Chris

Chris asked Eric Yuan about any observed improvements in product velocity from AI coding tools in recent months and whether product investment strategies have changed compared to last year.

Answer

Eric Yuan (Founder and CEO, Zoom) confirmed that the adoption of AI coding tools has accelerated innovation, particularly for new product development, though maintaining millions of lines of existing code with AI tools is still challenging. He highlighted Zoom Virtual Agent (ZVA) as a prime example of accelerated feature development due to AI coding tools and Zoom's embrace of AI across the entire product development lifecycle, leading to faster innovation and improved customer perception.

Chris asked for details on the 2026 Americas guidance, specifically how much growth is anticipated from repair and replacement versus new construction. He also inquired about Watts Water Technologies' capacity to meet the demand from the data center end market.

Answer

President and CEO Bob Pagano stated that for repair and replacement, they assume growth around GDP, approximately 2%. Regarding data center capacity, he explained that Watts is leveraging its global supply chain and facilities across North America, Europe, and Asia-Pacific, actively adding and building capacity, and feels confident in their ability to ramp up to meet market demand.

Chris asked about the durability of Zoetis's livestock growth drivers looking ahead to 2026.

Answer

Wetteny Joseph, Chief Financial Officer, expressed satisfaction with double-digit livestock growth, marking the third consecutive year of above-market growth, which is anticipated to continue in 2026. He cited sustainable underlying demand driven by increased protein consumption, population growth, emerging middle class, and urbanization. Joseph highlighted livestock's strong performance as a core strength, demonstrating portfolio diversification amidst U.S. companion animal macro headwinds.

Chris asked for initial insights into the drivers of a 'normal +2% price environment' for 2026, distinguishing between commodity and non-commodity pricing, and whether pricing would trend higher in H1 2026 due to easier comparisons. He also sought a better sense of the potential magnitude of SG&A leverage for next year, excluding volume, considering pricing expectations and branch closures.

Answer

John Guthrie, EVP, CFO, and Assistant Secretary, expects pricing to accelerate through 2026, with grass seed being a first-half overhang. He noted that PVC pipe price decreases were mostly in 2024 and stable in 2025, with suppliers indicating low single-digit price increases for Q1 2026. Regarding SG&A leverage, Mr. Guthrie stated that achieving it is a goal for next year, but it is premature to provide specific guidance as they are currently in the planning process.

Chris asked for initial insights into the drivers of a 'more normal +2% price environment' for SiteOne Landscape Supply Inc., specifically how commodity pricing is expected to play out relative to non-commodity pricing, and if pricing would trend towards the higher end of the 1%-3% range in the first half of 2026 given easier comps. He also sought a better sense of the potential magnitude of SG&A leverage for next year, considering current actions and pricing expectations.

Answer

EVP, CFO, and Assistant Secretary John Guthrie explained that pricing would likely accelerate as the year progresses, primarily because grass seed would be less of an overhang in the first half. He noted that most PVC pipe price decreases occurred in 2024, and non-commodity products were in good shape. He mentioned hearing low single-digit price increases from suppliers for Q1 2026 but emphasized the uncertainty. Regarding SG&A, Mr. Guthrie stated that achieving leverage next year is a goal, but it's too early in the planning process to provide specific guidance.

Chris, on behalf of Joseph Giordano, asked if there's any observed change in customer sentiment or project timing for water/wastewater infrastructure investments tied to government funding, and requested an update on the short-cycle business trend and its expected contribution to the 2026 mix.

Answer

CEO Todd Gleason stated that CECO has not observed an impact on large water infrastructure projects from U.S. government funding changes, as their significant projects are primarily international and driven by other investment criteria. Regarding the short-cycle business, Todd Gleason noted it's growing nicely and contributing positively, with its share of sales now above 30% (up from 20% four years ago). He explained that while the goal is 50/50, the mix can fluctuate depending on large, longer-cycle power and water jobs, but CECO continues to invest in aftermarket content.

Chris, on behalf of Joseph Giordano, asked if CECO Environmental observed any changes in customer sentiment or project timing for water wastewater infrastructure investments due to government funding, and requested an update on the short-cycle business trends and its expected contribution to the 2026 mix.

Answer

Todd Gleason (CEO) stated that CECO has not observed an impact from U.S. government funding changes, as their large infrastructure projects are primarily international with different investment drivers. Peter Johansson (CFO) and Todd Gleason (CEO) noted that the short-cycle business is growing nicely and remains steady, but its percentage of the overall mix can fluctuate due to the increasing volume of longer-cycle large power and water projects. The long-term goal remains a 50/50 short-cycle mix through organic and inorganic growth.

Chris from TD Cowen inquired about the long-term opportunity for segment margin recovery in North America and asked about the expected category mix between apparel and footwear within the Q1 revenue guidance.

Answer

CEO Kevin Plank addressed the North America question by focusing on the cultural reset and the fundamental goal of driving brand affection with the 16-to-24-year-old consumer, rather than providing a specific margin target. CFO David Bergman stated that for Q1, footwear is expected to face more pressure than apparel, which provides a slight benefit to gross margin as footwear currently has a lower margin profile, a gap the company is actively working to close.