Financial Data and Key Metrics Changes - The company achieved record Q2 sales of $5.2 billion, with organic growth of 6.6% and a 150 basis points margin expansion, resulting in a 27.1% adjusted segment operating margin [4][10] - Adjusted earnings per share (EPS) grew 17% to $7.65, with net income reaching $980 million, reflecting an 18.9% return on sales [10][11] - Cash flow from operations was $1.6 billion, representing 16% of sales, while free cash flow was $1.5 billion, or 14.2% of sales [17] Business Line Data and Key Metrics Changes - North America sales were approximately $2 billion, with organic growth of 2.5%, driven by strength in off-highway and aerospace and defense verticals [13] - International sales reached a record $1.5 billion, up 12% year-over-year, with organic growth of 4.6% [15] - Aerospace sales were a record $1.7 billion, up 14.5% year-over-year, with an adjusted segment operating margin of 30.2% [16] Market Data and Key Metrics Changes - Orders in North America increased by 7% compared to the prior year, with a backlog reaching a record $11.7 billion [12][13] - International orders improved by 6%, with positive orders in both Europe and Asia-Pacific [15] - The aerospace segment saw a 14% increase in backlog, reaching a record $8 billion [16] Company Strategy and Development Direction - The company is focused on interconnected technologies that provide efficient solutions across market verticals, with a strong emphasis on the off-highway market [5][6] - The acquisition of Filtration Group Corporation is expected to enhance the company's presence in life sciences, HVAC, and industrial markets, with anticipated cost synergies of approximately $220 million [8][9] - The company aims to maintain a disciplined acquisition strategy that is accretive to organic growth and improves profitability [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering another record fiscal year in 2026, supported by strong orders and positive growth across various segments [11][19] - The company noted that while some markets are recovering, challenges remain in transportation and upstream oil and gas sectors [40][41] - Management highlighted the importance of productivity and automation projects over large capacity expansions, indicating a gradual recovery in the industrial sector [125] Other Important Information - The company is increasing its full-year guidance for organic sales growth to a range of 4%-6%, with specific increases in aerospace and diversified industrial segments [21][22] - Adjusted segment operating margins guidance has been raised to 27.2% for the full year, reflecting an increase of 110 basis points from the prior year [23] Q&A Session Summary Question: Positive organic growth across technology platforms - Management acknowledged the positive organic growth across all three technology platforms and attributed it to both company-specific factors and broader market cycles [30][31] Question: Outlook for international growth and regional dynamics - Management provided insights on regional growth, indicating a positive outlook for North America and Asia-Pacific, while Europe showed signs of recovery [39][42] Question: Pricing and cost management amid inflation - Management confirmed strong pricing power and ongoing efforts to manage costs effectively, ensuring that inflation does not impact EPS [74][75] Question: Filtration Group acquisition timing and hurdles - Management indicated that standard regulatory filings are the primary hurdles for the Filtration Group acquisition, with an expected closing timeline of 6-12 months [76] Question: In-plant equipment spending trends - Management noted that customers are prioritizing productivity and automation projects, which benefits the company, while capacity expansion remains gradual [125]