Image source: The Motley Fool.

DATE

Tuesday, Nov. 4, 2025, at 11 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Paulo Ruiz Sternadt
  • Chief Financial Officer — Olivier C. Leonetti
  • Vice President, Investor Relations — Yan Jin

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Electrical Americas Backlog -- Grew 20% year over year to a record $12 billion in Q3 2025, providing strong visibility for organic growth.
  • Data Center Book to Bill -- Reached 1.7 on a rolling twelve-month basis, with order growth for the vertical close to 70% in both the Americas and globally.
  • Data Center Orders -- Data center orders rose close to 70% year-over-year and sales increased 40% versus Q3 2024, reinforcing market momentum in high-growth segments.
  • Adjusted Earnings Per Share -- Increased 8% to $3.07 in Q3 2025, at the top end of guidance.
  • Segment Margins -- Reached a quarterly record of 25% in Q3 2025, up 70 basis points year over year, driven by broad-based strength and operational improvements.
  • Organic Sales Growth -- Achieved 7% organic growth company-wide, led by Aerospace, Electrical Americas (9% organic growth), and Electrical Global (8% organic growth), partially offset by declines in vehicle and eMobility.
  • Electrical Americas Operating Margin -- Delivered a Q3 record at 30.3%, up 20 basis points versus prior year, buoyed by higher sales and efficiency gains.
  • Electrical Global Growth -- Total growth of 10% and organic growth of 8%, with a 19.1% operating margin, up 40 basis points over prior year on sales strength and partially higher inpatients.
  • Aerospace Backlog -- Expanded 15% year over year and 4% sequentially in Q3 2025, supporting strong forward visibility for the segment.
  • Aerospace Operating Margin -- Increased 150 basis points to 25.9% in Q3 2025, reflecting favorable sales and margin expansion initiatives.
  • Vehicle Segment Decline -- Experienced a 9% organic sales contraction, with a 160 basis point margin decrease year over year due to North American market weakness and higher inflation.
  • Boyd Acquisition -- Deal announced for leading liquid cooling company, expected to generate $1.7 billion in sales in calendar year 2026 and a 25% adjusted EBITDA margin in calendar year 2026; Over 80% of Boyd's revenue comes from the data center segment.
  • Company Data Center Content per Megawatt -- Projected to approach $3 million per megawatt at the high end following the Boyd acquisition, an increase of $500,000 per megawatt from prior levels with the Boyd acquisition.
  • CapEx Outlook -- Capital expenditures expected to be higher in 2026 versus 2025, with a return to normalized levels anticipated in 2027.
  • Order Pipeline Win Rate -- Stands at approximately 40%, demonstrating competitiveness in securing major projects.
  • 2025 Guidance Reaffirmed -- Organic growth is forecast at 8.5%-9.5% for fiscal 2025 (period ending Dec. 31, 2025), with margin guidance unchanged at 24.1%-24.5% for 2025 and an adjusted EPS range of $11.97 to $12.17 for 2025.
  • Q4 2025 Outlook -- Expected EPS of $3.23 to $3.43, implying 18% year-over-year EPS growth and organic growth of 10%-12%.
  • Backlog Trend -- Company-wide backlog rose by $1 billion sequentially from Q2 to Q3, with $600 million attributable to Latin America, supporting strong projections for Q4 and beyond.

SUMMARY

Eaton Corp. (ETN +3.70%) announced the Boyd liquid cooling acquisition, significantly boosting its presence and technological scope in the rapidly growing data center market, with expectations of $1.7 billion in new sales next year and margin accretion in year two. Management disclosed a record Electrical Americas backlog in Q3 2025 and continued order acceleration, especially within the Americas and data center verticals, providing notable multi-year revenue visibility. Earnings guidance and segment margin expansion targets were reaffirmed despite persistent softness in vehicle and eMobility markets. Planned capital investments and rapid capacity expansions position the company to address an expanded addressable market and maintain its competitive advantage. Leadership noted robust mega-project activity, highlighted by a 185% increase in project announcements over the past two years, and described a strategic win rate of 40% across active negotiation pipelines.

  • Paulo Ruiz Sternadt stated, "with this acquisition of Boyd, Eaton now plays a leading position in each one of those technology blocks."
  • The CFO confirmed the Boyd deal's margin assumptions as reflective of Boyd's current standalone performance: "This is their margin. Yeah. Today."
  • The company reported mega-project announcements totaling $239 billion in Q3, up 18% year over year, with data centers constituting nearly half, indicating broader secular growth drivers in place.
  • Leadership signaled that higher CapEx is planned for 2026 to support both organic growth and recent acquisitions, with normalization expected thereafter.

INDUSTRY GLOSSARY

  • Book to Bill: The ratio of new orders received to revenue billed in the same period, indicating future demand strength.
  • White Space / Gray Space: "White space" refers to the area in a data center housing IT equipment; "gray space" refers to areas supporting power and cooling infrastructure.
  • Megaproject: Large-scale capital projects, often infrastructure or utility-related, that can significantly impact backlog and forward-looking revenue.
  • Hyperscaler: Very large cloud services providers or companies building and operating massive data centers at scale.

Full Conference Call Transcript

Paulo Ruiz Sternadt: Thanks, Yan, and thanks everyone for joining us. I'm happy to report we delivered solid results. In Latin America, sales are up 7% from up 2% in Q2. Our Electrical Americas backlog grew 20% year over year, reaching an all-time record. Demand in the Aerospace business remains very strong as well. We posted order growth of 11% on a rolling twelve-month basis and backlog expansion of 15% year over year. As a result, our book to bill for the combined segment was 1.2 on a quarterly basis and 1.1 on a rolling twelve-month basis. As we continue to deliver robust growth in the data center market, our orders accelerated 70% and our sales were up 40% versus Q3 2024.

The strong demand picture gives us confidence in our ability to deliver sustained growth and add value to shareholders. Among the Q3 highlights, our adjusted earnings per share were up 8% versus prior year and our segment margins of 25% hit a quarterly record, up 70 basis points year over year. We are also reaffirming our 2025 guidance. Lastly, yesterday, we were excited to announce the agreement to acquire Boyd's thermal business, a global leader in liquid cooling, and I will talk through this in much more detail in the following slides. Olivier and I will dive into Q3 and the full year outlook in just a minute.

But first, I'd like to share more details on how we are investing and executing for growth in our operations starting on Page four. So earlier this year, I laid out our bold new strategy with three pillars: Lead, Invest, and Execute. All three are designed to accelerate our growth and create sustained value for shareholders. These three pillars also enable us to capitalize on key megatrends we've discussed for the last few years. Today, we will focus on invest and execute for growth. Executing for growth involves elevating operations from good to best in class.

It includes self-help, growing the head and fixing the tail, and controlling your destiny and the results we are starting to see from this strategy. Turning to Page five. Yesterday, we announced the acquisition of Boyd, the global leader in liquid cooling technologies for aerospace and defense, and industrial. This is a high-growth business playing in a high-growth market, and we expect it to generate $1.7 billion in sales next year at an adjusted EBITDA margin of 25%. This level of sales represents significant year-over-year growth, demonstrating how the business is benefiting from strong customer demand, especially in data centers. And the business itself has a large global presence with over 5,200 employees and 16 manufacturing locations.

This global presence is critical to Boyd's success as they are able to support customers almost anywhere in the world as they build out their data center infrastructure. Of those 5,200 employees, over 500 are engineers, which is another important part of Boyd's success. These engineers work directly with the customer teams to design the next few platforms to understand the thermal characteristics of this next generation, and then this knowledge gets translated into Boyd's own designs. Boyd's manufacturing engineering teams are also involved in the design of the cooling systems to ensure the highest reliability and that production can be rapidly scaled to meet customer needs anywhere in the world.

This deep application engineering expertise combined with world-class manufacturing and supply chain creates a powerful flywheel for Boyd to always stay ahead of the competition in terms of technology, reliability, and scalability. On Slide six, we show some market data. As we talked about previously, the chips used to power AI models and other high-performance compute applications are getting more and more powerful. If you look at the data before the advent of GenAI, the power used in a typical rack was in the 10 to 15 kilowatt range. At this level, you can cool these chips using air cooling, which is a pretty mature technology and has been around for many years.

Now, with the introduction of more and more powerful AI chips, the power in each one of those racks is just skyrocketing. Take NVIDIA, for example, its GB200 chip unveiled in 2024 uses 120 kilowatts per rack. Fast forward a year to 2025, and NVIDIA's GV300 chip now uses 180 kilowatts per rack. And it's only increasing from there. NVIDIA's Robin chip is expected to use 600 kilowatts per rack, and its Feynman chip 1,000 kilowatts per rack. Now, in addition to this, higher power chips require more and more electrical equipment, which is a great thing for our business. Once you get above roughly 50 kilowatts per rack, traditional air cooling is replaced by liquid cooling.

The physics of these power levels require liquid cooling the chip; otherwise, performance is degraded, chips don't last as long, or they just might not work at all. So all the demand that you are seeing for Gen AI chips will drive commensurate demand for liquid cooling solutions to cool those chips. The growth goes hand in hand. Market estimates vary, but we believe that the global liquid cooling market will grow around 35% annually through 2028. Just tremendous growth that is supported by long-term underlying factors. And to go back to my point from the prior slide, Boyd is the global leader in liquid cooling, which is why we are so excited about this business.

With the acquisition of Boyd, Eaton Corporation plc's data center portfolio will now be even bigger than before, shown in more detail on Page seven. We can now provide solutions for all major power and cooling systems from the chip to the grid. This includes all of our traditional power distribution, power quality, and infrastructure products in the data center gray space. And here you can see our other two recent acquisitions of Fiberbond Modular Pods and Resilient Power medium voltage solid-state transformers. And in the data center white space, we can provide everything from power distribution units, remote power panels, and busway to racks, enclosures, cable tray, and in 2026, liquid cooling.

And of course, I need to mention our software and services capabilities, which historically have been focused on the gray space and the white space power distribution and power class equipment only, and now we added the same service capabilities for liquid cooling. Which we view as a really attractive avenue for growth. Truly an impressive portfolio of solutions for data centers. Moving to page eight, I already talked about how this acquisition bolsters our data center portfolio. And I also want to mention how it aligns with how our customers are thinking about the future data center architectures. Starting from the chip out, there are really five main technology blocks that work outward towards the utility grid.

There is the thermal management system to handle heat loads primarily from the chip but also from other heat-generating assets like storage devices and power supplies. There is white space power distribution and infrastructure equipment to get the power to the racks. There's a great equipment to distribute, transform, and condition medium voltage AC power down to low voltage AC and then low voltage DC power. There are Eaton Corporation plc assets to connect the data center to the grid. And finally, there is software and services to monitor and manage all these power and IT assets. So with this acquisition of Boyd, Eaton Corporation plc now plays a leading position in each one of those technology blocks.

One reason this is important is that we can now offer our data center customers a greater share of wallet. This is important as they seek to consolidate their supply base among a smaller set of stronger, more globally capable players. And the other important reason is that customers are increasingly looking to integrate these various systems to drive increased technical performance and more rapid deployments. This is especially true in data center white space, which is exactly where Boyd plays. So overall, a really exciting acquisition for us and one that we know will allow us to continue supporting our customers today and into the future.

Now let's pivot to execute for growth, another exciting important pillar of our strategy. So on Slide nine, these are key leading indicators in Electrical Americas. This segment is clearly the half of our portfolio, and we have an execution plan to grow it even stronger. And with increased margins. Our leading indicators on this page are proof points of the generational growth opportunity ahead of us. They also show that our team is executing well to capture this growth. The visibility is unprecedented. So let me walk you through what we are seeing. Over the last two years, the mega project announcements have increased a staggering 185%.

In the same timeframe, our negotiations pipeline has increased 35%, following into rolling twelve-month orders up 23% on a two-year stack and a book to bill of 1.1. For data centers specifically, the two-year stack of rolling twelve-month orders is up more than 100%, and the data center book to bill is 1.7. Elastic Americas backlog is up 51% over the last two years, of which data center backlog extends over two years. On a two-year stack, Electrical has grown 23% organically, and within that, data centers have grown 104%. So the demand indicators clearly support why we are so bullish for this business. Our position of strength in The Americas keeps resonating across the market.

We are proud to have the broadest portfolio of electrical products in the market, to cultivate strong and trustworthy relationships, and to be the partner of choice to co-design the technologies of the future together with our key customers. Slide 10 showcases the Elanco global organic growth journey. Last year, we grew 4%, this year approximately 7%. We've talked about the focus to increase electrical global margins while we continue to make strong progress. Our 2025 guidance reflects year-over-year margin expansion of 100 basis points. And let's talk about the growth rates in Electrical Global now. Our Electrical Global organic growth is accelerating up to about 7% in our 2025 guidance from 4% last year.

Our 2030 target of 6% to 9% growth for the portfolio assumes about a middle single-digit growth over the period, and we are off to a great start. We are seeing order acceleration, building strong backlog, and positioning to win for years to come. We talk about being in the right markets, targeting fast-growing markets supported by secular megatrends. For example, the data center growth is impacting our business globally as governments and enterprises are prioritizing data localization and resiliency, and we are partnering with our hyperscaler customers in various parts of the world. And by the way, all these data centers need power, and we are a key beneficiary of our global utility space as well.

And we have a broad portfolio with breadth and capabilities leveraged across end markets. All this enables us to win and positions us to gain market share on a global front. The strategy is clear. And as you'll hear from Olivier soon, we are booking sizable orders already, which is momentum to position us for strong growth for years to come. Now, I will pass to Olivier to walk through the financials.

Olivier C. Leonetti: Thank you, Paulo. I'll start by providing a brief summary of Q3 results. Organic growth for the quarter was 7%, driven by strength in Aerospace, Electrical Americas, and Electrical Global, partially offset by weakness in short-cycle markets, including vehicle and eMobility. Otherwise, organic growth would have been almost 10%. We generated quarterly revenue of $7 billion and expanded margins by 70 basis points to 25%. Adjusted EPS of $3.07 increased by 8%, which is at the high end of our guidance range. Now let's move to the segment details. On slide 12, we highlight the Electrical Americas segment. The business continues to execute at a high level and delivered another record quarter on operating profit and Q3 record margins.

Organic sales growth of 9% was driven primarily by strength in data centers, up about 40%. Operating margin of 30.3% was up 20 basis points versus prior year, benefiting from higher sales and increased operational efficiencies. Orders accelerated to up 7% on a trailing twelve-month basis, from up 2%. This represents a strong acceleration with total quarterly orders up sequentially by more than 11%. We are confident that we will have an all-time record level of orders booked in 2025. Book to bill remained at 1.1, and our backlog grew by $2 billion or 20% to $12 billion, providing strong visibility for our organic growth outlook. Now I'll summarize the results of our Electrical Global segment.

Total growth of 10% included organic growth of 8%, a very strong performance for the quarter. We had strength in data center, residential, commercial, and institutional and machine OEM. Regionally, we saw high single-digit growth across all three regions. Operating margin of 19.1% was up 40 basis points over prior year, driven primarily by sales growth partially offset by higher inpatients. Orders were up 2% on the Olive twelve-month basis, with mid-single-digit growth in APAC and EMEA. EMEA orders increased by more than 30%, driven by data center orders, including sizable orders in The Middle East and a large order with hyperscaler in Scandinavia. This represents strong acceleration with quarterly orders up sequentially 15%.

Backlog increased 7% from prior year, while book to bill remained above one on a holding twelve-month basis. Before moving to our industrial businesses, I'd like to briefly recap the combined Electrical segment's performance. For Q3, we posted organic growth of 9% and segment margin of 26.6%, which was up 40 basis points over prior year. On a holding twelve-month basis, orders accelerated to up 5%, and our book to bill ratio for our electrical sector increased to 1.1. This represents continued acceleration with quarterly orders up sequentially by 13%. We are very excited to capture growth from the robust demand with strong margins in our overall electrical business.

Page 14 highlights our 13% remained at the high end and resulted in Q3 record sales. With broad-based strength across all markets, and particular strength in defense aftermarket. Operating margin expanded by 150 basis points to 25.9%, driven primarily by sales growth. On a holding twelve-month basis, orders increased 11%, driven by defense OEM and aftermarket up 1614% respectively. On a two-year stack basis, trailing twelve-month orders are up 17%. This demonstrates strong momentum with quarterly orders increasing over 9% sequentially. Our book to bill for our Aerospace segment remains strong at one on a holding twelve-month basis, resulting in backlog increase of 15% year over year and 4% sequentially.

Overall, Aerospace posted a solid Q3 and remains well positioned going forward. Moving to our Vehicle segment on Page 15. In the quarter, the business declined by 9% on an organic basis, primarily driven by weaknesses in the North America truck and light vehicle markets. Margin are down 160 basis points year over year, primarily driven by lower sales and higher inflation. On Page 16, we show results for our eMobility business. Revenue decreased 90% from 20% lower organic, partially offset by 1% favorable FX. Operating loss was $9 million in the quarter. Now, I'll pass it back to Paulo to go over the remainder of the presentation.

Paulo Ruiz Sternadt: Thanks, Olivier. Here on Page 17 is our updated guidance for the year for organic growth and operating margins. We are reaffirming our growth guidance range of 8.5% to 9.5%. We will likely end up at the low end of this range in total, primarily due to market dynamics in our vehicle and eMobility businesses. We are also reaffirming our margin guidance of 24.1% to 24.5% with minor revisions between Aerospace and eMobility. Moving to page 18, here's the outlook for Q4 and our updated guidance for the year. For the upcoming quarter, we see EPS of $3.23 to $3.43, representing 18% year-over-year growth.

We see organic growth at 10% to 12%, which is a reacceleration of growth for the company. And for the year, we are reaffirming our adjusted EPS guidance at $11.97 to $12.17, which includes our near-term investments to position us for sustained long-term growth. As this represents 12% growth in earnings per share at the midpoint, which I promised you in March. Shifting our perspective ahead to 2026 on Page 19, we provide a review of end market growth assumptions for the year. All in, this equates to about a 7% market growth rate, and with some outgrowth, is consistent with our 2030 organic growth CAGR of 6% to 9%.

I won't go line by line here, but this chart shows that we anticipate growth across our end markets with attractive growth for over 70% of our portfolio. In particular, the data center, distributed IT, and electrical vehicle markets are expected to be the strongest, up double digits. We also expect solid growth in the utility end market along with both commercial aerospace and defense. In summary, we continue to see many paths towards sustained growth, and we are confident in our end market positioning to deliver another differentiated year in 2026 of growth and strong shareholder returns. I will close with a quick summary on Page 20. We had a strong quarter.

Q3 record revenue and an all-time record on segment profit and margin. We are seeing unprecedented demand reflected in continued order acceleration and growing backlogs. Our strategy to lead, invest, and execute for growth is positioning us to capture generational demand and deliver lasting value for our shareholders. We look forward to welcoming and integrating Boyd into our business and satisfying our customers with a complete solution offering. Bottom line, we have confidence in our guidance to close out the remainder of the year, and we are well positioned as we go into 2026 and beyond. And we remain confident that our brightest days are yet to come. And with that, we are happy to take your questions.

Yan Jin: Your opportunity just one question and follow-up. Thanks in advance for your cooperation. With that, I will turn it over to the operator to give you guys the instruction.

Operator: Certainly. Our first question comes from the line of Andrew Obin from Bank of America. Your question please.

Andrew Obin: Yes, good morning.

Paulo Ruiz Sternadt: Good morning. Good morning, Andrew. Hi, Andrew.

Andrew Obin: Yeah. So, you know, I know orders maybe you guys don't want to talk about them, but the investors certainly do. Maybe we can talk about Electrical Americas LTM orders outlook.

Olivier C. Leonetti: Electrical Americas orders continue to accelerate on an LTM basis. I think it was 2% in the second quarter. 7% in the third quarter. So what's your expectation for orders in the fourth quarter and 2026, if you're willing to talk about it? Thank you. Sure. Thanks for the question, Andrew. Based on the orders momentum we had in Q3, and a very strong October, in orders we also have a growth in our negotiations pipeline. We have a lot of visibility into Q4 orders. So we remain very bullish about orders growth also in Q4.

And I say that because we continue to have specific projects that we track in the pipeline that support this outlook that I'm referring to for strong order acceleration of LTM orders into Q4. So we are bullish about orders.

Andrew Obin: Excellent. And maybe we can talk about Electrical Americas quarterly orders. You only just closed orders on an LTM basis. But I think externally, we do estimate your orders on a quarterly basis in Electrical Americas. I think it was sort of came up like mid-20s to close to 30% year over year. Is that in the ballpark? And is it close to 30%? Is it close to 25%? Thank you.

Paulo Ruiz Sternadt: Another great question. Thanks again. Based on these LTM disclosures we make, we know that people externally estimate quarterly orders as well. I would say this direction your estimate is in the ballpark. I would say it's towards the higher end of your estimation. So we continue to see strong inflection in orders in Q3. As I just said, we continue to see momentum in Q4. But most importantly, and I would like to remind you and the whole team why we are winning businesses at this pace. I think it's important to talk about it. We have this success because we have the broadest of electrical products in Electrical Americas. We have all the solutions and services.

We count on strong channels. And we also have deep customer intimacy. So we co-design future technologies with our customers. And this allows us to be a leader in several end markets. I'm not only about data centers, but we also lead in utilities. We had very strong orders in utilities. C and I, etcetera. So every investment we make into Electrical America is actually scaled across many different end markets. And as you know, we're expanding our footprint in North America as well. To better serve our customers and to continue to capture more than our fair share of the market.

And at the same time, I would say this, that we are also in the position of strength that we have today and winning all these big orders because of the way we intentionally position our portfolio. So we have proven to be disciplined, proven to be nimble, progressive, and you continue to make the right moves to boost our growth. So we believe the best days and years are ahead of this business yet.

Olivier C. Leonetti: And Andrew, there was a lot of focus also on data center and hyperscale. The growth on orders in this particular vertical was very strong. In The Americas, close to 70%, same number for Global, and in total for the Electrical sector, close to 70% order growth in the quarter for data center and hyperscale.

Andrew Obin: Okay. Well, thanks so much.

Paulo Ruiz Sternadt: Yes. And I'll just conclude by saying that we'll we are beating every competitor on the marketing orders. And part of this is attributable to the portfolio and our sales channels and the relationships, but partially is also to the fact we are investing in our footprint and our customers feel comfortable and confident in giving us more orders versus other competitors. I think that's also a point that I would like to stress.

Andrew Obin: Thanks so much. Well, I'll let others to ask how Boyd was going help you with that. Thank you. Thanks.

Operator: Thank you. And our next question comes from the line of Andy Kaplowitz from Citigroup. Your question please. Good morning, everyone.

Paulo Ruiz Sternadt: Good morning, Andy. Good morning, Andy.

Andy Kaplowitz: Paolo, you previously said that AI data centers can get you $1.2 million to $2.9 million sales per megawatt and that you expect data center growth to be 17% over the next several years. But as you suggested today, even in the market of changed even since your Investor Day, the market been beginning to evolve toward 800 volt DC power architecture. You added FiberBond and now you're obviously adding Boyd. So can you talk about what total Eaton Corporation plc sales per megawatt within your eventual new portfolio could be? And do you ultimately see the data center market growing considerably faster than that 17% with Eaton Corporation plc outperforming?

Paulo Ruiz Sternadt: Yes, great question. Let me lead with this. We mentioned to you before that we have the broadest portfolio of power management solutions for data centers we had it already even before the announcement we made yesterday. But starting with the white space products, the white space is centered around the chips. And moving to the gray space, we have all this color product distribution, our quality products all the way to the front of the meter where we have our utility grid products. So we have a very extensive portfolio. And the recent acquisitions we made our position so much stronger. As you know, the data centers exist to support the chips ultimately.

And as these chips become more and more powerful, especially in support of AI workloads, as you mentioned, data center operators are moving towards direct current. Why is that? Because direct current offers advantages in terms of reduced power losses, fewer conversions with alternate current, and the ability to offer direct integration with other sources of power, just like renewables and battery storage. And Eaton Corporation plc is extremely well positioned for this change not only because today our products touch every conversion of AC and DC in the data center. But also because we have decade-long experience with dealing with DC power in other segments like machinery, industrial facilities, and also eMobility.

We're dealing with DC power for a while. So this is another example that makes Eaton Corporation plc unique in this space. And the resilient power acquisition we made a couple of quarters ago actually accelerates our readiness for DC integration right from the utility feed down to the chips. So, the question you made is how this can be possible. We are working with a number of customers. We're also working with institutions and governments and we have a seat on the table to decide on the codes for the new systems. And we also, as you probably know, we are partnering with NVIDIA. So we designed the data centers from the chip out.

On your specific question, on the dollars per megawatt, our range was between $1.2 million to $2.4 million per megawatt being the lower end cloud and being the higher end AI loads. For the portfolio we have today. And with the acquisition of Boyd, we're going to add another $500,000 so it will be close to $3 million per megawatt at the high end of the guide.

Andy Kaplowitz: And then maybe just for Olivier, your organic revenue growth in Electrical Americas slowed in Q3 versus Q2. I think the comps are pretty similar. I think you also have more capacity coming on. So can you give us more color on what in your end markets with maybe residential slower and I know you have a relatively big implied ramp in Q4, easier comps help. But where is that coming from? Is it data center revenue growth? And how does that translate into 'twenty six?

Olivier C. Leonetti: So if you look at Q3 on organic growth for ESA, we had two factors impacting our sales to the downside. One, residential being slower in September. And two, some small orders some orders being delayed from Q3 to Q4. We are confident that we'll catch up in Q4. If you look at the implied over new guide for ESA, that would be in the range of 17% to 18%. We're confident in our ability to deliver this kind of revenue growth as we are adding capacity.

Paulo Ruiz Sternadt: Like to complement this. Just to complement what Olivier said, which is absolutely right. I'd like you to take this into perspective. This miss of Electrical Americas to the midpoint of the guide if you calculate the dollars are $80 million eight-zero. If you think about the future performance of the business and the overall company, is not comparable, is not really important if you compare versus the backlog sequential increase we had for the company. The backlog increase from Q2 to Q3 for the overall company is about $1 billion being $600 million only in Latin America. So that's what gives us the confidence we have the right number going forward.

And then a reminder, last year, we had also a tough Q4 because we had impacts of strikes and hurricanes. So the comparables well helps in this case year over year.

Andy Kaplowitz: Appreciate the color guys.

Yan Jin: Thank you, Andy.

Operator: Thank you. And our next question comes from the line of Chris Snyder from Morgan Stanley. Your question please.

Chris Snyder: Thank you. I wanted to follow-up on some of that Q3 versus Q4 commentary, but specifically more on EPS. So Q3 EPS was up I guess, 8% year on year. Guiding Q4 at the midpoint up to 18 above the full year of 12. So is that just all driven by The Americas seeing stronger organic growth, which you just talked about? Or are there other factors in here that driving that sharp pickup in earnings growth? Thank you.

Olivier C. Leonetti: Mainly other factors. If you look at first the tax rate, last year, our tax rate in the quarter for Q4 was 17.4%. We are modeling 15%. The 15% is supported by discrete tax items. This is under our control. So that would be half of the difference between the 18% and the 12% for the full year. And the other half is a compare benefit Paolo mentioned that last year, had the impact of strike and hurricanes. Which impacted EPS and would benefit from the compare as well. So between the 18,000,000 and the twelve fifty-fifty of the gap between tax and the compare. Chris?

Paulo Ruiz Sternadt: And Chris, I'll just add one element to this. Just to complete the picture here, if you adjust by the two factors that Olivier just mentioned, the EPS growth will be around 13%. Which is a little bit higher than the average of the year. So that gives us confidence that we can hit that.

Chris Snyder: Thank you. I appreciate that. And maybe if I could follow-up with one, maybe more thematically around the Boyd acquisition. I imagine that there has always been some benefits if you were able to supply customers power equipment into both the gray and white space within data center. But it does seem like the ability to supply both is getting more important. Maybe that's on the move to 800 volts. I'm not sure. But I guess, you know, Paulo, from your standpoint, is the ability to sell into both the white and the gray space becoming more important? And was that a big if so, why? And ultimately, is that kind of a big motivation? This acquisition?

Operator: Thank you.

Paulo Ruiz Sternadt: Yes. No, great question. If you allow me, I'd like to give you a big picture rationale and acquisition. We can deep dive on this particular topic. We are excited about the data center market. We all know it's growing at a very fast pace. But if you look at liquid cooling, in particular, it's growing at even faster pace than the average of the data center market. So you saw in your chart in the low point projection of the market, is 35% CAGR. So market will be between $6 billion and $9 billion already in 2028. In 2030, we expect the market to be between $15 billion and $18 billion. So it will be a massive market.

And I told you, I think it's important, I get back to that point. I told you last quarter that the white space became much more interesting for Eaton Corporation plc given the power ranges that and also going to the racks moving from few kilowatts to a megawatt, which is at site now. And this makes a remarkable change in the way we design the power solutions. To be more attractive for Eaton Corporation plc having mission-critical solutions here. And then if you look at the cooling portion of it, there are technical synergies in the way you design the white space from the chip out.

And that's what we are interested in, in converting power and cooling technology and knowledge to come up with better designs for our customers. Then why Boyd? I would say we start with this. Firstly, they really have similar DNA that Eaton Corporation plc, which means that they lead with technology and innovation. Second, they are the market leader. So that provides us with a scaled entry into the market, not a sub-optimum assets we saw on the market before. This is a market leader. They have a global footprint. Which is impressive in all three continents. And a best-in-class engineering team because they have around 500 engineers and they are the best cooling experts on the market.

So we like what we see. And we also like the way they sell it, because they work through technical sales, meaning they work intimately connected with all the chip companies. So think about the merchant chips like NVIDIA, AMG, but they also work on the captive proprietary custom silicon developers which are the hyperscalers. So they are in those development projects for the long run. So they know two or three generations ahead of what is commercial today, what's gonna be delivered, because they are part of those projects.

So talking about synergies here, first of all, Eaton Corporation plc, in our power portfolio, we can leverage this connectivity they have with a chip manufacturers and the hyperscalers on their own chips. To leverage our power system designs as well. So they have the customer intimacy. On the other end, we believe we can help them grow their colocation, multi-tenant market. We have better access and better relationships than them. And then we also can help them reducing their cost position given our purchasing power at Eaton Corporation plc. Next year, they're going to reach $1.7 billion in revenue, which is staggering 70% growth.

We double clicked on that during diligence and their Q4 exit rate is already 400 which gives 1.6 if you multiply it by four making this $1.7 plan not only achievable, but there is upside next year. So I mean, we saw from that angle made us believe that was the right asset to go after. And we also know that we keep our discipline with the returns between 200, 300 points being accretive year two. So all the good stuff. So the asset is fantastic. I'm really excited about winning this business, especially because we've been working getting them to know as a supplier first for over a year.

Getting to know the teams, the technology, We hired independent consultants to browse all the pooling players and all the inputs we got pointed to Boyd as the best option for us. So when the asset came to market, we knew exactly what we wanted to check. We knew what plans we wanted to visit. We had an idea on the talent we wanted to retain. So we were quick, we were fast, and we won by certainty of our proposal fully vetted by our board, not necessarily because we were bidding higher than other folks. So a great step for us a great step for the business.

And we believe that combining these two technologies in the future will bring a lot of wins for the company even though I say we didn't need to put much of the synergies into the model. To make the math work because the business is growing so fast that it wins on its own merits.

Chris Snyder: Thank you, Paolo. Really appreciate that.

Operator: Thank you. And our next question comes from the line of Joe Ritchie from Goldman Sachs. Your question please.

Joe Ritchie: Hey guys, good morning.

Paulo Ruiz Sternadt: Morning, Joe. Morning, Joe.

Joe Ritchie: Hey. Just Paolo, maybe just continuing the conversation on Boyd. I'm just curious, when you think about the SaaS and how long they've been providing liquid cooling or CDU solutions to data centers, maybe help us provide a little bit of the history on that. And then secondly, we're trying to level set the portfolio of their business that you've laid out on slide five. I'm curious specifically, how much is liquid cooling? How much is cold plate? Just any color you can give us on that would be helpful.

Paulo Ruiz Sternadt: Great. So the company historically started by designing cooling systems for aerospace. Which is a great place to start because it's very stringent tough requirements, tough engineering solutions. And they really got traction there. And then when cooling became a reality, in the data center space, they migrated to cooling in data centers. You should think about Boyd as over 80% of their revenues are in the data center space, and the other 20% are divided between aerospace and industrial applications. So the data center part is growing at much faster pace, as you know. But the aerospace part is also interesting. We were working on our own projects to achieve exactly that.

And now with our technology, we don't need to continue with those projects any longer in aerospace. So it's also important but not any close to the growth rates that we see in data centers. And as you think about Boyd, they are not a don't think of Boyd as coplate company. They are the cooling experts on the market. When you have 500 engineers, and you are embedded into two or three generations of chips ahead of what's commercial today, you know what's going to happen in the next five years. And you are designed in. And it's almost like the same behavior we have in the aerospace selling.

You get to develop something with your customers, you win and you are in the platform. The difference here is that the aerospace platforms change every thirty years, and the chips change every 18 months. So they are ahead of the curve for the new designs to come to reality, which gives them a lot of advantage. I'm gonna explain what I mean by that. When solutions are stable, people will try to copy and do it cheaper. When the design is changing every 18 months, there's no way a company can catch up with them unless you have a seat on the table, you're working with engineering, teams of your customers. That's exactly how they play.

So we felt really comfortable with that. And then they have a long range of products in the cooling space. And they also have systems and they have systems capabilities. So the way to think about the future of this business is, whatever makes more sense to the customers they will develop and they will implement. They will not be fighting for product a or product b. They will always be offering the best solution to make the chips work perfectly fine. So that's how they are wired. We love the way they conduct themselves. And we talked a lot about engineering side of it.

But they also have great footprint with plants in Asia, Eastern Europe, North America, and top the edge lean qualities as well. So it's a well-run business. And we know we can scale. We know we can scale that business, and we will.

Joe Ritchie: Got it. That's that's super helpful. And then just a quick follow on question. On EA backlog. So, you know, you've grown the backlog by about $2 billion, year over year. It sounds like you have an expectation it will continue to grow through the end of the year. Just how are you how are you thinking about 2026 just given the strong growth that you're seeing and potentially continuing to see backlog growth in EA? In 2026?

Paulo Ruiz Sternadt: Yes. So particularly on the Latin America, through Q3, we saw this backlog growth of 20% which includes 9% organically. And on LTM basis, our book to bill was 1.1, as I said before. We were supported by higher growth in our end markets and also because, as I said before, we're investing and the customers are trusting us. So great results for Q3. As we look into Q4, and I said before, are bullish about orders growth once again in Q4. We see momentum in negotiations in orders. So it's very possible that our backlog at the 2025 will be up year over year at similar growth rates as Q3 was versus last year.

So the indications that could be possible. And the book to bill could also improve beyond 1.1 as a consequence. For '26, the second part of your question, I would say it's a bit too early to call. We will have more to share. We will provide our guidance in February. One thing is for sure, I want to share with you. We will start 2026 with record backlogs and enormous just enormous visibility into the fiscal year. That's a guarantee.

Joe Ritchie: Thank you.

Operator: Thank you. Our next question comes from the line of Nigel Coe from Wolfe Research. Your question please.

Nigel Coe: Thanks guys. Good morning. Just want to change gears a little bit here and maybe talk about aerospace. Perhaps you could just unpack the drivers of the aero performance and, in particular, the margins. And obviously, very strong leverage there. So just wanted to understand what's driving that?

Paulo Ruiz Sternadt: Okay. Great. Thanks. Well, you probably remember Nigel, that we shared in March our plan for the Aerospace business to go to 2030. And to reach 27% margins. John Sapp, John explained that to the whole team. I would start by saying that we're on the right track to deliver on 2030 commitments. I see great performance by the aerospace team this year that supports my statement. I'll give you more detail on that. Firstly, want to say, which is really important for this business, they landed historical wins on new platforms that were available defense platforms. So those historical wins will give us a lot of revenue decades to come. So the long-term view of this business is fantastic.

And incredibly strong. For the short term, I'm again proud of the team as they keep ramping volumes consistently and improving customer satisfaction while they do that, which is also great. So if you compare this business last year, we grew 10%. And this year, we're yet again raising organic growth guidance up 100 basis points to the midpoint of 12% this year, which is a great year-over-year performance. And on the margin front, we start to see upside from some of the key strategic levers which are driving already 70 basis points of margin expansion. So I would say we are on track to reach the 27% margins we promised for 2030.

Asked for details where we are working to improve margins. The first thing is no surprise in the industry supply chain. We invested in AI tools to improve planning and the connectivity between our suppliers and our customers, including our plants. This is going well. Second, we are investing in amount of manufacturing excellence, improving the way aerospace runs the show. And it's also going the right track. And third, I would say this, we also although there's not the massive investment we had in Electrical Americas, aerospace is also expanding a couple of plants and they're doing that very well. But that growth is basically getting more out of the same facilities they have, which is great performance.

And fourth, I would say this, we talk about portfolio management both for the short term and for the long term. I see also green shoots here, You heard me saying every GM as a portfolio manager, So John Sapp and his team, they took care of some contracts that we saw as a tail of the portfolio and then renegotiated those contracts, which will give us better margins in the future.

And the other thing I want to highlight which the team also landed, I don't want you to forget, is that the Ultra PCS announced deal is a great example of an asset we acquire that would add to the top line in terms of growth acceleration and we'll start adding to the margin being accretive to margins right away. So it's a great asset. And we expect now to close this year in Q4 rather than beginning of the first half of next year, which is also great news. So I would summarize by saying proud, really proud of this team and I'm confident that they will deliver on their commitments towards two thousand and thirty.

Olivier C. Leonetti: One additional statistic, Nigel, if I may. The 12% revenue guide for the year we'd also assume a backlog growth. So we're not flushing the backlog. We are growing faster than prior year. And adding to the backlog. As a reminder, the backlog in Q3 was 15%, one-five higher than it was a year ago.

Nigel Coe: Yes. That's great color. Thanks, guys. And then sticking with margins, a lot going on, in The Americas margins. Price, tariffs, investment spending, etcetera, obviously, lot of volume leverage as well. So just wondering how we should think about incremental margins in 2026 and how that all plays out? Thanks.

Paulo Ruiz Sternadt: Yeah. I will start and then I'll allow Olivier to provide more color. It's too early to talk about 2026 margins. But I think Q3 was a good proxy where the top line didn't come to the levels expected and the business could. Produce very good margins. And why was this possible? First, because we had a backlog we could deliver on. Second, because the team now covers for all the tariff costs and is not a drag on the margins. So it's not only recovering on the dollar by dollar basis, by the end of the year now, but also is not dilutive to margins, which is great news. Where are we now in Electrical Americas?

That's exactly the discussion we should be having. Think about a business that has been growing consistently with the same portfolio of plants. And all of a sudden now they're expanding 12 facilities at the same time. So six are built and they start to ramp. Other six are in building phase. So it's a lot of activity in that business, preparing us to start a new S curve, a new chapter of growth for the business. That's the way to think about Electrical Americas. Our customers trust that, and it's proven by the amount of orders they are giving us, which is it's just fascinating to see that. Quarter after quarter.

So that business is exactly getting ready for all this demand that we announced the expansions at the right time, and we realized that all this order momentum we have we need to accelerate investments, get the people ready, so we can produce on this backlog that we count on today. And with all that, we have over 100 basis points of inefficiencies minimum that we have by dealing with those inefficiencies and all this turmoil are ramping six facilities at the same time. So we're gonna give you full guidance in February for 2026, But in 2026, you should expect that we continue to ramp, so some of those inefficiencies are still going to be there.

But they're going disappear over time and then we can print even better margins for Electrical Americas.

Nigel Coe: Great. Thanks, Tyler.

Operator: Thank you. And our next question comes from the line of Jeffrey Sprague from Vertical Research Partners. Your question please.

Jeffrey Sprague: Hey, thanks. Good morning, everyone.

Paulo Ruiz Sternadt: Morning, Jeffrey. Morning.

Jeffrey Sprague: Hey. A lot of ground covered. I just wanna come back to Boyd one more time, at least for me. Just a little more color sort of on some of the deal assumptions. Paulo, that was very helpful given us the $1 billion to $1.7 billion. That was part of my question. But this 25% margin that you're pointing to, is that their organic margin? Is that kind of comparable to Eaton Corporation plc accounting? Or do you have some synergies baked into that number?

Paulo Ruiz Sternadt: No. This is their margin. This is their margin. Yeah. Today.

Jeffrey Sprague: And then and then so if you think about synergies, you know, you alluded to revenue synergies working together. I would assume you're maybe not ready to totally you know, kinda give us a number on that, although the $500,000 of content, certainly is a is a starting point. But how about on the cost side? Is there a cost story here too? Or you know, coming out of private equity, maybe, these guys have a lot of capacity they need to add or something to kind of keep up with this demand. Should we just think about kind of investment for growth as opposed to kinda cost related synergies as part of the, earnings algorithm?

Paulo Ruiz Sternadt: Yeah. We have both. I will say this. I'll go back to the deal criteria. It's clear that we remain disciplined. Is going to be accretive on year two. And I said before, we need to use synergies to make the business case work given all the growth that they have in the pipe. But if you look at the synergy, the multiple after the synergies, the multiple goes down to high single digit. So there are synergies that we can play here. The most the quickest and the easiest to implement is on the cost side. We look at what they buy.

And we compare to our purchasing volumes and our purchasing power we believe we can help them a great deal. And then again, the other part of synergies about sales, that we see as a great opportunity and we work towards that. But once again, we could even take this out of the model, and the math will still work fine. Olivier can give you more details on how we're going to run the financing, etcetera. We also checked our leverage point. And we believe that after the deal, we're going to still be at the same credit rating as today. So that would not be affected. You want to add anything, Olivia, to it?

Olivier C. Leonetti: Nothing more to add. No.

Jeffrey Sprague: Okay? I'll leave it there. Thank you very much. Thank you.

Operator: Thank you. Our next question comes from the line of Steve Tusa from JPMorgan. Your question please.

Steve Tusa: Guys, thanks for fitting me in.

Paulo Ruiz Sternadt: Hey,

Steve Tusa: So just to kind of clarify in the fourth quarter here, I guess what you're saying with the EA revenue is that the resi stuff remains weak and, some of these other nits and naps that were onetime issues, you know, ship. And so I think the midpoint of the prior range was higher than 18% revenue growth. Is that basically the resi impact in 4Q?

Olivier C. Leonetti: Yes. So you got this correctly. Steve. I'll go back. So we if you look at the sequential revenue growth for Electrical Americas around $200 million we are confident we check plant by plant what needs to happen. And this is around 5% to 6% sequential growth. And this is possible because new capacity came online in Q3, we are ramping up as we speak. In terms of the miss you mentioned, which was half of the miss to the mid of the guidance on growth, you should think about this as being less than one day of sales. Right?

So think about whole quarter and they missed less than one day of sales, and this is gonna be a carryover for us in Q4. So that product is on the pipe. It was on the shop floor. And now becomes a tailwind for Q4. So this is one element for you to consider. That's why we believe this strong double-digit growth is possible. Having this carryover from Q3. That we were working on, we put on the lever. And then the second thing was that last year, is the easiest comp of 2024, which the growth was only 9%. So we believe it's possible to achieve that.

Steve Tusa: Yeah. So they that makes sense. I like only 9% growth. That's not exactly the easiest comp in the grand scheme of the economy, but I understand for you guys it's kind of a different scale. Then just lastly, following up on Nigel's question on the margins, I think your margins are guided this year down 50 bps and you have this 100 basis points of inefficiencies. You're also absorbing tariffs and maybe like a deal here and there this year. Like, why wouldn't it be better than, you know, down modestly next year? Like, does the 100 bps get worse next year, or does that get a little bit better?

You know, you should be able to kind of, in my view, engineer to something that's that's at least up a little bit you know, for next year.

Operator: For EA.

Paulo Ruiz Sternadt: Yeah. So on the first part of your question, of course, we are dealing with the right deals in the right time, the right place. Is not what we're to do. So that addresses the first part of your question. And of course, the business is making things better as we speak every month, every day. And you should expect that those inefficiencies will go away as more of the plants that we start to ramp up, they become mature. I'll only caution you, it's too early to give you guidance for 2026. We're going to talk in February, and then we're going to give you more detail on the plan.

I need to meet with the team to see the bottoms up plan working on that as we speak. But directionally, think about this less deals next year, we focus to digest what we acquired this year. And then in terms of efficiencies, should start getting better over time Latin America as we mature the food footprint.

Steve Tusa: Yeah. That makes a lot of sense. Okay. Thanks a lot.

Operator: Thank you. And our next question comes from the line of Deane Dray from RBC. Your question please.

Deane Dray: Thank you. Good afternoon, everyone.

Paulo Ruiz Sternadt: Good afternoon. Good afternoon.

Deane Dray: Hey, just want to follow-up on Jeff's question regarding capacity investments and particularly for Boyd. We talk about the 70% growth expected for '26. How much capacity do they need to add one of their key competitors announced they're doubling capacity. He said, boy, to 16 plants. Just what's in front of them in terms of capacity? And really, what are you solving for? Is there a backlog that you have in mind? That you don't want to exceed in terms of how much capacity you'll you'll be adding.

Paulo Ruiz Sternadt: So this was a key part of our diligence. And we double clicked on that. They are ramping two facilities, large facilities, one in Asia and one in North America, they have ordered they have equipment in place, they are hiring people at a high pace, And then all the long term the long lead items, the long lead capital goods, machinery, etcetera, are ordered already. So the capital plan is well underway. So whatever is required for 2627 is already in the pipe.

And then we feel really good about their capacity to ramp because we were, we saw those plants we saw the exit rate now in Q4 already in the ballpark of the revenue numbers for next year. So yes, they are investing, they are growing. The investments are already in their plan. And over time, it could well happen as it's happening with fiber bond that we can accelerate an algoment their wings and then we can come to a decision later on to invest even further. But today is not required. It's all in.

Deane Dray: That's really good to hear. And then just a follow-up, we appreciate the update on the mega projects. You all have been really good about providing some data points, given your perspective. Can you talk about the number of projects you see today and your win rate?

Paulo Ruiz Sternadt: Yeah. Great. Great question. We didn't have a slide. We plan to have a slide here before we close the deal, so we needed to remove. So maybe next quarter, I'll bring it back. So another very strong quarter. Record announcements once again. So in Q3, the mega project announcements reached $239 billion, which is up 18% year over year, And if you think about the sequential growth from Q2, it's almost 50%. So very, very, very strong quarter. You look at the composition of those mega projects, you would expect a big portion of it be data centers, and it's true. It's almost half of the total. But the other half is not data center, which is also great.

And diversifies the end market. And if you look at what's happening, I gave you data about starts and announcements last quarter. If you look through September, and you look back from January to September, average announcements per month are reaching $65 billion and the starts for all nine months are only $100 billion. So there's a lot of things to still come to the markets, a long runway. And the backlog today is around $2.6 trillion. So it's up 29% from last year. So astronomical numbers, and if you translate to us, we won around $2 billion in orders. We have a negotiation pipeline now.

We are active on negotiating other $4 billion an ish in products and solutions and we win around 40% of what we bid on. So that's a very strong win rate. With all those numbers and you compare the potential to what we booked, so far, I hope you're going to get to the same conclusion I got, which is those large projects typically take between three and five years for announcement to our revenues. So think about this as a great, great tailwind for extended duration of the market growth that we have for even a longer period of time.

Olivier C. Leonetti: You could also triangulate those large projects with what the with the announcement from the hyperscalers. If you remember, during the earnings seasons, the top five in US, they announced a growth in their CapEx 25% to 24% by 67% year on year. And then 26 versus 25 about 45%. And all those numbers are higher than what they had announced the prior quarter. So many triangulation point,

Deane Dray: That's a good point. Thanks. Thanks, Olivier. Really helpful. We can take the last

Paulo Ruiz Sternadt: Thank you. Are overtime. So let's go for the last question, please.

Operator: Certainly. Our final question for today comes from the line of Scott Davis from Melius Research. Your question, please.

Scott Davis: Hey, guys. And congrats on, the numbers etcetera, or the outlook, I should say, is very encouraging. Hey. Just a couple cleanup items because I think you've touched on 99% of what matters here. But the CapEx, I think you were guiding to kind of call it $1.2 billion this year and next. Are you at the point where you may need to upsize that 26,000,000 CapEx number given the order book?

Olivier C. Leonetti: We believe so we will be higher in CapEx in '26 versus '25. We have said that constant in a consistent manner. We think we are going to have leverage. You go back to the question from Paolo on the CapEx, we had deployed in 2025, 2026 would be a pick and then would go back to the historical CapEx as a proportion revenue you had at Eaton Corporation plc.

Scott Davis: As of '27. Right? As of '27. Correct.

Paulo Ruiz Sternadt: So you should think we are actually accelerating our accelerating our hiring and our ramp now. On the existing you know, expansions we announced already.

Scott Davis: Okay. That's helpful. And then, guys, to, again, another cleanup item. Where do we stand right now with channel inventories? Are they back to kind of more normal levels?

Paulo Ruiz Sternadt: Yes. So we have we have a closer look with our distributors. I think RESI reached bottom in my opinion. And then we see other markets that are coming back really nicely. Distribution IT, for example, recovered not only North America, but also in EMEA, double digits orders growth. Our utilities business came back very strongly now as well in terms of orders. Strong double digit growth. So this is coming back. Res is still down DIT back, and then utilities, very, very strong orders. Which we didn't have an opportunity to cover. But utility business did really well in orders as well in Q3.

Scott Davis: Okay. I'll pass it on. Thank you, guys. Thank you.

Yan Jin: Hey. Thanks, guys. As always, the IR team will be available to address your follow-up questions. Thank you for joining us. Have a nice day guys.

Paulo Ruiz Sternadt: Thanks, everyone.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.