Andy Kaplowitz

Andy Kaplowitz from Citigroup Inc. asked about the funding visibility and progression under the Infrastructure Investment and Jobs Act (IIJA) for Jacobs' transportation sector, specifically if there were any observed delays or accelerations in new money flowing to states. He also sought insights into regional performance across end markets, identifying which regions outperformed expectations and which might be softer in FY26.

Answer

Chair and CEO Bob Pragada stated that IIJA continues to be a catalyst without delays, noting strong global transportation growth beyond the US, including Europe, Middle East, Australia, and New Zealand. He added that business outside the US is in growth mode, with double-digit growth in the Middle East, recovery in Europe, and strong transportation and water growth in Southeast Asia and Australia/New Zealand, indicating uniform global performance. CFO Venk Nathamuni added that PA Consulting also sees solid momentum in the UK and continental Europe.

Andrew Kaplowitz asked about the sustainability of double-digit growth in the Water and Environmental segment, particularly regarding potential impacts from U.S. deregulation, and questioned the drivers for the expected second-half recovery in Advanced Manufacturing.

Answer

Chair and CEO Bob Pragada affirmed confidence in Water and Environmental growth, citing fundamental needs like urbanization and climate effects, and noted some deregulation can even accelerate projects. For Advanced Manufacturing, he explained that while the semi business is flat, data centers are growing double-digits, and a recovery is expected in Industrial Manufacturing, driven by a growing pipeline and reshoring efforts.

On behalf of Andy Kaplowitz, Natalia from Citi asked about the margin and revenue growth outlook for the PA Consulting segment in fiscal 2025. She also inquired about capital deployment priorities and whether M&A could be used to fill any portfolio gaps.

Answer

CEO Bob Pragada stated that PA Consulting's margin profile is expected to continue its strength. CFO Venk Nathamuni added that they anticipate a growth inflection point for PA in FY25, which is factored into the overall company guidance. Regarding capital, Venk prioritized organic investment and shareholder returns (buybacks, dividends), noting M&A is a long-term accelerant and that the company has significant optionality due to its strong balance sheet.

Andy Kaplowitz inquired about the execution risks associated with Quanta Services' new Total Solutions platform, particularly for large power generation jobs, and how the company secures favorable terms and conditions to protect its interests.

Answer

President and CEO Duke Austin emphasized Quanta's extensive experience in generation (8 GW) and Zachry's expertise (100 CCGTs). He highlighted a collaborative partnership approach with clients to de-risk both sides from cost escalations, reiterating Quanta's public stance against taking undue risk on these projects by focusing on total cost solutions.

Andy Kaplowitz asked about execution risks for the new Total Solutions power generation platform, particularly for larger jobs, and how Quanta plans to secure favorable terms and conditions to protect itself.

Answer

President and CEO Duke Austin emphasized de-risking both Quanta and the client on cost escalations, stating Quanta is not taking undue risk on these projects. He highlighted collaborative planning for total cost solutions and the strength of their partnership with Zachry.

Andy Kaplowitz from Citigroup inquired about the drivers behind the accelerating organic growth in Safety Services, specifically asking if it was boosted by data center tailwinds or more broad-based, and sought an update on APi Group's M&A progress, including the expansion of its elevator platform.

Answer

President and CEO Russ Becker explained that while data centers contribute (moving from 7-8% to 9-10% of revenue), growth is broad-based across semiconductors, advanced manufacturing, aviation, healthcare, and critical infrastructure, benefiting from APi's ability to handle complex projects. Regarding M&A, Mr. Becker stated they are 'right on track' for their $250M target, highlighting the 'forever home' value proposition for sellers, continued focus on North America (fire, security, elevators), and growing international activity based on country readiness.

Andy Kaplowitz asked about the acceleration of organic growth in Safety Services, seeking a breakdown of drivers such as data center tailwinds versus broader growth, and inquired about APi Group's M&A progress, including the number of bolt-on acquisitions and expansion into new platforms like elevators.

Answer

Russ Becker, President and CEO, explained that robust activity in data centers (pushing 9-10% of revenue), semiconductors, advanced manufacturing, aviation, healthcare, and critical infrastructure are driving growth. He noted the size and complexity of projects limit competition. Regarding M&A, Mr. Becker stated they are on track for $250 million in bolt-ons, with a strong pipeline focused primarily on North American fire and security, and ongoing work in elevator/escalator and international markets. David Jackola, EVP and CFO, added that the underlying organic growth algorithm is sustainable.

Andy Kaplowitz questioned whether Gates Industrial is accelerating or enhancing its restructuring plans (footprint optimization, 80/20) beyond what was outlined at the Investor Day a year and a half ago, given slower growth. He also asked for an update on how 80/20 is impacting Gates into 2026 and beyond, and if the company can achieve core incrementals over 40% with organic growth.

Answer

CEO Ivo Jurek clarified that the company is executing its original restructuring plan, which was paused briefly after "Liberation Day" announcements to reassess the mercantile regime, but ultimately validated. He emphasized the need to be well-positioned for an anticipated upcycle. Jurek highlighted 80/20, material cost reductions, and operational focus as key drivers for outperforming expectations and delivering midterm targets without growth, viewing it as a powerful tool with early innings. He stated that, excluding restructuring benefits, the company expects 30-35% incrementals in a normalized growth environment for 2026 and beyond. Jurek also provided regional growth color, noting North America's challenge from agriculture, South America's normalization after strong growth, Europe's surprising positive core growth driven by auto replacement and industrial first fit, and China's consistent performance. He expressed optimism for India's continued nice growth trajectory.

Andy Kaplowitz asked if Gates Industrial is accelerating or enhancing its restructuring plans compared to the Investor Day update, given slower growth, and sought an update on the impact of 80/20 initiatives. He also questioned if the company could achieve core incrementals over 40% with organic growth, and requested more color on regional growth trends, particularly in North America, EMEA, and China.

Answer

CEO Ivo Jurek clarified that the company is executing on its original restructuring plan, which was paused briefly to assess the mercantile regime, and is now moving forward to position for an anticipated upcycle. He emphasized that 80/20, material cost reductions, and operational focus have been key to outperforming expectations and delivering midterm targets without growth, with early innings still providing significant opportunity. Mr. Jurek stated that excluding restructuring benefits, the company expects 30%-35% incrementals in a normalized growth environment. He provided regional insights, noting North America's challenge from agriculture, South America's normalization after strong growth, EMEA's surprising positive core growth driven by construction and mobility, and China's consistent performance in auto and industrial replacement, with India showing strong growth potential.

Andy Kaplowitz asked for more color on the margin inflection seen in FTD during the quarter, specifically the contribution from MOGAS versus core FTD, and whether the segment's long-term operating margin target of 16%-18% by FY2027 might be conservative given current performance. He also inquired about Flowserve's potential market share within the $10 billion nuclear flow control opportunity over the next decade and if nuclear bookings could continue to average high single digits of total bookings.

Answer

Scott Rowe, President and CEO, detailed the successful integration of MOGAS, noting its full adoption of the Flowserve business system, operational excellence, 80/20 principles, and commercial excellence. He confirmed MOGAS margins were accretive to FTD and that modules that previously caused concern have shipped. Amy Schwetz, CFO, added that FTD's 410 basis point sequential improvement was broad-based, driven by operational excellence, 80/20, and MOGAS, and that new long-term targets would be considered in 2026. Regarding nuclear, Mr. Rowe emphasized rising bookings and a higher trajectory for nuclear growth. He highlighted Flowserve's substantial market share (content in 75% of reactors), high barriers to entry, and strong position in North America, Europe, and Korea. He projected Flowserve to be a market leader in nuclear pumps and valves, potentially increasing market share, with the $10 billion opportunity excluding China.

Andy Kaplowitz asked for more color on the margin inflection seen in the FTD segment, specifically differentiating between MOGAS's contribution and core FTD improvements. He also questioned if the FTD segment's operating margin, already exceeding the 2027 target range, could be conservative. Additionally, he inquired about Flowserve's potential market share in the $10 billion nuclear flow control opportunity over the next decade and the sustainability of rising nuclear bookings.

Answer

Scott Rowe, Flowserve's President and CEO, detailed MOGAS's successful integration, embedding of the Flowserve business system, and its accretive margins to FTD. Amy Schwetz, Flowserve's CFO, added that FTD's 410 basis point sequential improvement was broad-based, driven by operational excellence, 80/20, and MOGAS, confirming FTD is exceeding long-term targets and will reset them in 2026. Mr. Rowe then elaborated on the nuclear opportunity, citing Flowserve's substantial share, high barriers to entry, and presence in 75% of global reactors. He outlined the $10 billion prize, excluding China, from new reactors, SMRs, aftermarket growth, and life extensions, expressing confidence in Flowserve's advantaged position and market leadership.

Andy Kaplowitz inquired about the durability of Veralto's industrial water quality business strength into 2026, particularly regarding data center-related growth, its current size, and expected future impact. He also asked about the slight lowering of 2025 margin guidance, whether it was tariff-related or due to incremental investments, and expectations for 2026 incremental margins.

Answer

Jennifer Honeycutt (President and CEO) highlighted data centers as a strategic priority, seeing strong double-digit growth from existing and new builds, and emphasized Veralto's role in maximizing energy efficiency and water conservation across the AI value chain. Sameer Ralhan (SVP and CFO) attributed the margin guide adjustment to Q4 expectations, including price/cost impacts and investments, primarily affecting PQI, while Water Quality maintained strong performance. He expects a return to 30-35% incremental margins in 2026.

Andy Kaplowitz from Citi asked about the long-term durability of Veralto's industrial water quality business strength, particularly concerning data center-related growth, and requested insights into the size and expected future impact of this specific business. Kaplowitz also questioned the slight reduction in the full-year 2025 margin guidance, asking if it was primarily due to PQI tariff pass-throughs or incremental investments, and if normal incremental margins (30%+) are expected to resume in 2026.

Answer

Jennifer Honeycutt, President and CEO, emphasized data centers as a strategic priority, noting strong double-digit growth from existing and new customers, driven by the "big five" tech companies. She highlighted Veralto's critical role in water treatment for chip manufacturing, power generation, and raw materials for AI infrastructure, confirming it's a smaller but rapidly growing part of the business. Sameer Ralhan, SVP and CFO, explained that the full-year margin guide reflects Q4 investments and tariff impacts, mainly in PQI, but expressed confidence in raising EPS guidance due to higher sales volume, lower interest expense, and tax rate benefits.

Andy Kaplowitz (Citigroup) inquired about Xylem's accelerated EBITDA margin improvement, the sustainability of 80/20 benefits beyond 2025, and potential upside to the 2027 adjusted EBITDA margin target. He also asked about the broad-based strength in Measurement & Control Solutions (MCS) order growth, particularly in smart energy and water meters, and its implications for 2026 visibility.

Answer

CEO Matthew Pine stated that Xylem is ahead of schedule on its 2027 EBITDA margin target (23%), guiding to over 22% for 2025, indicating likely upside. He outlined a multi-phase journey: Phase 1 (operating model transformation), Phase 2 (leveraging simplification for growth), and Phase 3 (doubling down on core franchises and M&A). CFO Bill Grogan confirmed healthy demand and a strong pipeline in MCS, with 11% order growth across water and energy meters. He noted a normalizing backlog of $1.5 billion and projected high single-digit growth for MCS in 2026, with Q4 expected to be book-to-bill positive.

Andy Kaplowitz with Citigroup inquired about Xylem's accelerated EBITDA margin improvement, the sustainability of 80/20 benefits, and potential upside to the company's 2027 adjusted EBITDA margin target. He also asked about the broad-based strength in Measurement and Control Solutions (MCS) order growth and its implications for 2026 visibility in smart energy and water meters.

Answer

CEO Matthew Pine noted Xylem is ahead of its 2027 EBITDA margin target, with potential upside, and described the ongoing transformation as the 'first phase' focused on operating model, culture, processes, and structure, with future phases targeting growth and core franchises. CFO Bill Grogan confirmed healthy demand and a strong pipeline in MCS, with 11% order growth across water and energy meters, supporting a high single-digit growth outlook for 2026, despite a normalizing backlog.

Andy Kaplowitz asked if GE Vernova would consider ramping gas power capacity beyond 20 gigawatts annually before reaching 80-100 gigawatts in backlog and slot reservations, given the current strong demand.

Answer

CEO Scott Strazik stated that GE Vernova is not currently planning to ramp capacity beyond the 20 GW annual run rate before reaching 80-100 GW in backlog/slot reservations. He clarified that 80-100 GW is an evaluation point, not a trigger, as orders are being booked further out with attractive economics. He noted that GE Vernova is not the only long-lead item and customers also need to secure EPC, gas pipelines, and permits. He expects CapEx for gas and grid to peak in 2026, with potential modest capacity lifts from productivity gains.

Andy Kaplowitz asked if GE Vernova would consider ramping gas power capacity beyond the 20 GW annual run rate before reaching the 80-100 GW backlog threshold, given the expectation of 70 GW in slot reservations and backlog by year-end.

Answer

CEO Scott Strazik stated that GE Vernova does not currently plan to ramp gas power capacity beyond the 20 GW annual run rate before reaching the 80-100 GW backlog threshold. He clarified that 80-100 GW is an evaluation point, not an automatic trigger for expansion, as current orders are for later fulfillment at attractive economics without significant market share loss. Scott Strazik expects CapEx for gas build-out to peak in 2026, with potential for modest capacity lifts from productivity gains due to new machinery installations.

Andy Kaplowitz asked about the lowered 2025 core Water Solutions growth guidance, specifically if commercial growth continued to lag, and sought preliminary thoughts on the segment's outlook for 2026. He also inquired about the 26% ROS target for 2026, questioning if the transformation and 80/20 funnel could extend well past 2026 to drive further margin expansion.

Answer

CFO Bob Fishman confirmed the core Water Solutions guidance tweak was due to commercial Water Solutions coming in at low single digits, reflecting a slower food service industry, but noted continued bottom-line optimization. CEO John Stauch added that North America Water Solutions performs well, offsetting some softness in international sales, with encouraging mid-single-digit growth in the ice business and 18 consecutive quarters of growth in North America filtration. Regarding margins, John Stauch expressed strong confidence in the 26% ROS target for 2026 and anticipated demonstrating a significantly improved transformation funnel at the upcoming Investor Day, driven by supply chain studies and expected labor and overhead productivity as volume returns.

Andy Kaplowitz inquired about the lowered 2025 core Water Solutions growth guidance, specifically if commercial growth continued to lag, and sought preliminary thoughts on the segment for 2026. He also asked for an update on the 26% ROS target for 2026 and the potential for the transformation/80/20 funnel to drive margins higher beyond 2026.

Answer

CFO Bob Fishman confirmed the slight downgrade for core Water Solutions, noting commercial water sales were at the lower end of expectations due to the food service industry. CEO John Stauch added that North America performed well, but international sales, particularly in China, showed softness. John Stauch expressed confidence in the 26% ROS target for 2026 and indicated a significant funnel of opportunities for margin expansion beyond that, driven by tariff mitigation studies and expected volume-based productivity.

On behalf of Andy Kaplowitz, an analyst asked about Atkore's volume growth visibility for fiscal 2026, demand trends in the water end market, and the competitive landscape for HDPE products amid BEADs funding.

Answer

President and CEO Bill Waltz expressed optimism for future volume growth, citing exploding demand from data centers and a positive outlook for solar. He noted that while mega-projects can be lumpy, the overall trend is favorable. For the water market, he stated that the municipal sector is picking up. Regarding HDPE, Waltz mentioned that while the competitive dynamic with satellites hasn't changed, overall business volume is increasing. CFO John Deitzer added that a low single-digit volume growth environment seems reasonable for the future.

An analyst on behalf of Andy Kaplowitz at Citigroup asked for more detail on productivity opportunities and the factors contributing to the soft Q1 guidance and the expected ramp-up in the second half of the year.

Answer

CEO Bill Waltz explained that Atkore expects tens of millions in net productivity in FY25, driven by investments in lean teams focused on scrap reduction and equipment uptime, which are not solely volume-dependent. Regarding the Q1 outlook, Waltz cited normal construction seasonality, while CFO John Deitzer added that Q1 faces a difficult year-over-year comparison and that new growth initiatives are expected to gain traction and contribute more significantly as the year progresses.

Andy Kaplowitz from Citigroup asked for more color on the accelerating Defense & Space business and for an update on how direct material productivity and AI initiatives are helping to offset cost inflation, as well as the stickiness of recent price increases.

Answer

Chairman & CEO Vimal Kapur stated that Defense & Space growth is driven by both supply chain healing and strong international and domestic demand. He confirmed that pricing has been sticky and is balanced with significant productivity gains from value engineering, which is being accelerated by AI. SVP & CFO Mike Stepniak added that the overall focus is on consistent long-term growth, allowing business units flexibility on the price-volume mix.

Andy Kaplowitz of Citigroup requested more color on the accelerating growth in Defense and Space, particularly the balance between U.S. and international demand. He also asked for an update on direct material productivity initiatives and the stickiness of recent price increases.

Answer

Chairman & CEO Vimal Kapur attributed the Defense and Space growth to both supply chain healing and strong order demand from domestic and international markets, which he expects to continue. On productivity, he stated that pricing has been sticky and successfully executed without destroying demand. He highlighted that value engineering, enhanced by AI, is becoming a meaningful lever that provides optionality in balancing price and productivity to drive margins.

Representing Andy Kaplowitz of Citigroup, an analyst asked about the company's path to achieving its long-term 14-16% EBITDA margin target given the 2025 guidance is around 11%, and requested an update on the Hazel Park facility ramp-up.

Answer

Executive Jagadeesh Reddy acknowledged that achieving the 2023 Investor Day targets might take longer due to current market conditions but reaffirmed they are achievable, citing future volume leverage from a Commercial Vehicle market recovery in 2026. Executive Todd Butz added that 2025 is a story of two halves, with margins expected to improve from 8-10% in H1 to 11-13% in H2, creating a clear path toward the long-term goal. Regarding Hazel Park, Reddy stated that while the top-line has been impacted by market demand, the company remains on track with new product launches.

An analyst on behalf of Andy Kaplowitz asked about the fiscal 2025 organic NSR growth outlook, questioning if both segments would grow in the 5-8% range and seeking an update on the Middle East. He also asked why guided margin expansion of 30 bps is below recent historical averages.

Answer

Management stated that the Americas segment is expected to lead organic growth, with International ramping up in the second half. President Lara Poloni confirmed the Middle East business grew in Q4 and for the full year, with no slowdown. CEO Troy Rudd explained that the 30 bps margin expansion reflects record organic investments in talent, technology, and new platforms like the Water & Environment Advisory business. These investments, while expensed now, are expected to drive margins well beyond the 17% long-term target.