Thank you for holding, and welcome to Rockwell Automation Quarterly Conference Call. I need to remind everyone that today's conference call is being recorded. Later in the call we will open up the lines for your questions. [Operator Instructions] At this time, I would like to turn the call over to Aijana Zellner, Head of Investor Relations and Market Strategy. Ms. Zellner, please go ahead.

Thank you, Julian. Good morning, and thank you for joining us for Rockwell Automation's second quarter fiscal 2023 earnings release conference call. With me today is Blake Moret, our Chairman and CEO; and Nick Gangestad, our CFO. Our results were released earlier this morning, and the press release and charts have been posted to our website. Both the press release and charts include and our call today will reference non-GAAP measures. Both the press release and charts include reconciliations of these non-GAAP measures. A webcast of this call will be available on our website for replay for the next 30 days. For your convenience, a transcript of our prepared remarks will also be available on our website at the conclusion of today's call. Before we get started, I need to remind you that our comments will include statements related to the expected future results of our company and are, therefore, forward-looking statements. Our actual results may differ materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and details in all our SEC filings. And with that, I’ll hand over to the Blake.

Thanks Aijana. And good morning everyone. Thank you for joining us today. Let's turn to our second quarter results on Slide 3. We had an outstanding quarter of strong growth in both sales and earnings. Our double-digit sales and margin growth continue to reflect Rockwell's strong execution and focus on business resiliency as well as overall improvement in electronic component availability. The demand for our differentiated offerings continue to be strong even in this uncertain economic environment. Through the first half of this fiscal year, our total orders were $4.8 billion, spread evenly between the 2 quarters once we adjust for the estimated price-related pull forward in our fiscal Q1. As expected, our order cancellation rates remain in the low single digits through April. Total sales grew over 25% versus prior year. Organic sales were up over 27% year-over-year and were above our expectations. Currency translation reduced sales by about 3% and acquisitions contributed over 1 point of growth this quarter. As in the prior quarters, the split of sales by business segment, region and industry, was largely driven by access to electronic components and the composition of our backlog. In the Intelligent Devices business segment, organic sales grew 27% versus prior year with broad-based growth across all businesses. We continue to see wider adoption of our independent cart technology in new applications across semiconductor, food and beverage and life sciences. One example of the new application is way for transport in semiconductor fabs. We continue to see increasing demand for this offering including important win with a large U.S company this quarter. These customer investing in modernizing and expanding its material handling systems and our independent cart technology helps increase wafer output and more efficiently utilizes existing fab space leading to increased capacity and significant savings. Software and Control…

Thank you, Blake, and good morning, everyone. I'll start on Slide 8, second quarter key financial information. Second quarter reported sales were up 25.8% over last year. Q2 organic sales were up 27.3%, and acquisitions contributed 130 basis points to total growth. Currency translation decreased sales by 2.8% about 6 points of our organic growth came from price. Segment operating margin expanded to 21.3% and was higher than our expectations. The majority of this outperformance was driven by the higher revenue. The 560 basis point year-over-year increase in margin was driven by higher sales volume and positive price costs, partially offset by higher incentive compensation and higher investment spend. Corporate and other expense was $29 million, in line with our expectations. Adjusted EPS of $3.01 was ahead of our expectations and grew 81% versus prior year. I'll cover a year-over-year adjusted EPS bridge on a later slide. The adjusted effective tax rate for the second quarter was 17.4%. Free cash flow of $156 million was $110 million higher compared to last year, driven by higher pretax income, partially offset by higher working capital. The increase in working capital was primarily driven by higher accounts receivable given our Q2 sales outperformance. We improved our days on hand in inventory by 7 days in Q2, and we expect reductions in inventory days to continue for the balance of the year. One additional item not shown on the slide, we repurchased approximately 140,000 shares in the quarter at a cost of $38 million. On March 31, $1.1 billion remained available under our repurchase authorization. Slide 9 provides the sales and margin performance overview of our 3 operating segments. Organic sales grew double digits year-over-year in each of our operating segments. Turning to margins. Intelligent Devices margin increased by 560 basis points year-over-year due…

Thanks, Nick. We are still operating in a dynamic environment and are laser-focused on execution through the rest of this fiscal year. With that said, we are continuing to accelerate new product development and investments in cloud-native technologies. Revenue from our new offerings, both organic and inorganic is becoming a more meaningful contributor to growth and share gains. We are the largest pure-play automation company with market-leading solutions across discrete, hybrid and process industries and we are adding scale to our differentiated offerings through strong partnerships and strategic acquisitions. Our recent acquisition of Knowledge Lens is adding 600 resources with cutting-edge data science, AI and cloud solutions to our existing digital services business. This expanded team is already working with our key customers on their next-generation plans. I want to welcome all Knowledge Lens employees to Rockwell. Our close relationships with end customers, our best-in-class ecosystem and our talent give us confidence in the continued momentum for growth and profitability this year and beyond. Aijana will now begin the Q&A session.

Thanks, Blake. We would like to get as many of you as possible, so please limit yourself to 1 question and a quick follow-up. Thank you.

[Operator Instructions] Our first question comes from Andy Kaplowitz from Citigroup. Please go ahead. Your line is open.

Blake, so just focusing on your comments in terms of the setup for '24. I know there will be some investors who will think about the $9 billion of orders and say, look [Indiscernible] point to order deceleration in the second half. But how do you think about the cycle in the context of your $9 billion-plus solution, as we call it, that you're coming close to hitting this year and the $5 billion of backlog you end the year with. I know you suggested you're set up '24 earnings growth, but can you talk about how you're thinking about the durability of the automation cycle based on the conversations you're having? And do you have the capacity to grow beyond that $9 billion?

Sure. Well, let me take that first, Andy. We're continuing to add capacity. So at the same time that chip supply is improving. We're continuing to make sure that our labor and our facilities, our redundancy across our integrated supply chain operations is ready to handle continued growth. So let me start there. Now in terms of the demand, this is playing out like we thought it would. We have said for some time now that we did expect orders and shipments to converge as lead times improve. And so that's exactly what you're seeing, but the orders are continuing at a strong pace. And to look at that, let's take kind of a vertical by vertical view, we've talked about the historic generational spending levels in certain of the verticals that are important to us, things like electric vehicle and battery and semiconductor. We're seeing additional expenditures in energy, both as the fossil fuel providers decarbonized and as renewables become a bigger part of our business as well. But we're also seeing across all verticals an increased focus on automation, and that's due to large durable trends, things like scarcity of trained workforce and so the need to complement people with the technologies and the software and the services that we provide. So as I look across that while we continue to pay close attention to macroeconomic conditions, we think the setup for multiyear growth in automation and information is there.

And then maybe Blake or Nick, can you give us a little more color on your margins in the segments. If I look at software and control, it seems like when supply chain headwinds are not impacting that business, you can do sort of low to mid-30s and lifecycle, obviously, still kind of lagging behind a little bit. So do you get lifecycle up now starting in the second half of the year? And is that a fair assessment of software and control when it's sort of firing on all cylinders, it's an above 30% margin business.

Yes, Andy, let me take that. As far as software and control with what we're seeing in that business and the mix of what we're selling and the strength in the overall market there, we do see over 30% as a sustainable margin for that business. In terms of lifecycle services, we see that -- that's going to be sequentially going up. And we had talked earlier about getting this to double digits. We see that happening in the fourth quarter. And we think that's a good trajectory we're going to expect to see happen beyond '23 as well. So that's where we're seeing margins in those two segments.

Our next question comes from Josh Pokrzywinski from Morgan Stanley. Please go ahead. Your line is open.

So Blake, just on some of the order commentary, I want to square the circle here a little bit. Talking about, I guess, you kind of comp the comp sequentially. You had the pull forward that probably happened around the price increase. As you said, lead times are coming down a little bit. So presumably, customers sort of altering plans accordingly, but you still have, call it, flattish sequential order. So something seem to have gotten better. It seems like it's the same markets that get mentioned over and over again, like EV and battery and Life Sciences and a few others that come in there. But did anything, I guess, build momentum quarter-over-quarter and anything in terms of March or April exit rates that we should be aware of?

Yes, a couple of things. Josh, it was fairly broad, but in addition to the usual suspects, the things that we've been talking about for a while now, I'd say oil and gas orders were quite good. We had some major competitive wins in our Sensia business that built some great backlog there. And I would also say within the orders -- North American orders were relatively stronger than Europe and Asia, and we expect that to continue for the rest of the year.

And then I guess there's the obligatory question for Nick on investment spending since I think that gets pulled around a little bit, especially when things are a little better than expected. Nick, was there any kind of reallocation of investment spending to get more in this quarter? And how should we think about the rest of the year?

Yes. The investment spend for this particular for second quarter, it came up a few million dollars more than what we had in our initial plan for Q2. We are upping our investment spend in the third and fourth quarter. We started the year with, what I would call, a pretty conservative view of what we were going to do on spend, and we were holding some things in our back pocket that if things improve, we would be ready to invest in, and we are releasing that in the second half of the year. All in, that we see total investment spend up for the full year versus what we had previously estimated up by roughly $50 million. It's up year over year $180 million. I previously in the last guidance said it would be up $130 million, it's now up $180 million.

Our next question comes from Andrew Obin from Bank of America. Please go ahead. Your line is open.

Just we are getting questions on lead times. So how should I think about this $5 billion number? Is that just a nice round comp to where you were versus fiscal -- the end of fiscal '22 where you sort of showed you were slightly above $5 billion, right, and then sort of $9 billion matches, $9 billion is just very simple math. Or is there a sort of dynamic update to this number throughout the year? Is it just basically a placeholder to help us think about the big framework? Or is that a number sort of somebody manages to an update inside the company every quarter?

Yes, Andrew, you should think about that as a slight reduction of the current backlog, which sits at about $5.6 billion, but still held up by continuing strong order rates. So it's not intended to be precise, but on the other hand, it does reflect the trends that we're seeing and that is that as lead times improve, we're able to clear past due backlog, but the overall number stays quite high due to the continuing strength of orders.

And just a question on Plex because you guys had a great demo at Hanover show. Can you just a, 15% IRR is pretty impressive. But can we just talk about Plex is doing? And how does Rockwell sort of manage historical focus on large enterprise and try to sort of feel is the product and SMB end market, just evolution of Plex what the experience has been, as I said, because clearly, a big focus at Hanover show.

Sure. Well, Plex continues to be a really exciting addition to our offering, and it's playing out like we hoped it would when we made that acquisition. Plex is smart manufacturing platform to be sure, has MES capability, but it also has quality management, supply chain and even ERP functionality for small- and medium-sized businesses. When we bought Plex, they had a great track record in certain verticals like tier automotives, but we knew that with our existing market access, we could expand that into food and beverage and EV and mining. And we also knew that we had the opportunity to geographically diversify their customer base and we're doing just that with wins in Asia and with putting Plex on to Azure in Europe where we've already seen some nice wins there. So it's that synergy that's playing out, and there is lots of room to run with that. So it's working well. I've mentioned before, one of the things that we've done is to take the seasoned veterans of selling cloud-native SaaS software and given them enterprise-wide roles within Rockwell. So software sales leadership, our Chief Marketing Officer and a number of other functions are coming from Plex. So it's not just the technology and the business -- it's also the expertise that we're making sure that we don't vary in the organization.

And growth rates sort of commensurate was 15%. Is it in line with 5% for the rest of the business, better worse, if you could just sort of benchmark that if you're [Indiscernible].

Sure. Plex and Flix are very supportive to the overall growth of our software business.

Our next question comes from Julian Mitchell from Barclays. Please go ahead. Your line is open.

Maybe just wanted to try and drill into that book-to-bill element a little bit more for the back half being well below one. It doesn't sound like you're perturbed by that. but just trying to understand, if we look at it in a little bit more detail, anything you'd call out around sort of hybrid versus process versus discrete markets, maybe where you see that book-to-bill or year-on-year orders pressure being most severe. And just maybe a question sort of more broadly on that for Blake. You've had this component flush driving this huge revenue surge right now. Is there sort of a view on the world or the demand environment post that flush changed at all in recent months?

Yes. So Julian, let me start. I wouldn't characterize the reduction in backlog is pressured. It's playing out in a way that we would hope it is in that we're clearing past due backlog and improving customer service levels and adding additional orders in the business. So you know historically that Rockwell has been fortunate to be able to ship out products pretty much in the same quarter that we get the order. So this is unusual to have product backlog, and we intend to continue to reduce the lead times and products just as much as possible. At the same time, a 1.27 book-to-bill in our Lifecycle Services business gives us good confidence about continuing demand for longer cycle projects there. So I feel good about the way that this is working. We obviously are focused on execution as well as creating additional demand going forward, but we feel this is a very healthy environment. To your second question about, has anything changed in terms of the component world, being able to get chips. I mean we're always going to have a larger effort than we did pre supply chain constraints on making sure that our designs are resilient, both in terms of reevaluating existing products as well as new products and to make sure that they will go forward unless we have new levels of resiliency in component supply and robust designs to be able to reduce dependencies on any one vendor. So that's here to stay. We do believe, as Nick talked about, working capital with some of the inventory increases to go down, and that supports the good cash flow for the year. So certain of those things aren't going to change all the way back to, let's say, prepandemic, but we do expect a return to more normal levels in working capital and so on as we go forward as the chip constraints continue to resolve themselves.

And when you sort of look at the two components of customer demand being strong and a good pipeline of projects coming up, plus at the same time, a sort of accelerated backlog conversion into revenue because of supply chain, do you think we could be in for quite a prolonged period of having that book-to-bill below one? Or you're sort of thinking, no, we get some adjustments for a couple of quarters and then it moves back into seeing sort of one-to-one like Rockwell's classic business model.

Yes. Beyond kind of unusual levels of disclosure about the setup for '24 we've already given. I'm not going to guess further about that, but we do believe that the demand for automation in the specific verticals that I've talked about and as well as a general setup is something that's a positive read going forward. And our intention is to reduce product level lead times closer and closer to what they were before these constraints, but with an incoming order rate far above what they were prepandemic.

Our next question comes from Steve Tusa from JPMorgan. Please go ahead. Your line is open.

Congrats on the execution on this backlog. I missed a part of the call. But did you guys talk about the sequential change in that -- in the backlog from 4Q -- or sorry, 1Q to 2Q?

Steve, what we talked about is that the backlog at the middle of the year for us now stands at $5.6 billion. That's versus $5.2 million that it was at the beginning of the year. So up $400 million for the first 6 months of the year.

And then just on the margins at F&C, how much of that is like did you break down at all how much of that was the products-related price/cost spread? Maybe just a little bit more color on the year-over-year margin drivers? How much came from the products in that business and how much came from the software there?

I haven't provided the product versus the software mix. But in terms of the things that are causing the margin expansion. The biggest factor by far is the volume growth that we're experiencing and the leverage we're getting on that. The second biggest thing that is improving that margin is the favorable price/cost versus where we were in second quarter last year. And then offsetting that, to some extent, to bring it down to a 900 basis point year-on-year increase. We have increased investment spend year-over-year in software and control, and we also are facing noticeably higher incentive compensation. Those are the 2 negative things on the margin in the year-over-year Q2 for Software and Control.

And then where do you expect that margin to end? Where do you expect that margin to finish the year just for the annual F&C margin?

Yes. We think it will be over 30%. It's -- and that's up from what I have said in the past that we see that margin being able to sustain into the second half of the year. At levels fairly similar to what we're seeing in our second quarter. So full year, we're going to be above 30% could be a few percentage points above 30%.

Our next question comes from Nigel Coe from Wolfe Research. Please go ahead. Your line is open.

So I see some of the call, so I apologize if we're going to be sort of like, I will be asking the question we've asked about 3 times. But just wondering about the backlog kind of conversion means supply chains, where are we versus normal in terms of lead times? And converting this backlog, is it more constraint of just the lead times? Is it labor? Is it customer acceptance, project timing? What could cause the backlog to convert even faster in the second half of the year?

Yes. Nigel, this is a good development in that as the chip supply is easing that's really the primary limiting factor as we're clearing older backlog there. As we've said, we've got about $5.6 billion worth of backlog, and we're expecting that to go down to around $5 billion by the end of the year, but it's held up by continuing good order intake there. And also the contribution from lifecycle services with its strong book-to-bill. So it's primarily the chip supply. We feel good about our ability to continue to add labor in our facilities around the world. We've been adding for some time now, additional equipment. But as you know, we're not really a very capital-intensive operation. So it's not like if we're having to add a lot of heavy equipment because we're primarily an intellectual capital company. And so the equipment that we need has relatively shorter lead times than if we were in heavier manufacturing type operations.

And then just another stab at the backlog. Are we seeing the mix of the backlog shifting to some of the larger projects, particularly with the systems, ED plants, et cetera. I mean, so are we seeing some of those larger systems orders coming through in the backlog? And then just kind of another part of that would be you point to $9 billion of orders, so obviously $4.8 billion in the first half, $4.2 billion the first half, $4.2 billion in the second half. What's -- I mean, 4.2% is still a very level, no question about it, but -- what's causing that drop down? Is it project timing? Is it lead times for customers channels are just not placing kind of the same rate of orders. What kind of visibility do you have to that second half deceleration in orders? Again, very healthy level that you are pointing to declining orders.

Yes. So first of all, in terms of the composition of the backlog, I don't think we're seeing any fundamental change in the type of orders. Now obviously, as we move through the backlog has a richer pricing as we work through the year. So that's a good read. But in terms of the number of big EV projects or semiconductor, facilities management systems or independent card or just continuing MRO, I don't think you're going to see a big change because a lot of these investment cycles in those areas are multiyear. We're in it for the long haul with some of these positive areas. Now in terms of where you might see a little bit of the contribution from the moderation in orders, probably the most specific area is as lead times improve, as they are across a lot of our product lines, you'll see machine builders not having to provide orders of the same size to have as many months of coverage of their backlog. So as they're concerned about their cash flow and they can look at shorter lead times, then they can reduce the size of their orders because they don't need as many months coverage for the machines that they've already booked. So I think that's probably the most specific contribution to some of the orders moderation.

Our next question comes from Rob Mason from Baird. Please go ahead. Your line is open.

I called out Sensia several times in and around oil and gas. So it sounds like things are positioned to accelerate further there. But any thoughts just on -- it still looks like maybe we're pulling through an operating loss just based on the minority interest, how profitability might shift as we go forward over the next 6, 12 months at Sensia.

Yes. You said it. I mean, we're seeing some good growth there. We had a particularly strong orders, and there's a very strong backlog in the business. And so as we move through the coming quarters, we expect the positive contribution of Sensia both in terms of growth and profitability to have an impact first on lifecycle services and then more broadly across Rockwell.

And Rob, just to build on that. In my prepared remarks, I talked about some onetime costs that we took in the second quarter to expand profitability. Some of that is focused in the Sensia area where we made some investments to simplify business infrastructure for Sensia that we think will make it even more -- build it for more profitability in the future. And so that's part of what we're seeing in our second quarter results for Sensia.

Excellent. Just as a follow-up to, any thoughts, I didn't hear any commentary specific to China, just exactly what you're seeing on the ground in China and how that recovery is playing out in your business?

Yes. So a couple of things. First of all, in general, the growth is strong in China across the business. And it's a lot of the same contributors that we've seen in the past with areas like EV and life sciences and so on. So we think that our business there is posed for continued growth.

Our next question comes from Noah Kaye from Oppenheimer. Please go ahead. Your line is open.

This is Andre on for Noah. On the M&A pipeline, you've previously defined ISGS and market access in Europe and Asia and Advanced Material Handling as priorities. Could you give us any color on what's most near term for you as a focus and how active that pipeline looks today?

Yes. Andre, it's a good pipeline, and you said it. Those are the priorities. That's fairly broad. But within that, there's a lot of information management software in the production world. So there's some decent targets there. Cybersecurity has been extremely successful for us both organically and as we've added additional capabilities through some acquisitions, advanced material handling. We talk all the time about our independent cart technology, about some of the things we're doing in robotics applications as the lines get blurred between robot control and programmable line control, and we think there's some very interesting things going on there. Obviously, you had AI and autonomy to some of these areas, and there's new dimensions for value for customers. And then New York and Asia, we're very happy, for instance, with what we're doing in -- with awesome, the Italian manufacturer of industrial PCs that also has some great software that's forming the basis for some of our most exciting new introduction. So I would say that the pipeline is good across all of those fronts.

Thank you also just get an update on pipeline and customer needs in the EV transition starting with the upstream opportunity in lithium and any impact of the IRA and domestic battery and vehicle production where customers in that vertical focused most right now?

Well, they're all focused on building up their fleet capacity so that they can get a return on these giant investments. You don't get that unless you put more jobs per hour on the door and so they're all working to be able to expand their production output. But if you look on the on the road today, you still don't see a ton of electric vehicles and all of them, if you listen to those goals and you look at the trends, this is a multiyear process and from start to finish lines and the basic materials that are needed for the batteries, through the battery making facilities through the electric vehicle assembly. All of that has to build out to be able to get us to a point where you start seeing electric vehicles come anywhere near approaching internal combustion vehicles on the road. So this is multiple years and all of these manufacturers are focused on debottlenecking that whole supply chain, which is going to be in the news for years to come. I think the one other question. I mean the IRA, obviously, that helps there as well as it does with other renewable providers. We've talked before about First Solar, for instance. We talked about Oxy's 1.5 initiative. So we're seeing more and more of these come online across our verticals and people are doing it because it's important for their business models. And again, that's not a femoral thing. That's going to be over multiple years.

Our next question comes from Phil Buller from Berenberg. Please go ahead. Your line is open.

I was hoping you could expand on the topic of, I guess, the order funnel or pipeline rather than the backlog. I'm wondering if you're more excited about the funnel in process markets, generally speaking, more so than discrete or hybrid at this point. You've thought very helpfully about different customer examples in those like EVs and such. I'm just trying to get a handle on how it aggregates into those big process versus discrete buckets. So which funnel is getting fuller, if you will? And perhaps you can remind us if there's any structural margin differential between those that would be great.

Sure. Yes, it's broad-based. I mean, we're very happy with the way that our business is balanced between discrete and hybrid and process applications with big opportunities in all of them. I mean, as we talk about EV and battery in discrete, we talk about food and beverage and life sciences, food and beverage is our single biggest vertical in hybrid. And then in process, I highlighted some particularly strong order activity with Sensia, but we also continue to see good activity in metals as well. So it's across all of them. Now in terms of the margin, one to the next there's high-margin opportunities in each one. I would say that the engineered systems are concentrated a little bit more heavily on the process side. Those customers are more often looking for engineering content to complement the hardware coming from the same provider. So you'd probably see a little bit lower margin there due to the people intensivity of that, but good opportunities in the funnel for near and midterm orders across all of the industry segments.

And just in terms of the different topic margins here. I know you've touched on the Software and Control margin. The drop through between the three different businesses is quite different, depending on which one you're looking at. And I know that there's been a lot of things bouncing around at the moment. So I guess I was just trying to get a handle on how you think about the H2 margin evolution for each of the three businesses relative to H1. Is there anything that you could point out that we should be bearing in mind beyond Software and Control, please?

Beyond Software and Control, which I've already covered still, when I look at intelligent devices, that's been a little over 20%, about 21% margin in the first half of this year. I think for the full year, it's going to be close to that, maybe between 20% and 21% for the full year margin for Intelligent Devices. Some of the things happening there, we continue to see good volume, good price growth, but as I talked about earlier, for the full year, we'll also be seeing higher incentive comp and higher investment spend. This is one of the places where we've been focusing some of our investment spend in resiliency and we'll see that continuing. So between 20% and 21% for Intelligent Devices. And then soft -- excuse me, lifecycle services. I've talked about sequential improvement. I don't see us crossing the threshold into double-digit margin until the fourth quarter. So I see Q3 being a move in that direction from where we were in the first half where we're in the little over 5% margin. We'll be stepping it up, but not all the way to 10% and then going to 10% or over in the fourth quarter.

Julian, we will take one more question.

Certainly, our last question will come from Jairam Nathan from Daiwa. Please go ahead. Your line is open.

So I just wanted to spend a little time on the automotive. We are seeing, as the transition towards EVs, we are seeing the number of process steps coming down. And I understand Rockwell probably does not have a lot of content on welding, but do you see any implications as EVs or auto companies go from spot welding to giga casting and things like that?

Yes. So the net opportunity for Rockwell actually goes up as we go from internal combustion engines to EVs, and that's for a couple of reasons. First of all, the traditional drivetrain operations. That's a more subtractive manufacturing process, that's boring cylinders, that's finishing metal surfaces and things like that. And that's largely done with computer numerical control, which is not a technology that Rockwell directly has. We have good partnerships, but it's not something that we provide directly. And so when that's replaced by some of the operations in electric vehicles, most notably, the battery formation and packing and assembly. That's more of an assembly type operation. And there's aspects at the front end of that with batch processes. And those are all applications that Rockwell has great readiness to serve. Then when you look at what you specifically mentioned in the joining part of it, it's more complex press operations, and Rockwell has great press control systems. So as the metal formation becomes more complex, again, those are really good applications for Rockwell with our program of control as well as our expanded drive control. So we feel good about those opportunities. And then added to those basic automation applications. It's the software that's a more pervasive part of the electric vehicle and battery manufacturing process, and we have really good solutions there.

And one more, if I may. So I mean all the -- given your outlook, I think the 1 area which actually decline seems to be chemicals. I think you went from a high single digit from a low double -- double digits. So can you explain that a bit?

No. I don't have a specific answer for where chemical is moderating other than to say our focus in chemical is more on the specialty chemical, fine chemical as opposed to bulk chemicals.

We have no further questions. I'd like to turn the call back over to Ms. Zellner for closing remarks.

Thank you, everyone, for joining us today. That concludes today's call.

That concludes today's conference call. At this time, you may disconnect. Thank you.