Financial Data and Key Metrics Changes - Sales in Q2 2025 were down 1.2% on an organic basis compared to the prior year, aligning with expectations [6][11] - Adjusted earnings per share increased by 8.3% to $2.48 [11] - Adjusted EBITDA margin was 22%, down 20 basis points year-over-year [11] - Free cash flow generated in Q2 was $493 million, with $368.5 million related to an accounts receivable securitization program [11][25] Business Line Data and Key Metrics Changes - **Automation and Motion Control (AMC)**: Sales decreased by 3.4% year-over-year, primarily due to weakness in the medical end market and project timing [16][18] - **Industrial Powertrain Solutions (IPS)**: Sales were down 4.4% year-over-year, attributed to project timing impacts in Metals and Mining [20][21] - **Power Efficiency Solutions (PES)**: Sales increased by 6.5% year-over-year, driven by strong growth in residential and commercial HVAC [23] Market Data and Key Metrics Changes - Orders in AMC declined by 7.5% year-over-year, impacted by a large data center order that slipped into July [19] - IPS orders increased by 3% on a daily basis, with a book-to-bill ratio of 1.01 [22] - PES orders were down 5.4% on a daily basis, consistent with expectations due to anticipated headwinds in residential HVAC [24] Company Strategy and Development Direction - The company is on track to deliver at least $250 million in cross-sell synergies from recent acquisitions, with a growing funnel of opportunities [12][14] - Focus on longer cycle projects and engineered solutions is expected to drive growth in IPS and AMC segments [20][22] - The company aims to neutralize tariff impacts on adjusted EBITDA and maintain margin neutrality by mid-2026 [27][30] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about low single-digit sales growth in 2025, supported by a growing backlog and positive order trends [8][33] - The company anticipates a recovery in the medical market and improved conditions in the data center sector [36][71] - Management acknowledges ongoing macroeconomic uncertainties but believes underlying business momentum is positive [33][36] Other Important Information - The accounts receivable securitization program completed in Q2 is expected to provide $4 million in annualized interest savings [25][26] - The gross annual unmitigated cost impact from tariffs is estimated to have decreased from $130 million to approximately $125 million [29][30] Q&A Session Summary Question: Expectations for end market recovery in the second half of the year - Management expects orders to be up mid-single digits in the second half, driven by strong performance in data centers and other solid markets [36][37] Question: Exposure to rare earth magnets and data center wins - Rare earth magnets represent about 1% of sales, but challenges in procurement impacted Q2 performance; however, recovery is expected in Q3 and Q4 [39][40] Question: AMC division margin ramp and backlog visibility - AMC's margin guidance has been widened due to rare earth exposure, with expectations for improved conditions in the medical market and higher shippable backlog [92][93] Question: Competitive position in the data center market - The company is well-positioned in the data center market, focusing on customized solutions, and has a strong order funnel [85][86]