structure of what goes into deferred revenue changed materially or still, if we look at deferred revenue over the past several quarters, it is apples to apples.

¶36Craig Chamberlin: it is apples-to-apples, Andrew. No. What you might be feeling a little bit differently is, as we talked about back in fourth quarter, we had a large order influx on the Infer Solutions business where I would say a lot of these milestones are set up in the project based world as opposed to the point, you know, product based world. So the project based world might have more milestones before delivery of revenue, So you would get 1 at the input of the order and then 1 along the way as a design and 1 that you potentially as you start to deliver products. So you have different levels of milestones on those projects versus a point product. And we know that the project basis that we have talked about a lot,, those larger ones, OneCore Smartron, runs, We had a large order intake in the fourth quarter of last year that we spoke to. And that would be some of the stuff that you might be seeing in the deferred revenue as it comes through throughout the year. And then, again, it is tied to our regular down payments as well. But no structural change in the way that we would recognize deferred revenue. Thank you.

¶37Operator: The next question comes from Christopher Snyder with Morgan Stanley. Christopher, go ahead.

¶38Christopher Snyder: Thank you. I wanted to follow up on the conversation around the production disruption and some of the supply chain impact. I guess, you guys are obviously guiding to a pretty significant organic ramp here into the back half relative to what we saw in the first half. So I guess, anything that you could provide around confidence that you are seeing that these disruptions are getting better getting better? Like, I would imagine that as the quarter went on, the monthlies got better. I think you said July was off to a start that presumably supports this ramp. So I guess has it gotten better? Any just kind of color on that monthly cadence? To give us more confidence in the back half? Thank you.

¶39Giordano Albertazzi: Thank you. I would not use the word disruption. Yeah. I think we have to I want to be clear about when we talk about complexity into the interdependencies. As I said, very, very often, in these large projects, you will see multiple Vertiv factories feeding others, besides, of course, external suppliers feeding those factories. Well. So it is really a complexity. So there is an operational aspect to your question, that is, we are getting stronger in the operational execution of that complexity. So the complexity does not go away, but the our ability to handle that complexity is accelerating very, very strongly, and that is what enhanced my comments. But, again, I would not I would not talk in terms of disruption.

¶40Craig Chamberlin: Agree. I think on your second point of why do we feel comfortable about the second half, as Giordano said, know, it is a learning curve when you have these large projects, and you do have congestion in your supply chain, which, again, some of that stuff's normal on point products, which is easier to iron out as you have a learning project for larger project. it takes a little bit more time to get smoothed out and understand. We are seeing good signs of it being able to ratchet up on that learning curve. And as we think about the second half, we have also assumed some of that congestion continues as we normally would. But on these projects, it might be a little bit further of congestion that we would have assumed than normal. So all in all, exactly. So all in all, we believe that we are prudent in our second half and very well supported by the platform. Thank you.

¶41Operator: The next question comes from Nicole DeBlaseBlase with Deutsche Bank. Nicole, please go ahead.

¶42Nicole DeBlase: Yeah. Thanks, and good morning, guys. I am sorry to beat a dead horse, but I am going to. With respect to the second half ramp, there is still, you know, a lot of questions about what is specifically is embedded and what is not. Maybe a way to frame it I will try this. Like, how much of the second half ramp is based upon this improvement in learning curve and maybe unlocking some of the revenue that was pushed out of 2Q versus just the overall capacity ramp that you guys are doing at the same time just so that we can try to get more comfortable with the step up in revenues that are embedded in the second half and how much visibility you have into that.

¶43Giordano Albertazzi: Yeah. Thank you. Thank you, Nicole. When we talk about unlocking revenue, let's just be clear that you know, the revenues that were let's say, little bit locked in some elements on the second quarter are being delivered, deployed in the second half. And we feel extremely well about that. When it comes to some elements of congestion, elements of congestion, as Craig mentioned, we are prudent in our guidance, though we believe that there will be and we see, we are seeing a strong acceleration and improvement from an operational standpoint. We are still remain prudent in our guidance. There is capacity that is being released, and that is a big element, of course, of, also the backlog conversion. So look at it as 3 levels. The operational acceleration in the complex projects, the capacity coming available. That has been coming available in the in the second quarter, but even more so in the second half, a very strong backlog coverage. And over and above that, wrap it up with, anyway, a guidance that is not an all-stars-aligned type of guidance.

¶44Operator: The next question comes from Amit Mehrotra with UBS. Amit, please go ahead.

¶45Amit Mehrotra: Thanks, operator. Jio, I just I would be curious to compare and contrast some of the challenges you are having today to the challenges you had really at this time last year, And you know, you got back on track. Pretty quickly from an operational. But at that time, it was not a revenue issue. It was more of a margin issue and an operational issue. And I know at heart, you are an operational guy. So just maybe compare and contrast that and are there multiple points of just wanna maybe explain the complexity within the complexity. What I mean by that is that are there multiple points of challenges, or is there a sort of 1 main challenge that is sort of cascading across the supply chain That little bit of color there would be helpful.

¶46Giordano Albertazzi: Yeah. Thank you. Thank you, Amit. And I really appreciate that you draw that parallel to exactly a year ago. It was a different nature. At that stage, it was Ireland and some executional challenges on the on the busbar switchgear that we have amply recouped as you were saying. But I think this highlights the fact that in a business that is moving at this speed, that is growing at this speed with the number, let's say, of technology, with the technology speed sorry. The speed of technology evolution, that we are experiencing and indeed driving, there is a lot of complexity. To you know, to manage. And so in many respect, the parallel is similar. You were talking about well, that was a margin; this is a revenue. Anyway, it is operational execution. that we are concentrating on right now. So it may be different in the type of product line, if you will, it is not different in terms of the type of focus and the type of, let's say, recipe that we applied. And, again, it is a matter of, really continuing to mature operationally as the market's portfolio, the scope of what we do continues to evolve. So I feel very good about that.

¶47Amit Mehrotra: As I did. But, Giordano, are you failing are you-- it is not failing, but are you reducing the on-time delivery of the customer? Because 1 of the USPs has been Vertiv has been 1 of the few companies that can deliver on time in full. Are you disappointing customers with this development? That opens up market share opportunities for other companies? Or no?

¶48Giordano Albertazzi: Well, look. Our, our overall performance is, if anything, in improving. So I would say that the answer is no. it is not something that changes our perception in the market, we believe.

¶49Operator: The next question comes from Mark Delaney. With Goldman Sachs. Mark, please go ahead.

¶50Mark Delaney: Yes. Thank you for taking my question. 1 of the topics at the Investor Day that we have not discussed yet on the call this morning is around M and A. I think you talked about something in the order of $24 billion that could be deployed. And light of some of the pullback in financial market valuations. as well as all the opportunities you see on the technology front, including areas like 800 volt, curious if you could give us your latest thoughts on the M and A opportunity and if the pipeline there is active, and that might be something that could be executed upon relatively soon. Thanks.

¶51Craig Chamberlin: I mean, I would say our outlook does not change in terms of the M and A world. We still look at it in the same way we looked at it back during Investor Day, but it is active. And we do see an active market, and we are participating in that after active market looking at, know, several targets. But, again, it has to fit us, and it has to be the right I would say, value play for us in terms of fit in our portfolio and what we believe we can grow and what we can return to investors in terms of what we are going to pay. Again, I have always talked about we invest in ourselves first, and that is capacity, and that is R&D, and that is development, and that is the things we are always going to look at. And then we will look at the spots where we believe we can get true value out of an acquisition and an add on whether it be regional reach or a product that we believe could get us to the market faster or a technology we do not currently have. So, yes, we are active, and we continue to look at it in terms of that framework.

¶52Operator: The next question comes from Noah Kaye. With Oppenheimer. Noah, please go ahead.

¶53Noah Kaye: Thanks for taking the question. You know, talking about some of these learning curve developments around what seems to be more of a focus on infrastructure solutions. You know, the components of these as we understand them, the building blocks they are already part of the Vertiv portfolio largely. But I am just curious, as you come up this learning curve, to what extent are you increasing your vertical integration across those building blocks and supply chain Is that a process that you are undertaking now? Is it something that needs to happen on a go forward basis to mitigate and manage some of those challenges in architecting these solutions?

¶54Giordano Albertazzi: Well, there is clearly always an analysis of make or buy vertical integration in anything we do. Be it at a point product level, and at, let's say, large infrastructure solution level, When you when you talk about the vertical integration for solutions, for us is really we are very, very integrated in the sense that we are putting into our infrastructure solutions, products that are Vertiv products. So then clearly, we are in good control of the of the supply chain in that respect. And so we feel good in this moment We do not think there are any major gaps in vertical integration for what we are doing, but that does not mean that we will not adjust over time the mix of, make or buy in whichever dimension. That could be depending on, depending on the type of business, depending on where we manufacture and auto manufacturing locations are the same in terms of access to a nearby let's say, critical mass. So it is it is always there now, but we do not perceive in this moment that there are any major gaps. But for example, if you think about an acquisition that we shared with you last quarter, B. Mark, that was that was moved to vertically integrate on our frame construction for our infrastructure solutions. So that is, I think, a testament to the dynamic approach that we have when it comes to make-or-buy. Yep. Thank you, Jeffrey.

¶55Operator: The next question comes from Anand Baruah with Loop Capital. Anand, please go ahead.

¶56Analyst: Yeah. Thanks, Scott, for taking the question. Really appreciate it. I would love to get your guys' view. This is an 800-volt, 450-volt question. For 800-volt, how broadly throughout the marketplace are you expecting in the next couple of years the, the technology to be adopted And really, the genesis for the question is there is that, as you guys may know, there is of been speculation last few months that 1 of the larger AI infrastructure companies could see a push out that would use 800-volt as far as far as 2029, how if there were a major customer push out, how broad is the tech-- are you guys anticipating the tech to be throughout the industry? And then we have heard really good things on 450-volt potential over the next 24 months. You know, what is the right way to think about the impact that could have and could that fill in any white space? You know, if there were, like, a meaningful you know, sort of AI infrastructure 800V customer push out? Thanks. Just any context would be helpful. Thanks.

¶57Giordano Albertazzi: Well, thanks. A multidimensional, multilayer question here. So I would not comment on rumors in the market. As we shared with investors in May, but also but also earlier today, we believe that the adoption of 800-volt will be gradual would be convincing. We are certainly very invested in that part of the in that part of the of the portfolio. Whether that happens at the speed that is currently in our roadmaps and that you saw or something slower than that, you know, we will be flexible and certainly, we are extremely resilient with that because it means that other parts of the architectures that we provide to our customers will certainly be take the share of the market in terms of architecture. So whichever way no matter the speed of acceleration, we think that we are in a good in a good place because we have the architectures, we have the technologies, the roadmaps as we shared, but there is a 400-volt DC question, and that 400-volt DC volt question is an important 1. We see that some players are thinking in terms both of 800 and 400. The underlying technology is not dramatically different. And quite honestly, we are involved in both. that is really helpful. Thanks so much. Really appreciate it. Sure.

¶58Operator: The next question comes from Luke Junk with Baird. Luke, please go ahead.

¶59Analyst: Yeah. Thanks for sneaking me in here. Giordano, hoping just to get some texture around your ongoing increase in confidence around the EMEA market specifically, and we saw a step up in margins. Sequentially this quarter. How do you think about the sustainability there or maybe in the potential for some further improvement in the back half of the year? Thank you.

¶60Giordano Albertazzi: Yeah. Well, thanks for the EMEA question. The we are we are pretty bullish about EMEA as you saw Certainly, we believe in a strong, second half, and back to growth. You see EMEA faring better than we expected anyway in the second quarter. So very confident in the second half. I was vocal about the fact that we were very happy with orders in EMEA in the first quarter. I would say that we like what we see in the second quarter. And there is a backlog formation that is certainly convincing. And we see that the improvement translates in top line and bottom line improvement has demonstrated. So the market continues to accelerate. And we certainly have a very important position in that market.

¶61Craig Chamberlin: Luke, I will just hit on the fact that we do and as we have talked about through even back as early as last year, we do see a second half increase in growth for EMEA in terms of where we expect their organic growth to go from a revenue perspective. In terms of the I would say, the gain that you saw in margin, was a favorable comp too, as you had mentioned, the Ireland portion did come through Q2 last year, which was in EMEA. So a little bit of a favorable comp in there, but we do still expect margins to be pretty good. Got it. Leaving it there. Thank you. Thank you.

¶62Operator: This concludes our question and answer session. I would like to turn the conference back to Giordano Albertazzi, for any closing remarks.

¶63Giordano Albertazzi: Well, thank you. And thank you very much, everyone. Thank you for the questions, and thank you for your time today. I am very pleased with what we delivered this quarter. And how we are positioned for the second half. The team is executing at a high level. Scaling capacity, deepening customer partnerships, and advancing our technology portfolio. All simultaneously. it is not easy. But this invigorates us Pipelines are strong, our operational discipline is sharp, and our customers trust us to deliver at scale. Just to be clear, I am very encouraged by our trajectory. I am pleased, but certainly never satisfied. With that, thank you all, and I wish you all a great rest of the day.

¶64Operator: The conference has now concluded. Thank you for attending today's presentation. May now disconnect.