Business Update

Aug 6, 2021

Slides

Hello, and welcome to the Ingersoll Rand ESG and Sustainability Report Conference Call. My name is Harry, and I'll be coordinating the call today. I will now hand over to your host, Vikram Keeney sorry, I will now hand over to your host, Chris Moren. Chris, please go ahead now. Thank you, and welcome to Ingersoll Rand's Sustainability and ESG update. I'm Chris Myron, Vice President of Investor Relations. And joining me is Vicente Reynal, President and Chief Executive Officer Mary Bache, Vice President, Sustainability Vic Kinney, CFO and Andy Schiesel, our General Counsel and CCO. Today's presentation is available on the Investor Relations section of our website, www.irco.com. In addition, a replay of this conference call will be available later today. Before we start, I want to remind everyone that certain statements on this call are forward looking in nature and are subject to the risks And uncertainties discussed in our previous SEC filings, which you should read in conjunction with the information provided on this call. Please review the forward looking statements on Slide 2 for more details. At the end of our meeting, I will moderate today's Q and A session, asking a series of At this time, I'll turn the call over to Vicente. Thank you, Chris, and good morning to everyone. Moving to Slide 3, it's showing the 3 key themes for today. First, how operating sustainably is a strategic imperative to Universal Run. 2nd, how we are effectively using IRX to operationalize sustainability and achieve our targets. And third, insights on those sustainability topics most material to the company and our stakeholders. Let's move to Slide 4 to discuss how sustainability fits into our strategic framework. Our Five strategic imperatives are how we stay grounded on our priorities and areas of focus. Operate sustainably is at the core of our strategy And has become a driving motivation for our highly engaged employees. Purpose driven and sustainably minded employees with an ownership mindset Are an unstoppable force. Our customer focus and sustainability commitment are solidifying our ability to deliver stakeholder benefits and ensuring the long term health and security of our company. With the transparency of our data and the aggressiveness of our targets, I hope you recognize that what underpins our passion is the pursuit of our purpose, which is lean on us to help you make life better. Sustainability is strategic to us. We strive to protect and improve our environment. We strive to be active contributor in our communities. And in all we do, we strive to make life better for our employees, Customers, shareholders and communities. Moving to Slide 5, our board is dedicated to our ESG journey. As a sign of this support and recognizing the importance of our operate sustainably strategic imperatives, Our Board recently formed a sustainability committee and we're delighted to have Mark Jones serve as the Chair of the Committee With Kurt Carnell and Gary Forsey as members. It's also important to note that we have implemented meaningful governance changes That demonstrate our commitment to governance best practices. Over the past year, our Board of Directors and its Nominating and Corporate Governance Committee Undertook a very thorough evaluation of our corporate governance, taking into consideration the views held by the investment community as to best practices. And based on this review, our Board recommended a number of changes to our corporate charter and presented these changes to our stockholders for approval. At our most recent annual meeting, 99% of the votes cast by our stockholders were in favor Of the recommended changes including amendments to our certificate of incorporation that declassified our Board of Directors and provided For the annual election of all of our directors, eliminated the requirement for a super majority vote of our stockholders to amend our certificate of incorporation, And also eliminated the requirement for a super majority vote of our stockholders to amend our bylaws. In addition, our Board made an amendment to our bylaws that changed the vote required to elect directors From a plurality of votes cast to a majority of votes cast. These changes demonstrate how we bring the same intentionality and thoughtfulness To our governance efforts as we bring to the environmental and social aspects of our ESG journey. The Board's dedication and commitment to our ESE journey has enabled the company to make swift progress and achievements in all areas of environmental, Social and Governance. Now moving to Slide 6, we will highlight some of those results. 3 weeks ago, we released our 2020 Sustainability Report, which is a very thorough, transparent compilation of sustainability progress. Our aspirational goal is to be recognized as a top quartile industrial company in sustainability. And we're well on our way as we prioritize Sustainability as the way we do business. I touched on many of these during our earnings call. And what's important to know here Today is the volume and quality of achievements from the team over the last year has been outstanding. Even during the integration of our company In the middle of the pandemic, not only did we achieve great financial results, but we also built a strong foundation for long term success with ESG at the center of how we operate. And the rigorous application of IRX is how we were able to do it all at once, Which leads us to Slide 7. We continue to execute UT9Rx as our backbone, whether for M and A For synergy delivery or sustainability efforts, it's proven to be effective. Slide 7 reminds us The power of IRX to deliver strong momentum on our cost synergy delivery efforts. Due to the funnel we built applying IRX Processes, we were able to accelerate our overall synergy delivery efforts and increase our cost savings target by 20% to $300,000,000 And as I said last week during an earnings call, to date $250,000,000 of annualized synergies have already been executed, which is slightly higher than 80% of the increased target. This progress shows what the teams can accomplish through IRX. And I use these as one example of many to share how we're now applying this same discipline to our sustainability efforts. Moving to Slide 8, which shows how we're operationalizing sustainability with the help of IRX. We have a very Thematic process to accelerate the cadence of execution. On the left, we have spoken to you about IRX, We start from the outer ring with our values and then gets deployed via our strategic imperatives on the Greg Hall ring And executed via 2 distinct tools that we call Impact Daily Management or IUDM and Policy Deployment or PD. This is a yearly ongoing cycle that has proven to drive successful acceleration performance. In this slide, I just want to highlight How we have leveraged IRX to drive environmental and social IDNs to accelerate our ESG journey. And turning to Slide 9, we put IRX to use to improve our public sustainability reporting and submissions to ESG rating agencies. Following IRX processes, we built an improvement bridge across 13 key areas that ESG rating agencies review with a critical view toward the topics most material to our stakeholders and the company. And turning to Slide 10, Mary will touch on these material topics. Thank you, Vicente. In early 2020, Ingersoll Rand executed a formal materiality assessment process that included numerous stakeholders. The assessment process followed the Global Reporting Initiatives or GRA Standards Framework with the goal of pinpointing most impactful to Ingersoll Rand and that create value for our stakeholders, which include employees, their families, Our customers, suppliers, shareholders and our communities. The materiality assessment process identified the Three topics most material based on their relative importance to stakeholders and to the Ingersoll Rand business. 1st, labor and employee matters 2nd, product stewardship, new product development and innovation and third, energy use. Through continuous focus on our material topics, we ensure our strategy aligns with stakeholder expectations and the needs of our communities While positively impacting the world. Ingersoll Rand is tracking aggressive key performance indicators or KPIs For each topic, let's take a closer look at each. Vicente will share more information about our first two material topics. Thanks, Mary. And so with that, let's move to Slide 11. Our employees are the bedrock of Ingrid Florent. Their safety and engagement are Paramount to our success. We commit to core values that foster a culture that celebrates diversity, equity and inclusion and promotes an ownership mindset. Our passion to foster Inspire Team's role to provide all employees with equity grants totaling $250,000,000 Since 2017. An employee who was granted equity in 2017 has realized a nearly 150% increase in value. Making this real, let me share a story about one of our IPS European employees, Rizwan Ravani, who is based in Germany and grows by Rizi. Rizi grew up in an SOS Children's Village Home in Pakistan, separated from his mother who was working hard with a house cleaner in a privileged area of Islamabad to support her 5 children. Years later found RISD in Germany struggling with the challenges, including language barriers, culture shock, Financial stability and most importantly, difficulties in landing a permanent job. This happened he was ready to give up When he got a job with us in 2014 at GAR November, Rizzi had one big dream, Which was uniting his family together into a home. In 2017, Rizzi was part of the 1st employee equity grant during the Gardner Denver IPO. And he also received equity again in 2020 when we combine Gardner Denver And the industrial segment of Ingersoll Brands. For RISI, the financial security these grants provided and are providing are life changing For him and his family, Rissy made his dream come true by purchasing his mother Her own home with the initial equity he obtained during the Gardner Denver IPO. Reese's mother is very in her new house and is very grateful for his journey with Ingersoll Rand. And so we are very grateful for RISI. This is just one example of how Ingersoll Rand has invested in employee equity, morale, motivation, engagement and our community at large. When our employees think and act like owners, they know they're welcome, safe and needed. They perform better, work more efficiently and are loyal to Ingersoll Rand. And our employees also know that they have skin in the game in our long term journey. And this translates to increased company innovation and growth, which makes others, people and businesses take notice, allowing Ingersoll Rand to to your employees while also gaining social credibility. Moving to Slide 12, We're passionately committed to diversity, equity and inclusion. On this page, you see our long term goals and critical initiatives. Our vision is to be a DE and I leader within our industry. We leverage diversity, equity and inclusion to exceed our business goals, Attract and retain the best talent and address today's global challenges. We hold ourselves accountable to building an inclusive workplace that cultivates A sense of belonging, empowerment and respect for all of our employees across the globe. In the CEO Action for Diversity and Inclusion Pledge since 2019, we are proud that Ingersoll Rand Board of Director members are 50% diverse In gender or ethnicity. And also that our full extended leadership team is nearly 30% female and is 43% diverse in gender Or ethnicity. In 2020, we introduced a powerful initiative called Leaning to Change, where employees from across the company participated in culturally sensitive conversations and with trust and transparency. Profiles in the diversity journal recognize This Ingersoll Rand initiative with the top 10 Innovations in Diversity Award. The company also launched 3 employee led inclusion groups, the Black Employee Network, the Women Inclusion Group and the Veteran Inclusion Group. As strategic resources for talent management, community influence and leadership development and mentoring. Connecting to our value of fostering inspired teams, we cultivate diversity, we promote equity and pursue a more inclusive culture that strengthens The sense of belonging for all. We expect individuals to uphold these aspirations with humility, integrity and respect. Our 2025 DE and I goal illustrates this commitment. We're passionate about solidifying and advancing the development of our company culture By increasing diversity of talent, supporting navigation of career paths and ensuring equal opportunities while fostering a sense of belonging. Moving to Slide 13, we see how the team is deploying IRX to achieve our DE and I goals In the areas of representation, career development and employee engagement, we're focused on leading indicators of performance to ensure we exceed our goals. Moving to Slide 14, Inge For Rent's global employees care deeply about our neighbors And share climate. Before we move on to our next material topic, I want to mention we strongly believe That we have the power and responsibility to build a better world, and we wake up every day with a desire to help make life better. Our company wide citizenship strategy guides our philanthropic priorities and activities, which are aligned to the UN Sustainable Development Goals and to our company's business drivers. Managing our citizenship strategy in this way provides Clear direction and enable us to use our product expertise and strength of our employee volunteers to have maximum Measurable suicidal impact on communities and the world. Moving to Slide 15, After employee matters, our 2nd material topic is product stewardship, new product development and innovation. Ingersoll Brands grows our business by providing customers with the sustainable products they need and desire. Our company excels through the creation of innovative customer solutions, new products and services and associated technologies. Inge For Rent has long been respected For the reliability of our products, we're focused on energy efficiency and invest in technology that allows us to develop products that are long lasting, reliable, Sustainable and relevant. This not only meets the needs of our customers and the environment, but it lowers the operating costs And negative impacts on the environment for both Ingersoll Rand and its customers. We estimate that approximately 30% of our revenues $1,500,000,000 are generated from products that are related to water processes, and our teams continue to find ways to improve the efficiency of water and energy use. For instance, the DovStream business, which serves food safety, Water and animal health markets among others use a technology that allows them to move fluid without the use of electricity. This core proprietary IP we developed is part of this problem. Our Roentech, which Harry's ability to dramatically reduce water consumption in end markets like pulp and paper. In the pulp and paper market, we're not only able to save on average 45% energy consumption, we also can save up to 90% of water consumption. And with our current installed base, we estimate that that results in more than 7,000,000,000 of gallons of water Looking at Slide 16, it's also important to note that our M and A funnel is driven by our strategic imperatives, including operate sustainably. The signing of a definitive agreement to acquire Citex and the closing of Maximo Solution, Both of which will become part of the Precision and Science Technology segment are very representative of incorporating Sustainability into key characteristics we're targeting to drive our inorganic growth strategy. As a reminder, CEPEX is by estimations the number 2 Global Progressive Cavity Pump Manufacturer. Annette is a highly recognized brand as a premium player in the market, that adds a new positive displacement pump technology to our portfolio. Maximo Solutions is a leading player in the agri tech software and controls market, For technology, we intend to pull through to other markets and leverage across the Ingersoll Rand portfolio. We're very excited to have just recently closed on this transaction and welcome the Maximus employees to our English program family. Both of these companies are focused on sustainable end markets We tend to grow well above GDP rates and have delivered strong high single digit to double digit organic growth Since at least 2017. Moving to Slide 17, I will now turn it back to Mary to talk about our 3rd Materiality focus, which is energy use. Thanks, Vicente. We announced ambitious environmental goals in March. Let me take a minute to remind everyone, in the area of waste, our goal is to have 50% of our sites achieve 0 waste This means that 98% of non hazardous waste is first eliminated, reused or recycled with the remainder sent off-site To incineration for energy. For water, by 2,030, our goal is to review 17% of all water used globally in our operations. If all our site test stands are not already in a closed loop system, this is certainly an opportunity we are evaluating. We simply cannot waste this natural resource rather We use it again and again. And regarding energy, our goal is to reduce 60% of our greenhouse gas emissions by 2,030. This includes electricity, natural gas, fuels, including gasoline and diesel, as well as propane, VOCs and refrigerants. Energy use is a direct contributor to climate change. Reduction of operational energy and shifting remaining energy to renewables Further reduces our impact. We have one other goal, which is to achieve net 0 greenhouse gas emissions by 2,050. Already, we have 4 plants powered by solar, 2 in India and 2 in China and 3 sites currently under construction in Italy. Additionally, 14 locations have agreements with their utilities to purchase green energy. And we're just getting started. There's a lot more to come on this front. Moving to Slide 18, we can't just talk about these ambitious goals. We need to act upon We need to move from commitment to impact, from work to actionable results. And we're beginning that journey using the IRX process Our operations and our products. We're developing a roadmap on how we're going to reach our 2,030 and 2,050 goals. First, let's Talk about operationalizing sustainability in our own operations. We launched an impact daily management or IDM on July 22 with 30 employees across all our business units and functions around the world. The goal is to embed sustainability into our businesses And operationalize at scale, looking upstream into our processes to find reduction and recycling solutions, Methods for reusing materials, improving the efficiency of water and energy and developing take back solutions with our suppliers. Some of these examples include turning off all the production lights during lunch in Guilin, China in Riddich, England reducing the test Time from 8 hours to 4 hours. Increasing summer set point 5 degrees in Knoxville, North Carolina. Implementing returnable packaging in Naroda, India and closed loop recycling in Tempere, Finland. Sustainability is all about thinking and acting like owners. Our employees are constantly identifying ways where we can recycle and reuse waste And how we can conserve water and energy. Recently, I was in Knoxville, North Carolina and an employee had a brilliant idea to reuse the coolant that Coats the chips in the machining centers when they're dumped into large hoppers. The coolant drains to the bottom of the hoppers and instead Going to the wastewater treatment plant and then eventual disposal to the city, the coolant is now collected, pumped back into a tote and taken right Back out onto the production line for reuse at a savings of $600 a day, genius. That employee Found an estimated $150,000 annual savings from Knoxville. Just think if 1% of our employees could A simple solution like that within their own area of influence, then we're looking at annual savings of more than $22,000,000 of environmentally friendly actions. I mentioned our renewable energy goal. 1 of the focus areas in this IDM is to develop our long term renewable energy strategy. Well, that's a bit about how we intend to operationalize sustainability within our operations. Our businesses are right now developing their business unit roadmaps. We have a swim lane dedicated to providing all the tools, Calculators, resources and idea generators for the business units and a swim lane focused on communications and telling our story Both internally and externally. Now, how do we intend to accomplish our product related goals? Again, we're using the IRX process to accomplish this work. In August, we're doing an IDM install event with nearly 40 employees to understand the water and energy impacts Our products. Energy efficient products have a lower use impact. Our customers save on costs by lowering energy use in their operations And add to revenue by attracting customers seeking sustainable solutions that decrease their environmental impact. Reducing the energy use of our products positively affects our environment and increases our value proposition to our customers And search of similar solutions. We have 2 goals surrounding our products, greenhouse gas and water. We will develop an approved and verified methodology to measure the baseline and then over time Demonstrate the reduction of water and energy in our product portfolio, enabling our customers to reduce their environmental footprint. That helps give a little more color on how we will achieve our goals and we'll have more to share with you as we progress on our journey. And now I'll turn it back to you Vicente to close us Thank you, Mary. And turning to Slide 19. As we wrap up today's call, Ingersoll Rand is taking a leadership role in sustainability For our own operations and with our products, we have made significant progress and we're guided by our purpose and value And we'll ensure execution through our use of IRX. We're making positive impacts across environmental, social and governance areas But our most material to Ingersoll Rand and our stakeholders. We take our role as sustainability minded Industry leader very seriously and our employees eagerly embrace IRX to strengthen our leadership position. And finally, sustainability is also part of our M and A and capital allocation work. I believe our future looks very bright And I look forward to seeing what our global employees will accomplish. With that, I'll turn the call back to Chris to moderate us through Q and A. Thanks, Vicente. First, I'd like to say thank you to our research analysts who provided questions ahead of today's call. We'll start with a question for Vicente. How is Ingersoll Rand's portfolio exposure to ESG centric products going to change by 2,030, Hydrogen oil free water and wastewater contributing to meeting the 2,030 ESG targets for Ingersoll Rand? Yes, Chris. I mean, we're extremely focused on realigning and investing in our portfolio to be oriented towards ESG centric technologies. When we completed the Ingersoll Rand Industrials and Gardner Denver merger, we knew there were some key actions that needed to happen. First was aggressively pursuing organic growth opportunities in sustainable end markets such as water, wastewater, medical, lab, agri Hydrogen and many others. We have formed IDNs, as you have seen, very focused specifically on these end markets With the teams highly focused on further penetration of these end markets and new product development oriented towards addressing the applications of our technologies in these markets. As we highlighted in our Q2 earnings call, we are planning to invest approximately $45,000,000 into expanding our hydrogen solutions and manufacturing capacity in anticipation of the growth demand. 2nd, a critical piece was to materially remove our exposure to the upstream oil and gas industry, which we accomplished earlier this year through the sale of our high pressure solution business. And third, as we look forward towards growth Through inorganically or M and A, one of our key analytical criteria is end market screening with sustainability being a very high level And not only are these markets advancing our ESG strategy, they also tend to be higher growth And higher margin, which naturally leads to them rising to the top of our funnel priorities. And as we remain highly disciplined and returns Focusing our approach to M and A. So as you can see, we're making and we're taking swift action And really leaving the strategic imperative as we think daily about our future portfolio of technologies for our company. Thanks, Vicente. So given that, Vic, how do we balance ESG improvement with our mid teens Return on capital hurdle by year 3 for acquisitions. The market has seen ESG related assets Price increased materially over the past year? Yes. Thanks, Chris. I think a lot of it goes back to what Vicente just mentioned. I think from an M and A perspective, Our funnel really is largely comprised of targets that are levered much more to sustainable end markets, largely because those end markets tend to grow faster than GDP. But a critical factor of a target moving through our funnel is the ability to deliver on our return thresholds, which really ensures that we don't overpay for the targets that we pursue. And you're right, while we have seen multiples in some instances increase recently, we continue to remain very disciplined on purchase price. We don't feel like we need to chase targets and we take a highly strategic approach to each target. Key to us is the ability to drive those mid teens ROIC By year 3 of ownership and also the ability to buy down the purchase multiple over time to the realization of synergies. I would say and very consistent with what we talked about in our earnings call last week, our funnel is currently comprised largely of targets that fit both the sustainability focus And return thresholds that we target and we're moving very swiftly to action them. Great. Thanks, Vic. Next question is for Mary. Regarding the goal of 17% water reduction by 2,030, can you talk about some of the progress we've made to date and what are the steps we're planning to take in the future to achieve that goal? Sure, Chris. Happy to address that. Let me give you some examples from around the world. In Shandong, China, we are using the condensate generated from the steam system instead of using potable water on-site. In Wuzhang, China, we're reusing treated sanitary water In the equipment production process, we're harvesting rainwater in Sahibabad, India for reuse in our operations. And in Naroda, India, We've installed a reverse osmosis system for sanitary and industrial water where the water is reused for outdoor vegetation and recycled for reuse in We've also installed closed loop test stands in temporary Finland to reduce water consumption. And then finally, in North Carolina, we're recycling wastewater used in plant operations. As you can see, all over the world, our teams are thinking creatively To materially reduce water consumption and it's going to take a global team effort to achieve our goal. We're excited to come together as an Ingersoll Rand family to get That's great, Mary. So in our sustainability report and on the call today, we provided a lot of statistics around water conservation, Waste Reduction and Energy Efficiency. So what does that look like in practice? Currently, our manufacturing sites are evaluating their energy Using an energy calculator tool, which provides understanding of their total facility energy footprint and it also solutions for their consideration. The sites enter their ideas into an environmental tracker, which is used by the business units to develop their own Energy roadmaps towards their 2,030 goals. Additionally, the IDM team is working on developing standard work to include other evaluations such as water and waste analysis, green teams and identifying other helpful resources as we progress in our sustainable journey. There are 83 energy projects, 27 waste projects And 11 water projects in our environmental tracker today. The excitement is really building among the employees. Thanks so much, Mary. So then can you talk about our 2,030 emission targets in terms of greenhouse gas scope 12 and how that compares to best in class industrial peers? We're typically appropriately conservative when we provide targets and so should we assume a similar level of conservatism in these targets? When we set our goals, we reviewed best in class ESG companies across multiple industries to refine our focus and benchmarking. We view our targets as appropriately aggressive, but achievable and consistent with best in class industrial peers, aligning with our value As being bold in our aspirations while moving forward with humility and integrity. Thanks very much, Mary. Andy, here's a question for you. How has employee equity ownership and higher engagement flowed through to retention and other HR metrics? Thanks, Each year we conduct an Ingersoll Rand employee engagement survey to understand in great detail the engagement level of our employee base. Since 2018, our employee Employee engagement store has actually increased from 67% to 78%. We believe that employee equity ownership is a strong driver of that improved engagement performance And critical to the long term retention of our employee base, equity ownership is the key driver of our first value. We think and act like owners. This ownership mindset is core to our future success and is foundational to our culture. Thanks, Andy. Mary, looking at Page 9, could you provide some Effective on how the ESG rating score compares to others in our industry? Sure. Our aspirational goal is to be a Top quartile industrial ESG company and we're using the IRX process to get there. As an example, we use the IDM process engaging leaders in the various ESG elements to improve our ESG rating agency submittals and The 2020 Sustainability Report. As mentioned, we're doing the same for developing our operations and our product road map to reach our 2,030 and Resulting in a significant move in point scoring for that rating agency. That's great. Thank you. Are we in the process of or have we applied for science based targets initiative approvals? Some companies have noted that target validation by SBTI gives more confidence to ESG investors. What's your view on this? Currently, we're evaluating the alignment and validation by SBTI as we embark upon our renewable energy long term strategy. Part of our IDM impact plan is to engage with SBTI to better understand the approval process and our path to get there. Thanks, Mary. So Andy, now that KKR is no longer a shareholder in Ingersoll Rand, how do we think about Board composition long term? Yes. Thanks, Chris. As you'd expect, our non GAAP committee is always evaluating our Board to ensure we have the right number of directors as well as the right capabilities, backgrounds and diversity to provide the governance necessary to support and drive our long term strategies. The fact that KCARE is no longer a shareholder will certainly be taken into account by our non GAAP committee during that Okay. Thanks, Andy. Now one for Vic. Can you quantify the costs to achieve the ESG goals by 2,030? And how will this impact cash flows and how will we fund this? Yes, thanks Chris. I'll start by saying it's obviously tough to quantify But we very much intend to invest in our ESG efforts as well as delivering our goals. So whether that be investing in our ESG team To help drive our targeted initiatives over the coming years, investing in our people through ongoing training and development or investing in products To drive ongoing efficiency and environmental friendliness, we kind of view all of these as growth investments, much like we look at functions like demand generation. And they do have a payback and a return that will lead to increased productivity for our workforce and ultimately increased sales from new products and new markets. Thanks, Vic. Turning back to Vicente. How is Ingersoll Rand helping customers to be energy efficient using the compressor innovations and new product Yes. Thank you, Chris. I definitely love this question as this is really core to our purpose of making life better. And a critical part of our Product development process is voice of customer analysis. And we have spent a lot of time listening to our customer feedback And what matters to them in terms of driving energy efficiency, how they evaluate technologies and what drives Purchasing decisions. That way we can optimize and orient our I2B process and new product development to address the feedback from voice of customer. For example, our Ultima oil free compressor is a revolutionary technology that offers not only 100% oil And silicon free air, but also highest level of energy efficiency and effective heat recovery system. All of that in a very small footprint and very low noise level, which helps the customer have the compressor close to point of use, Which also means less piping. So all in all, a very well advanced technology focused on many aspects of ESG. We have also increased our opportunity set to include other technologies in the compressor value chain, such as the dryer technology That we discussed in our Q2 earnings call, which has a 20% higher energy efficiency than prior models And 50% reduction in greenhouse emissions. So creating energy efficiency for our customers will continue to remain a focus of how we differentiate ourselves in the market. Thanks Vicente. So finally, Vic, can you talk about how our Energy efficiency goals tie up with our cost saving goals, including footprint optimization? Sure. I think clearly our footprint consolidation, it reduces our impact on the environment and also ultimately results in a lower cost profile. But as part of our footprint optimization evaluation, we've incorporated energy efficiency into our decision making criteria. After making decisions on footprint realignment, we're then investing in the facilities that we're consolidating into As we make the transition to ensure we're maximizing opportunities to reduce energy consumption and cost. And one great example that you can see in the business right now, We're consolidating our compressor footprint in China to one facility in Wuzhang, which does currently derive a portion of its energy from solar energy. And we'll look for continued opportunities to reduce energy exposure and optimize waste reduction there as well. Great. Thanks, Vic. So this concludes the question and answer portion for today's call. I'll turn it back over to Vicente for final remarks. I just want to say thank you To all of you that are participating in the call, thank you for your interest on our first ESG focus call. We appreciate your interest in Ingersoll Rand as well. And as you saw here, we're making great progress on our journey. So with that, I just want to say thank you, and have a great day. Thank you. Thank you to everyone who has joined us today. And this concludes the call. You may now disconnect your lines.