Financial Data and Key Metrics Changes - In Q2 2025, the company reported $1 billion in orders, a 16% increase overall and a 13% increase organically, driven by strong performance across all businesses and acquisitions [7] - Quarterly revenue exceeded $970 million, up 7% overall and 4% organically, with all segments contributing [7] - Operating income grew more than twice the organic sales growth rate, and operating margin expanded over 100 basis points excluding M&A impacts [7] - Adjusted EPS grew by 10% or 16% when excluding the WorldVerlin divestiture [8] - Free cash flow reached $214 million year-to-date, with a free cash flow margin of 14% in Q2 [9] Business Line Data and Key Metrics Changes - Industrial Process (IP) orders grew by 22%, with notable strength in Gulps Pumps and Svanohoi, where orders exceeded their full year 2024 revenue in the first half of 2025 [10] - Connect and Control (CCT) saw a 9% organic growth driven by Defense and Commercial Aerospace, with total orders increasing by 36% [11] - Motion Technologies (MT) Friction team won 49 new electrified platform awards, with Friction OE growing 7% organically [12][13] - IP revenue grew 5% organically, while CCT grew 4% organically, and MT Friction OE outperformed global auto production by over 500 basis points [24][26] Market Data and Key Metrics Changes - The company reported a book-to-bill ratio of 1.1, resulting in an ending backlog of nearly $2 billion, up 34% year-over-year and 9% sequentially [13] - The automotive market production was up 2.6% in Q2, with expectations for the full year to be flat or slightly positive [42] - The company outperformed in all three regions (Europe, China, North America) and across all powertrain types (internal combustion, hybrid, EV) [43] Company Strategy and Development Direction - The company focuses on organic growth and margin expansion, complemented by M&A activities [6] - The 2030 financial targets include more than 5% organic revenue growth and approximately 10% total growth annually, with margins expected to reach 23% [22] - The company is actively pursuing acquisition targets, with a disciplined framework for deal selection and integration [21][82] Management's Comments on Operating Environment and Future Outlook - Management raised the full-year adjusted EPS outlook to $6.45, reflecting strong first-half performance and improved visibility for the second half [16][31] - The company expects continued growth in the Project business in IP, firm demand in Aerospace and Defense, and outperformance in Friction OE and Rail [31] - Management noted that the funnel remains healthy, with only minor shifts in order timing, indicating confidence in future performance [40] Other Important Information - The company repurchased $500 million of shares year-to-date, reducing the weighted average share count by 3% [9] - The estimated gross tariff costs for 2025 have been reduced to approximately $25 million, half of the previous estimate, with no material impact expected [32][122] Q&A Session Summary Question: Thoughts on capital equipment and project hesitancy - Management noted strong order performance with only minor shifts in timing, indicating no major concerns in the market [39][40] Question: Auto landscape outlook - The automotive production forecast for 2025 is slightly positive, with the company outperforming across all regions and powertrain types [42][43] Question: CCT orders and market growth - CCT orders grew significantly, driven by aerospace and defense, with strong share gains noted [52][54] Question: FX impact on Motion Technologies margins - The depreciation of the dollar against the euro has negatively impacted transaction margins, despite positive translation effects [56] Question: Strength in Svanahoy business - The outperformance is attributed to strong execution and product differentiation, with expectations for continued growth [63][65] Question: Pricing actions and tariff exposure - The company has successfully mitigated tariff impacts through pricing and productivity actions, with no material income impact expected [122]