Group 1 - The article does not provide specific insights or analysis on any companies or industries [1]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The company reports a 3% sales increase, details segment realignment, and classifies its R&LC HVAC business as a discontinued operation - On April 1, 2025, the company realigned its structure from four reportable segments to three: Americas, EMEA, and APAC[23](index=23&type=chunk)[115](index=115&type=chunk) - The company entered into a definitive agreement to sell its Residential and Light Commercial (R&LC) HVAC business to Bosch Group for approximately **$8.1 billion**, classifying it as a discontinued operation[26](index=26&type=chunk)[38](index=38&type=chunk) [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Q3 net sales grew 2.6% to $6.05 billion, while net income decreased due to higher expenses; YTD net income rose significantly Consolidated Statements of Income Highlights (in millions, except EPS) | Metric | Q3 2025 | Q3 2024 | YoY Change | YTD 2025 | YTD 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | **$6,052** | **$5,898** | **+2.6%** | **$17,154** | **$16,704** | **+2.7%** | | Gross Profit | $2,246 | $2,109 | +6.5% | $6,241 | $5,809 | +7.4% | | Income from Continuing Operations | $618 | $851 | -27.4% | $1,454 | $873 | +66.6% | | **Net Income attributable to JCI** | **$701** | **$975** | **-28.1%** | **$1,598** | **$1,072** | **+49.1%** | | **Diluted EPS (Total)** | **$1.07** | **$1.45** | **-26.2%** | **$2.42** | **$1.58** | **+53.2%** | [Consolidated Statements of Financial Position](index=6&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) Total assets and liabilities increased to $43.4 billion and $26.4 billion respectively, while total equity slightly decreased Key Balance Sheet Items (in millions) | Metric | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | **$11,849** | **$11,179** | | Goodwill | $16,709 | $16,725 | | **Total Assets** | **$43,393** | **$42,695** | | **Total Current Liabilities** | **$12,350** | **$11,955** | | Long-term Debt | $8,446 | $8,004 | | **Total Liabilities** | **$26,348** | **$25,334** | | **Total Equity** | **$17,045** | **$17,361** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) YTD operating cash flow from continuing operations increased substantially to $1.59 billion, driven by higher net income Cash Flow Summary - Continuing Operations (in millions) | Cash Flow Activity | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | **Operating Activities** | **$1,586** | **$216** | | Investing Activities | ($302) | ($286) | | Financing Activities | ($1,111) | ($190) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the ~$8.1 billion R&LC HVAC sale, a new restructuring plan, a $750 million AFFF settlement, and segment realignment - The company entered a definitive agreement to sell its R&LC HVAC business to Bosch Group for approximately **$8.1 billion**, with Johnson Controls' portion being **~$6.7 billion** and net cash proceeds of **~$5.0 billion**[38](index=38&type=chunk) - As of June 30, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately **$22.4 billion**[50](index=50&type=chunk) - In Q4 2024, the company initiated a new multi-year restructuring plan with expected costs of **~$400 million** through fiscal 2027 to address stranded costs from portfolio simplification[98](index=98&type=chunk) - On April 12, 2024, subsidiary Tyco Fire Products agreed to a **$750 million** settlement with a nationwide class of public water systems related to AFFF litigation[151](index=151&type=chunk) [Management's Discussion and Analysis (MD&A)](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 3% sales growth, improved margins, segment performance, and a strong backlog, alongside liquidity bolstered by asset sale proceeds [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q3 net sales grew 3% to $6.05 billion with a 130 basis point gross margin expansion, though SG&A expenses increased significantly Financial Performance Summary (in millions) | Metric | Q3 2025 | Q3 2024 | Change | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | **$6,052** | **$5,898** | **+3%** | **$17,154** | **$16,704** | **+3%** | | Gross Profit | $2,246 | $2,109 | +6% | $6,241 | $5,809 | +7% | | *Gross Margin* | *37.1%* | *35.8%* | *+130 bps* | *36.4%* | *34.8%* | *+160 bps* | | SG&A | $1,417 | $895 | +58% | $4,243 | $4,293 | -1% | - The increase in Q3 SG&A was primarily due to the unfavorable impact of prior year water systems AFFF insurance recoveries (**$350 million**), unfavorable earn-out adjustments (**$61 million**), and higher transformation costs (**$45 million**)[199](index=199&type=chunk) [Segment Analysis](index=44&type=section&id=Segment%20Analysis) Organic sales grew across all segments in Q3, with EMEA and APAC showing strong EBITA growth, contributing to an 11% organic backlog increase Q3 2025 Net Sales by Segment (in millions) | Segment | Q3 2025 Sales | YoY Change | Organic YoY Change | | :--- | :--- | :--- | :--- | | Americas | $4,042 | 0% | +7% | | EMEA | $1,273 | +8% | +4% | | APAC | $737 | +7% | +6% | Q3 2025 Segment EBITA (in millions) | Segment | Q3 2025 EBITA | YoY Change | | :--- | :--- | :--- | | Americas | $742 | -8% | | EMEA | $177 | +15% | | APAC | $143 | +12% | Backlog and Orders (as of June 30, 2025) | Segment | Backlog (in billions) | Organic YoY Change | Q3 Orders (in billions) | Organic YoY Change | | :--- | :--- | :--- | :--- | :--- | | Americas | $10.3 | +10% | $3.4 | +5% | | EMEA | $2.6 | +9% | $1.1 | +2% | | APAC | $1.7 | +14% | $0.7 | -8% | | **Total** | **$14.6** | **+11%** | **$5.2** | **+2%** | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is strong with ~$5.0 billion in proceeds from the R&LC sale funding a $5.0 billion share repurchase program - The company received net cash proceeds of approximately **$5.0 billion** from the sale of its R&LC HVAC business on July 31, 2025[222](index=222&type=chunk) - The company plans to use a portion of the sale proceeds to implement a **$5.0 billion** accelerated share repurchase program[222](index=222&type=chunk) - In June 2025, the Board of Directors increased the share repurchase authorization by **$9.0 billion**, leaving approximately **$9.8 billion** available as of June 30, 2025[222](index=222&type=chunk)[247](index=247&type=chunk) Capitalization Summary (in millions) | Metric | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Total Debt | $10,293 | $9,493 | | Cash and Cash Equivalents | $731 | $606 | | **Net Debt** | **$9,562** | **$8,887** | | Total Equity | $15,830 | $16,098 | | **Net Debt as % of Net Capitalization** | **37.7%** | **35.6%** | [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material adverse changes in its market risk exposures since its last annual report - No material changes in market risk exposures were reported as of June 30, 2025, compared to the fiscal year-end 2024 report[231](index=231&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[233](index=233&type=chunk) - No significant changes to internal control over financial reporting were identified during the third fiscal quarter of 2025[234](index=234&type=chunk) [Part II. Other Information](index=51&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company provides an update on a class action lawsuit related to the 2016 merger, which is currently under appeal - In the Gumm v. Molinaroli et al. case concerning the 2016 merger, the complaint was dismissed in March 2025, but plaintiffs filed an appeal in May 2025[235](index=235&type=chunk) - For details on environmental, asbestos, and other litigation, the company refers to Note 18, "Commitments and Contingencies"[236](index=236&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) Key risks include talent retention, cybersecurity threats, and the potential impact of changing international trade policies - The company's success is dependent on attracting and retaining a high-performance, diverse workforce with skills in digital and outcome-based selling, and it faces risks from labor shortages[237](index=237&type=chunk)[238](index=238&type=chunk) - Data privacy and cybersecurity are significant risks, highlighted by the September 2023 incident that impacted employee and applicant data[239](index=239&type=chunk)[240](index=240&type=chunk) - Changes in foreign trade policies, including tariffs and sanctions by the U.S., China, and other countries, pose a risk to the company's supply chain, costs, and overall financial results[244](index=244&type=chunk)[245](index=245&type=chunk) [Share Repurchases and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The share repurchase authorization was increased by $9.0 billion, with $9.8 billion now available and a $5.0 billion ASR planned - The Board of Directors approved a **$9.0 billion** increase to the share repurchase authorization in June 2025[247](index=247&type=chunk) Share Repurchase Activity | Period | Amount Repurchased | Remaining Authorization | | :--- | :--- | :--- | | Q3 2025 (3 months) | $310 million | $9.8 billion | | YTD 2025 (9 months) | $970 million | $9.8 billion | - A **$5.0 billion** accelerated share repurchase program is planned, funded by proceeds from the Residential & Light Commercial business sale[247](index=247&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) George Oliver retired as Chairman of the Board, with Mark Vergnano appointed as the new independent Chairman - George Oliver retired as Chairman of the Board of Directors effective August 1, 2025[251](index=251&type=chunk) - Mark Vergnano has been appointed as the new independent Chairman of the Board[251](index=251&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including Sarbanes-Oxley certifications and iXBRL-formatted financial statements - The report includes required CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[252](index=252&type=chunk)

Core Insights - The earnings season has highlighted increased data center investments from major tech companies like Amazon, Microsoft, and Meta Platforms, driven by the AI revolution [1] - The global data center market is projected to grow from $347.60 billion in 2024 to $652.01 billion in 2030, reflecting a compound annual growth rate (CAGR) of 11.2% [2] - Investors are shifting focus towards companies that will benefit from infrastructure spending related to data centers [2] Company Summaries Johnson Controls International (JCI) - JCI plays a crucial role in data center infrastructure, particularly in cooling systems necessary for high-density AI chip environments [4][5] - The company’s HVAC systems are designed to improve energy efficiency, addressing the increasing pressure on data center operators to reduce power usage effectiveness (PUE) [5] - JCI's stock has seen a drop of approximately 7.5% before its earnings report, but analysts project a 17% earnings growth in the next 12 months, with a consensus price target of $105.17 [6] American Tower (AMT) - AMT is recognized for its role in the 5G buildout and is making significant investments in edge data centers and fiber interconnection assets [8] - The stock has increased by 15.7% in 2025, reversing a negative total return trend over the past five years, and offers a dividend yield of 3.21% [9] - AMT reported slight earnings beats, and its forward P/E ratio of around 20x suggests it is attractively valued, with a consensus price target of $243.88 indicating a potential 15% upside [10] Vertiv (VRT) - Vertiv has delivered an impressive 824% gain over the last five years, currently trading close to its consensus price target of $145.54 [12] - The company is expected to see increased demand for its liquid cooling technology, supported by positive earnings reports [13] - Despite its strong performance, VRT appears overvalued in the short term, and investors may want to wait for a pullback before entering [14]

Core Insights - Artificial intelligence is transitioning from experimental phases to large-scale deployment across various industries, enhancing operational efficiency and reshaping competitive advantages [1] - Companies are rapidly advancing AI applications in both digital and physical realms, utilizing generative AI, automation, and machine learning to optimize supply chains, improve customer service, enhance financial forecasting, and accelerate R&D processes [1] Industry Trends - A recent survey indicated that 60% of CIOs expect generative AI workloads to be in production applications by the end of 2025, maintaining the same percentage as earlier this year [1] - Core objectives of corporate AI strategies include improving internal production efficiency, reducing labor costs, and developing customer-facing applications that generate revenue and enhance satisfaction [1] Investment Opportunities - The report identifies five categories of AI investment opportunities, ranging from companies with strong pricing power and deep AI integration capabilities to those undervalued in the options market regarding their AI revenue potential [1] - Notable companies highlighted for their strong AI application strategies include Adobe, Amazon, and Johnson Controls, recognized as high-quality large-cap AI application pioneers [2] - Other significant players in the scalable application space include NVIDIA, Microsoft, Alphabet, Meta Platforms, and Tesla, all receiving "overweight" ratings from Morgan Stanley for their dual advantages as AI technology enablers and users [2] Conclusion - The trend of AI deployment is accelerating across industries, with varying applications such as predictive maintenance in energy, fraud detection in finance, and autonomous robotics in manufacturing, indicating a universal shift towards AI as a key driver of operational efficiency and competitive advantage [2]

Group 1 - The core viewpoint of the report is that artificial intelligence is transitioning from experimental phases to large-scale deployment across various industries, enhancing operational efficiency and reshaping competitive advantages [1] - The report highlights that AI applications in both digital and physical domains are rapidly advancing, optimizing supply chains, improving customer service, enhancing financial forecasting, and accelerating R&D processes [1] - A survey of chief information officers indicates that 60% of respondents expect workloads based on generative AI to be in production by the end of 2025, maintaining the same percentage as earlier this year [1] Group 2 - The report identifies five categories of AI investment opportunities, ranging from companies with strong pricing power and deep AI integration capabilities to those whose AI revenue potential is underestimated in the options market [1] - Adobe, Amazon, and Johnson Controls are highlighted as high-quality large-cap AI application pioneers, with AI playing an increasingly central role in their business strategies [2] - Other notable large-scale adopters include Nvidia, Microsoft, Alphabet, Meta Platforms, and Tesla, which are recognized for their dual advantages as both AI technology enablers and users [2]

Core Viewpoint - Johnson Controls International plc has completed the sale of its Residential and Light Commercial HVAC business to the Bosch Group for a total transaction value of $8.1 billion, marking a significant step in the company's transformation into a pure-play provider of innovative building solutions [1][2]. Company Overview - Johnson Controls is recognized as a global leader in smart, safe, healthy, and sustainable buildings, focusing on reimagining building performance to benefit people, places, and the planet [9][10]. - The company has a history of 140 years of innovation and offers the largest portfolio of building technology and software, along with service solutions [10]. Transaction Details - The sale includes the North America ducted business and a global residential joint venture with Hitachi, Ltd., while Hitachi retains certain ductless HVAC assets located in Shimizu, Japan [3]. - Johnson Controls' portion of the transaction consideration is approximately $6.7 billion, with net cash proceeds expected to be around $5.0 billion after tax and transaction-related expenses [2]. Future Plans - Following the transaction, Johnson Controls plans to return a portion of the net proceeds to shareholders through a $5.0 billion accelerated share repurchase program, in line with its capital allocation policy [4]. - The company has an overall share repurchase authorization availability of $9.8 billion [4]. Leadership Perspective - CEO Joakim Weidemanis emphasized the transaction as a milestone that positions Johnson Controls for faster growth and increased profitability as a technology-based and service-enabled company [2]. - He expressed gratitude to the Residential and Light Commercial HVAC team for their contributions and wished them success in their new roles at Bosch [2]. Advisory Information - Financial advisors for the transaction included Centerview Partners and Citi, with legal advice from Simpson Thacher and investor relations support from Joele Frank [5].

Core Insights - Johnson Controls International plc (JCI) reported adjusted earnings of $1.05 per share for Q3 fiscal 2025, exceeding the Zacks Consensus Estimate of $1.00, with an 11% year-over-year increase [1][9] - Total revenues for continuing operations reached $6.10 billion, surpassing the consensus estimate of $5.99 billion, marking a 3% year-over-year increase, while organic revenues grew by 6% [1][9] Q3 Segmental Results - **Americas**: Revenues were $4.04 billion, flat year over year, with organic sales increasing by 7%, driven by strong performance in HVAC and controls businesses. Adjusted EBITA rose by 0.4% year over year to $746 million [2] - **EMEA**: Revenues totaled $1.27 billion, up 8% year over year, with organic sales climbing 4% due to growth in Applied HVAC and fire and security businesses. Adjusted EBITA increased by 16% year over year to $179 million [3] - **APAC**: Revenues increased by 7% to $737 million, with organic sales growing by 6%, driven by the service business. Adjusted EBITA was $143 million, up 12% year over year [3] Margin Profile - JCI's cost of sales increased by 0.4% year over year to approximately $3.81 billion. Gross profit rose by 6.5% year over year to $2.25 billion, with the margin improving by 130 basis points to 37.1%. Selling, general and administrative expenses were $1.42 billion, up 58.3% year over year [4] Financial Position - As of June 30, 2025, JCI had cash and cash equivalents of $731 million, up from $606 million at the end of fiscal 2024. Long-term debt increased to $8.45 billion from $8 billion at the end of fiscal 2024 [5] - In the first nine months of fiscal 2025, the company generated net cash of $1.59 billion from operating activities, compared to $216 million in the prior year. Free cash flow reached $1.28 billion, reversing an $83 million outflow from the previous year [6] Q4 Guidance - JCI anticipates low-single-digit organic revenue growth compared to the previous year. Adjusted segment EBITA margin is estimated to be approximately 18.6%, with adjusted earnings expected to be in the range of $1.14-$1.17 per share [7] FY25 Guidance - The company expects organic revenue growth to be in the mid-single-digit range from the prior year, with an adjusted segment EBITA margin improvement of 90 basis points. Adjusted earnings per share are projected to be $3.65-$3.68, with adjusted free cash flow conversion expected to exceed 100% [10]

Core Insights - Johnson Controls (JCI) reported a revenue of $6.05 billion for the quarter ended June 2025, reflecting a year-over-year decline of 16.3% and an EPS of $1.05 compared to $1.14 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $5.99 billion, resulting in a surprise of +1.09%, while the EPS also surpassed the consensus estimate of $1.00 by +5% [1] Financial Performance - The company’s net sales in Building Solutions North America reached $4.04 billion, significantly higher than the $3 billion estimated by analysts, marking a year-over-year increase of +39.4% [4] - In the EMEA/LA region, net sales were reported at $1.27 billion, exceeding the average estimate of $1.11 billion, with a year-over-year change of +17.8% [4] - For the Asia Pacific region, net sales amounted to $737 million, surpassing the average estimate of $600.8 million, representing a +28.2% year-over-year increase [4] Stock Performance - Over the past month, shares of Johnson Controls have returned +5.6%, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Organic sales grew by 6% in Q3 2025, with segment margins expanding by 20 basis points to 17.6% [5][22] - Adjusted EPS increased by 11% year-over-year to $1.05, exceeding guidance [5][22] - Year-to-date adjusted free cash flow nearly doubled to $1.8 billion, with over 100% free cash flow conversion expected for the year [5][22] Business Line Data and Key Metrics Changes - Orders grew by 2%, with strength in The Americas offset by softness in China [6][23] - In the Americas, orders increased by 5%, while EMEA saw a 2% increase, and APAC experienced a decline [23][24] - Sales in the Americas rose by 7% organically, with EMEA growing by 4% and APAC by 6% [24][25] - The backlog grew by 11% to a record $14.6 billion, with both system and service backlogs increasing [6][26] Market Data and Key Metrics Changes - Orders in the Americas increased by 5%, while EMEA saw a 2% increase, and APAC orders declined [23][24] - The service business showed strong growth, particularly in EMEA with an 8% increase [24][25] - The data center market remains robust, contributing to healthy sales growth [94] Company Strategy and Development Direction - The company is focusing on customer centricity, operational efficiency, and innovation to drive growth [8][9] - A new business system is being implemented, emphasizing simplification, acceleration, and scaling through lean principles and digitization [12][13] - The company is evaluating its portfolio for potential acquisitions or exits to ensure sustainable growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core vertical markets remaining healthy despite challenges in China [64] - The company anticipates low single-digit organic sales growth for Q4 and is raising its full-year guidance for adjusted EPS and free cash flow [27][28] - There is a focus on improving operational efficiency and addressing growth blockers identified in various business lines [15][16] Other Important Information - The sale of the residential and light commercial HVAC business to Bosch is expected to close in Q4, with most net proceeds returned to shareholders [28] - The company is committed to returning 100% of free cash flow to shareholders through dividends and share repurchases [27][28] Q&A Session Summary Question: Initial observations and KPIs focus - Management highlighted the importance of sharpening customer focus and driving growth through innovation and R&D investments [30][32] Question: Accelerating growth in Fire and Security - Management sees potential for growth in Fire and Security, with plans to apply new business system principles to improve performance [41][44] Question: Free cash flow opportunities - Management noted strong cash flow performance driven by improved accounts receivable management and ongoing lean transformation efforts [47][49] Question: Order trends and long-term outlook - Management acknowledged ongoing softness in China but expressed confidence in healthy pipelines and core vertical markets [62][64] Question: Framework for 2026 and Investor Day plans - Management is working on 2026 plans and aims to provide a clearer long-term outlook as the year progresses [71][73]

Financial Data and Key Metrics Changes - Organic sales grew by 6% in Q3 2025, with segment margins expanding by 20 basis points to 17.6% [4][22] - Adjusted EPS increased by 11% year-over-year, reaching $1.05, exceeding guidance [23] - Year-to-date adjusted free cash flow nearly doubled to $1.8 billion, with over 100% free cash flow conversion expected for the year [4][29] Business Line Data and Key Metrics Changes - Orders grew by 2%, with strength in The Americas offset by softness in China [5][24] - In The Americas, orders increased by 5%, while EMEA saw a 2% rise, and APAC experienced a decline [24][25] - Adjusted segment EBITDA margins improved across regions, with EMEA up 100 basis points to 14.1% and APAC up 70 basis points to 19.4% [26] Market Data and Key Metrics Changes - The backlog grew by 11% to a record $14.6 billion, with both system and service backlogs increasing [5][27] - Sales in The Americas rose by 7% organically, driven by HVAC and controls [25] - APAC sales grew by 6% organically, with strong double-digit growth in the service business [26] Company Strategy and Development Direction - The company is focusing on customer centricity, operational efficiency, and innovation to drive growth [7][8] - A new business system is being developed, emphasizing simplification, acceleration, and scaling through lean principles and digitization [12][14] - The company is evaluating its portfolio for potential acquisitions or exits to ensure sustainable growth [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of core vertical markets despite challenges in China [63] - The company anticipates low single-digit organic sales growth in Q4, with a reaffirmation of mid-single-digit growth for the full year [27][28] - There is a focus on improving operational efficiency and cash flow conversion, with expectations of maintaining over 100% free cash flow conversion [29][50] Other Important Information - The sale of the residential and light commercial HVAC business to Bosch is expected to close in Q4, with most proceeds returned to shareholders [30] - The company is committed to returning 100% of free cash flow to shareholders through dividends and share repurchases [29] Q&A Session Summary Question: Initial observations and KPIs focus - Management highlighted the need to sharpen customer focus and drive growth through innovation and operational improvements [34][35] Question: Accelerating growth in Fire and Security - Management sees potential in both HVAC and Fire and Security, with plans to apply new business systems to improve performance [45][46] Question: Free cash flow opportunities - Management noted strong cash flow performance driven by improved collection management and operational efficiencies [49][50] Question: Orders and growth outlook - Management expressed confidence in healthy pipelines despite lower-than-expected order growth, particularly in China [62][63] Question: 2026 outlook and Investor Day - Management is working on the 2026 plan and aims to provide a clearer long-term outlook as the year progresses [72][74]