Financial Data and Key Metrics Changes - The company achieved organic sales growth of 1.9% in Q4 2024, with adjusted EPS growing approximately 8.2% [6][10][22] - Adjusted free cash flow reached $682 million in Q4, the highest quarterly result since the spin-off, contributing to a total of $1.6 billion for the year [7][10][22] - The adjusted operating profit margin expanded by 50 basis points, with overall adjusted operating profit margin increasing by 30 basis points or more each year since the spin-off [9][10][22] Business Line Data and Key Metrics Changes - Service segment organic sales grew by 7.8%, while new equipment organic sales declined by 6.8% [18][20] - Maintenance and repair sales increased by 5.6%, with modernization sales accelerating to 18% growth in Q4 [20][22] - Service operating profit accounted for 93% of overall operating profit, up from 89% the previous year [21][22] Market Data and Key Metrics Changes - New equipment orders declined by 4% in Q4, primarily due to challenging market conditions in China, where orders fell by more than 20% [10][11] - Excluding China, new equipment orders increased approximately 11%, with the Americas showing strong growth in the second half of the year [11][12] - The Asia Pacific region experienced over 20% growth in new equipment orders, while EMEA saw a decline of high single digits in Q4 [11][12] Company Strategy and Development Direction - The company is transforming its China business to focus more on service and modernization, shifting from new equipment sales [8][30] - The modernization opportunity in China is significant, with a target of over 20% annual growth in modernization orders [31][32] - The company aims to maintain a sustainable shareholder-driven management strategy, with plans for share repurchases and dividend growth [10][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the service-driven business model despite macro headwinds in the new equipment market [10][23] - The outlook for 2025 anticipates net sales growth of 2% to 4% organically, with adjusted EPS expected to be in the range of $4 to $4.10 [28][40] - The company expects the global new equipment market to decline mid single digits in units, primarily due to the ongoing challenges in China [27][28] Other Important Information - The company received a gold rating from Ecovadis for the third consecutive year, reflecting its commitment to ESG initiatives [9] - The company is targeting approximately $200 million in annual run rate savings by the second half of 2025 through its uplift program [7][35] Q&A Session Summary Question: Can you expand on the China cost initiatives? - Management highlighted the structural changes in China and the focus on becoming more service-oriented, with targeted savings around 2% of new equipment revenue [44][46] Question: What about the service margin in Q4? - Management acknowledged a decline in service margin due to investments in field professionals, which are critical for future growth [51][53] Question: What are the expectations for modernization margins in 2025? - Management indicated that modernization margins are expected to improve, with a target of reaching double-digit margins over the medium term [71][78] Question: Can you discuss the restructuring costs? - Management outlined that approximately $250 million is expected for restructuring, primarily related to the uplift program and the transformation in China [81][83] Question: What is the outlook for new equipment backlog? - Management noted that while the new equipment backlog is currently down, they expect stabilization in China and growth in other regions to positively impact backlog in 2025 [97][100]