Ati Modak

Atidrip Modak of Goldman Sachs questioned the strategic rationale behind the acquisition of Dynamic Systems, its broader end-market exposure, and whether more M&A in this domain should be expected.

Answer

President & CEO Duke Austin explained the acquisition was driven by customer requests for more certainty and speed in the technology and data center markets. He highlighted Dynamic Systems' cultural fit, craft-skilled labor focus, and advanced digital solutions as complementary to Quanta's existing capabilities. Austin confirmed Quanta will continue to evaluate similar strategic acquisitions of great family businesses that add value, emphasizing the unstated synergies that will cross both utility and technology markets.

Ati Modak requested more detail on the visibility of large transmission projects, asking about their current stage and when they might be reflected in the company's backlog.

Answer

President and CEO Duke Austin pointed to utility CapEx plans and RTO auctions as clear indicators of a robust, multi-year transmission build cycle. He stated that Quanta is in the 'very early stages' of this cycle and expects to see a continuous stack of work developing over the next five years, dismissing notions that generation could replace transmission needs.

Ati Modak inquired about the factors driving the margin performance in the Electric Power segment and questioned how much of that margin improvement should be considered structural and sustainable.

Answer

President & CEO Earl Austin stated that strong execution led to the performance and that a margin framework of 10.5% to 11% for the segment is a sustainable expectation, even with the integration of lower-margin acquisitions. CFO Jayshree Desai reinforced this, noting that the segment achieved double-digit margins even after factoring in reduced storm work and the divestiture of the Peru operations, which demonstrates underlying business strength.

Ati Modak asked about the key drivers for Expro's projected EBITDA margin expansion in 2026, especially given expectations of flat to slightly lower revenue, and whether the Drive25 initiative is the primary factor. Modak also inquired about the factors Expro is monitoring for the anticipated pickup in offshore activity in the second half of 2026 and requested regional insights into current activity trends. Finally, Modak asked about the implications for share repurchases for the remainder of 2025, given that the annual target was met early, and what to expect for 2026.

Answer

CEO Mike Jardon explained that margin expansion will be driven by the full-year impact of the Drive25 initiative, internationalization of recent M&A like Coretrax, and the rollout of new technologies that expand wallet share and improve positioning, emphasizing a focus on operational efficiency and technology deployment. Jardon indicated that Asia-Pacific is expected to be a laggard in 2026, while the 'Golden Triangle' (West Africa, Gulf of Mexico) and Saudi Arabia are showing constructive signs, also noting positive sentiment from Mexico. CFO Sergio Maiworm stated that Expro will continue to evaluate opportunities to return capital to shareholders in line with their capital allocation framework, noting that the $40 million repurchased already represents at least one-third of the adjusted free cash flow guidance. Jardon added that there is still plenty of headroom in the pre-authorized amount.

Ati Modak from Goldman Sachs inquired about the key drivers behind Expro's projected EBITDA margin expansion in 2026, particularly given expectations of flat to slightly lower revenue, and sought clarification on the regional outlook for offshore activity recovery in the second half of 2026. Modak also asked about the company's share repurchase plans for the remainder of 2025 and the outlook for 2026.

Answer

CEO Mike Jardon explained that 2026 margin expansion would be driven by the full-year impact of the Drive25 initiative, internationalization of recent M&A like Coretrax, and the rollout of new technologies expanding wallet share. He noted Asia-Pacific as a potential laggard, with the 'Golden Triangle' (West Africa, Gulf of Mexico) and positive sentiments in Saudi and Mexico driving H2 2026 offshore activity. CFO Sergio Maiworm and CEO Mike Jardon confirmed that share repurchases would continue to be evaluated in line with the capital allocation framework, with ample headroom in the pre-authorized amount, and that the $40 million target for 2025 was met ahead of schedule.

Atidrip Modak from Goldman Sachs requested guidance on the quarterly EBITDA margin cadence for the remainder of the year and asked for an update on the M&A market, including potential opportunities for Expro.

Answer

CEO Michael Jardon stated that while Q1 is seasonally the lightest, he would be disappointed if the company doesn't expand margins in 2025 versus 2024, noting Q2's strength came from solid execution, not one-offs. On M&A, he confirmed Expro remains very active, looking for accretive opportunities and 'dislocated assets' where the company can leverage its successful integration playbook to drive synergies.

Atidrip Modak from Goldman Sachs requested guidance on the expected EBITDA margin cadence for the remainder of the year by segment. He also asked for an update on the M&A market and whether Expro is seeing increased opportunities.

Answer

CEO Michael Jardon stated that while Q1 is typically the lightest quarter, Expro expects to expand margins for the full year 2025 compared to 2024. He characterized Q2's strong margin as the result of solid operational execution rather than one-off benefits. On M&A, Jardon confirmed that Expro remains very active in evaluating accretive opportunities, particularly focusing on 'dislocated assets' where the company can leverage its integration playbook to drive synergies.

Ati Modak from Goldman Sachs inquired about the key factors and sensitivities Expro is monitoring for its full-year guidance, and requested more detail on activity expectations across various geographies and for the well management and well construction businesses.

Answer

CEO Michael Jardon responded that the guidance is based on extensive customer conversations, which indicate caution but no stoppages for already sanctioned projects. He characterized the customer sentiment as a 'wait-and-see' mentality for new Final Investment Decisions (FIDs). Geographically, Jardon highlighted expected strength in Latin America (Guyana, Brazil, Argentina), resilience in the Middle East, and some softness in Australia and the UK North Sea, while noting strength in Norway and for non-Pemex activity in Mexico in the second half of the year.

Ati Modak inquired about the progression of free cash flow towards the company's 10% of revenue target, the impact of the Drive25 initiative, and the firm's capital allocation priorities, including its appetite for M&A.

Answer

CEO Mike Jardon detailed the 'Drive25' cost-saving initiative, which targets a $25 million reduction in run-rate support costs. CFO Quinn Fanning added that free cash flow improvement will be driven by a better activity mix, cost discipline, lower CapEx, and moderating working capital. Fanning confirmed a continued appetite for M&A based on 'industrial logic,' alongside a balanced approach that includes share buybacks and CapEx investment.

Atidrip Modak (The Goldman Sachs Group, Inc.) asked about the production impact of activity changes, specifically if any shifts in cycle times or efficiencies across the value chain could alter the company's laid-out response expectations. He also sought clarification on whether the expected gas activity in 2026 would represent an upside or merely offset softness in oil.

Answer

President and CEO Andy Hendricks stated that current activity levels have the potential to negatively impact U.S. production, which could lead to a commodity price reaction and self-correction. He maintained a long-term positive outlook due to fundamental demand growth. For 2026, Mr. Hendricks sees upside in gas activity, particularly later in the year as LNG demand comes online, even if oil activity holds steady.

Atidrip Modak asked about the production impact of activity changes, specifically if cycle times or efficiencies across the value chain could affect the expected response. He also inquired whether gas activity in 2026 would drive upside to steady expectations or offset softness in oil activity.

Answer

Andy Hendricks, President and CEO, believes current activity levels could negatively impact U.S. production, potentially leading to a commodity price reaction and self-correction. He sees strong long-term fundamentals for oil demand and the U.S.'s role in production. Customers are balancing production maintenance with capital spending in a lower commodity environment, leading to steady activity and demand for technology. Mr. Hendricks expects upside in gas activity later in 2026, driven by increased physical demand from LNG, after immediate needs are met by existing wells. This upside is anticipated even if oil activity holds steady.

Atidrip Modak of Goldman Sachs requested more color on conversations around future gas-directed activity and its implied trajectory for 2026. He also asked about the company's exposure to private operators and the activity trends observed in that customer segment.

Answer

President & CEO William Hendricks confirmed that discussions for 2026 point to an increase in gas-directed activity as new LNG facilities come online, with customers already planning for rig and completion needs. Regarding customer mix, he clarified that Patterson-UTI primarily works with larger, well-established private companies, not smaller, private equity-backed firms, and that this segment has remained relatively steady.

Ati Modak sought clarification on the momentum in natural gas basins versus customer caution, and asked for more detail on the company's plans to rightsize costs and drive corporate-level efficiency.

Answer

CEO William Hendricks stated that activity in natural gas basins, particularly the Haynesville, ramped up faster than expected but is now anticipated to remain relatively steady. He noted that customers' financial health is supported by the forward strip and prior hedging. CFO C. Smith added that all operating units are focused on reducing costs, especially support costs, and expects to see ratable progress throughout the year.

Ati Modak inquired about the company's approach to the 2025 CapEx budget, specifically whether it's driven by a target return or has rigid components, and asked for color on pumping hours for electric fleets versus the fleet average.

Answer

CFO C. Smith stated that the general framework for CapEx is guided by the goal of converting about 40% of EBITDA to free cash flow. CEO William Hendricks added that electric fleets are highly competitive, pumping a minimum of 20-21 hours per day, which is in line with their other high-end fleets, and that their performance has improved with experience.

Atidrip Modak from Goldman Sachs inquired about the expected direction for margins based on customer conversations and asked about the cadence of free cash flow, CapEx, and debt paydown into fiscal 2026.

Answer

SVP Michael Lennox stated that margins are expected to show resilience, supported by performance contracts, digital solutions, and cost efficiencies. CFO J. Kevin Vann confirmed the increased debt paydown target is funded by organic cash flow, with a long-term goal of reducing leverage to approximately one turn. He also noted that CapEx is expected to moderate and decline in fiscal 2026 from 2025 levels.

Atidrip Modak of Goldman Sachs asked about capacity building in the Pipeline segment, including headcount targets and the number of large projects that can be handled simultaneously. He also inquired about the nature of verbally awarded contracts and MasTec's typical bidding share on long-haul pipelines.

Answer

CEO José R. Mas noted that the 4,000 headcount increase was company-wide but that pipeline was a significant part. He stated the pipeline segment is currently underutilized at $2 billion in revenue compared to its $3.5 billion peak, indicating tremendous productivity potential. He explained that project share depends on the customer, with MasTec sometimes taking entire projects or a majority share, and that the company will scale responsibly to meet demand.

Ati Modak asked about the nature of the newly booked pipeline projects and expected order sizes for the second half of the year. She also requested more detail on the framework agreements and how they help de-risk the company's forward backlog.

Answer

CEO Jose Mas described the pipeline market as incredibly active, noting the Q1 bookings were diverse and that larger project awards are anticipated later in the year. He explained that framework and alliance agreements are a significant strategic shift, allowing MasTec to gain multi-year visibility into customers' project pipelines. This early insight helps the company better assess project viability and manage risks related to tariffs and regulations.

Ati Modak from Goldman Sachs inquired about the expected mix of future growth in the pipeline business, specifically between base business and large projects. She also asked about MasTec's exposure to recently announced 765 kV transmission line projects in the PJM market.

Answer

CEO Jose Mas clarified that the anticipated revenue growth in the pipeline segment for 2026 and beyond will be driven by large projects, not just the base business. Regarding transmission, he used the question to emphasize the massive, nationwide opportunity in grid modernization due to historical under-investment, stating MasTec is pursuing all major projects and is capable of executing any of them.

Ati Modak of Goldman Sachs requested details on verbally awarded Oil and Gas contracts and the gas generation opportunity, and also asked about the composition of the strong Clean Energy backlog and its future margin implications.

Answer

CEO Jose Mas described having excellent multi-year visibility in Oil and Gas through 2027, with gas-fired generation being a key long-term driver. For Clean Energy, he highlighted winning large anchor tenants as a significant factor in the record backlog. While confirming 2025 margins will improve, he deferred specific targets. CFO Paul Dimarco added that the strong backlog provides a much better starting point for margins heading into 2025 compared to prior years.

Atidrip Modak from Goldman Sachs asked about the company's strategy for future business footprint expansion, particularly regarding new MSAs. He also inquired about the labor requirements and potential margin impact associated with this incremental revenue.

Answer

President, CEO & Director Richard Swartz responded that MYR Group pursues both MSA and traditional bid work to capture opportunities across different customer preferences. He expressed confidence in managing labor needs through internal training, development, and recruitment, supplemented by disciplined, strategic tuck-in acquisitions. Mr. Swartz noted the company self-performs nearly all of its electrical work.

Ati Modak inquired about the outlook for MYR Group's Commercial and Industrial (C&I) segment, asking about the backlog, opportunity pipeline, and potential macroeconomic impacts. She also questioned the company's capital allocation strategy, specifically regarding share repurchases for the remainder of the year.

Answer

Richard Swartz, President and CEO, responded that client conversations in the C&I segment remain active with no project pullbacks observed despite ongoing discussions about tariffs and inflation. Kelly Huntington, SVP and CFO, addressed capital allocation, stating that the priority is funding organic growth and potential acquisitions. She noted that while no new share repurchase program is being announced, the company can act nimbly if market conditions and growth prospects warrant it.

Ati Modak asked for color on the growth and margin progression outlook for the T&D and C&I businesses in the upcoming year. She also requested more detail on the company's exposure to the 170+ planned hyperscale data centers, specifically regarding their presence in MYR Group's core markets and the competitive landscape.

Answer

President and CEO Richard Swartz projected that, on an annual basis, margins would operate in the mid-range of their stated targets: 7%-10.5% for T&D and 4%-6% for C&I. He anticipates upper single-digit revenue growth for C&I, while T&D will focus on filling the revenue gap left by the completed clean energy projects. C&I COO Don Egan confirmed that hyperscalers are moving into their core markets, but reiterated the company's strategy to remain diversified across data centers, healthcare, and water/wastewater projects.

Ati Modak inquired about the potential margin impact from change orders on clean energy projects and the expected margin progression for the core Transmission & Distribution (T&D) and Commercial & Industrial (C&I) segments.

Answer

Executive Richard Swartz explained that the company evaluates change orders quarterly and aims to have the problem projects completed by year-end. CFO Kelly Huntington added that excluding the impact of these solar projects, the T&D operating income margin is expected to be in the middle of its target range. She projected that looking forward to 2025, both the T&D and C&I segments should operate in the middle of their respective target ranges (7-10.5% for T&D and 4-6% for C&I).

Atidrip Modak asked for a quantification of the impact from the recent Argentinian asset sales and inquired if other parts of the portfolio are being considered for similar optimization.

Answer

President and CEO Girish Saligram explained that while there are a few other, much smaller, portfolio optimizations under review, the Argentina divestiture was the most significant. He quantified its impact by stating that without it, Q2 sequential revenue and EBITDA would have both increased by approximately 5%. The sale was a strategic move to avoid future capital intensity.

Ati Modak from Goldman Sachs sought clarification on why the revised guidance was described as 'potentially conservative' and asked new CFO Anuj Dhruv about his initial priorities for the company.

Answer

President and CEO Girish Saligram clarified that 'potentially conservative' reflects market uncertainty, as customers have not yet made definitive spending cuts. New EVP and CFO Anuj Dhruv stated his priorities align with the established strategy: maintaining the dividend, ensuring a 'fortress' balance sheet for flexibility, and having ample liquidity to be opportunistic through the cycle.

Atidrip Modak from Goldman Sachs asked about the regional focus for Managed Pressure Drilling (MPD) adoption beyond the Middle East. He also requested early thoughts on the free cash flow cadence and cash use for the upcoming year in a flattish revenue environment.

Answer

Executive Girish Saligram explained that the MPD push is global, with a key focus on capturing the 'performance tier' market with its Modus offering. Executive Arunava Mitra addressed cash flow, stating the company will continue to drive working capital efficiency towards its goal of 25% of revenue or better. He expects continuous improvements in working capital, lower interest costs, and moderating taxes to drive sequential cash conversion improvement over the next three years.

Ati Modak asked for more detail on the deferred volumes, questioning if they were from non-contracted work and what the potential is to divert these volumes to other producers. He also inquired about the current pricing on contracted volumes and the outlook for FOB sand prices in the second half of the year.

Answer

CEO John Turner clarified that the deferrals were a 'general pause' driven by macro uncertainty, with operators holding off on new commitments. CFO Blake McCarthy stated that the 22 million allocated tons are priced in the low $20s, while spot prices are in the mid-to-high teens. He noted that while incremental volumes would be dilutive to the average sales price, they would be highly accretive to consolidated margins due to low variable costs and the focus on total delivered cost.

Ati Modak asked for details on the 25 million ton volume outlook for 2025, including the share from key customers and the nature of pricing conversations. She also requested an update on the expected progression of mine operating costs throughout the year.

Answer

An executive explained that reliability is leading some key customers to commit 100% of their volumes to Atlas, a key differentiator that supports their volume outlook. Regarding costs, an executive stated that as volumes ramp up in Q1 and Q2, improved fixed cost leverage will lower OpEx per ton into the 'high teens' in Q1, with further improvement expected through mid-year.

Ati Modak questioned if the current environment has affected customer sentiment for long-dated projects (2028 and beyond) and asked about the sensitivity of the Surface Technologies business.

Answer

CEO Douglas Pferdehirt explained that clients evaluating long-term projects use a long-term commodity outlook and that these projects are increasingly gas-focused. For Surface Technologies, he contrasted the stable, strategic Middle East market with the more exposed U.S. land market. He noted that even in the U.S., FTI's focus on major clients provides more stability than the broader market.

Ati Modak of Goldman Sachs asked about the potential for free cash flow conversion to improve over time and how conversations with smaller, regional customers are influencing future order expectations.

Answer

CFO Alf Melin confirmed the potential for higher free cash flow conversion, explaining that as earnings grow, items like CapEx and interest will not scale at the same rate, allowing more EBITDA to convert to cash. CEO Douglas Pferdehirt added that smaller, regional clients are a significant and growing part of the business, now representing 30-40 clients per quarter versus a historical average of 12, and they almost exclusively choose the direct award iEPCI 2.0 model.

Ati Modak requested more detail on the flexibility within Liberty's CapEx plan and asked for updates on power contract negotiations.

Answer

CFO Michael Stock stated that the company has significant flexibility to adjust capital spending in Q4 and into 2026 by delaying deliveries and packaging to manage cash flow. On power contracts, he reiterated that conversations are progressing well but are complex and involve multiple parties, requiring time to reach a final investment decision.

Ati Modak of Goldman Sachs questioned the expected end-market mix and contract durations for the initial power deployments and asked how the capital expenditures for the power business would impact the company's return of capital program.

Answer

CEO Ron Gusek and CFO Michael Stock responded that they are targeting a balanced initial deployment across merchant power, commercial/industrial, and data centers, with a mix of short-term (2-8 years) and long-term (15-20+ years) contracts. Stock confirmed that the company can fund this growth organically while continuing its share buyback and dividend programs, all while maintaining a strong balance sheet.

Ati Modak asked about the current pricing pressure in the frac market, questioning if industry discipline is deteriorating and what profitability level Liberty considers a floor. She also sought details on future efficiency improvements and their impact on the company's competitive advantage.

Answer

CFO Michael Stock stated that while pricing for spot work is 'unusually rough,' broader industry discipline is not breaking down. He affirmed Liberty will idle capacity rather than accept unprofitable work and believes pricing is at or near a bottom. CEO Christopher Wright added that efficiency gains from consolidation and simul-fracs have increased productivity. He highlighted that the widening profitability gap between Liberty and smaller, struggling competitors is leading to a natural shrinkage in market capacity.

Ati Modak of Goldman Sachs questioned the flexibility of the fiscal 2025 activity cadence as a tool for managing production amid gas price volatility. She also sought details on the drivers behind capital expenditure efficiencies and the outlook for service costs.

Answer

Justin Loweth, President of Seneca Resources and National Fuel Midstream, confirmed the company retains flexibility in its activity plan but highlighted that a robust hedging program insulates it from price swings. He attributed CapEx efficiency gains to operational improvements, such as faster drilling, and optimized development planning in the Tioga area, which are expected to provide continued tailwinds.

Ati Modak asked about Antero's natural gas marketing strategy for the upcoming quarters and whether any currently drilled wells, beyond the already announced deferrals, could also be deferred.

Answer

CFO Michael Kennedy reaffirmed the existing marketing strategy, with 75% of gas flowing to the Gulf Coast and LNG corridor. He clarified that current drilling is focused on higher-liquids, higher-BTU content wells in Wetzel and Tyler counties, which are distinct from the deferred, drier gas pads.

Ati Modak asked for a comparison of Chart's LNG offerings against a competitor's recently acquired technology and inquired about Chart's appetite for similar acquisitions.

Answer

CEO Jillian Evanko positioned Chart's IPSMR technology as a leader in the market's shift to modular LNG, emphasizing its efficiency and smaller footprint. She expressed strong confidence in their current technology portfolio and stated they see no need for acquisitions in this area, citing their exceptional in-house R&D and engineering capabilities for organic development.

Asked about the expected full-year cadence for the Production Chemical Technologies (PCT) business in North America and for more details on the emissions business, including customer mix, geography, and market size.

Answer

The CEO expects steady growth in the North American PCT business throughout 2024. Regarding the emissions business, he stated the current 60 customers are predominantly a mix of operators in North America, with growing international opportunities. He described the market as a potential multi-billion dollar opportunity over time, significantly expanded by recent EPA regulations.

Asked for details on the Q3 revenue shortfall, the segment exposure to Argentina, and drivers for free cash flow growth beyond EBITDA.

Answer

The Q3 revenue miss of ~$35M was attributed half to U.S. land weakness (PAT & DT) and half to issues in Argentina (import delays) and Mexico. The Argentina exposure is almost entirely in the PCT segment. Free cash flow growth will continue to be driven by the capital-light model, with a 50-60% conversion target remaining intact.