Chris Moore

Chris Moore asked how the ultimate product mix, particularly with chillers potentially exceeding 50% of the mix by 2028, might impact Modine's margins and what the biggest wild cards are. He also questioned whether the capacity would be in place by the end of fiscal 2027 to manage the high end of the 70% CAGR for 2028, implying a $3 billion revenue target.

Answer

Mick Lucareli, EVP and CFO, Modine Manufacturing Company, stated that the data center product portfolio has a 'pretty uniform margin profile,' so product mix is not a significant margin driver, with capacity utilization being more critical. Neil Brinker, CEO, Modine Manufacturing Company, confirmed that capacity is expected to be in place by the end of 2027 to meet the $3 billion target, though it may not be at full utilization immediately.

Chris Moore asked about the impact of product mix on data center margins, particularly with chillers potentially exceeding 50% of the mix by 2028, and the biggest wild cards affecting this. He also inquired whether the company expects to have the necessary capacity in place by the end of fiscal 2027 to support the high end of the 70% CAGR for 2027 and 2028, implying a $3 billion revenue range.

Answer

Mick Lucareli, EVP and CFO, explained that the margin profile across the data center product portfolio is relatively uniform, making product mix less of a primary driver. He emphasized that capacity utilization and fixed costs from greenfield facilities are the main factors. Neil Brinker, CEO, confirmed that the capacity is expected to be in place by the end of fiscal 2027 to manage the high-end growth, though it may not be at full utilization immediately.

Chris Moore asked about Modine's market share aspirations within the data center HVAC market, specifically how the $2 billion fiscal 2028 target relates to the total addressable market (TAM) in calendar 2027. He also inquired about the relative contribution of air-cooled versus liquid-cooled solutions to the $2 billion target.

Answer

Neil Brinker, President and CEO, stated that Modine is growing faster than the expanding TAM, gaining share from low single-digits to low double-digits last year, and expects to reach 15-20% market share with the $2 billion target. He noted that both air-cooled and liquid-cooled solutions are necessary and complementary, with AI expansion driving significant growth. Mick Lucareli, EVP and CFO, added that there is a relatively consistent margin profile across the product suite, with service at the highest end, which will grow with the installed base.

Chris Moore requested more details on the custom modular data center project being developed with a client. He also asked if other areas within Performance Technologies, beyond internal combustion engines, are being de-emphasized, and sought guidance for fiscal 2026 interest expense.

Answer

President & CEO Neil Brinker described the modular data center as a 'data center in a box' designed to accelerate deployment for customers. He noted that the PT portfolio is under constant 80/20 evaluation and mentioned the genset business is flattening, which could allow for resource redeployment. EVP & CFO Michael Lucareli provided an interest expense forecast of $28 to $30 million for fiscal 2026.

On behalf of Chris Moore from CJS Securities, Will asked how Modine plans to expand its customer base to achieve its $1 billion data center revenue target while maintaining a niche focus. He also inquired about the current state of the remaining legacy Auto ICE business following past price increases.

Answer

President and CEO Neil Brinker explained the $1 billion target is based on growing market share from low-single-digits to low-double-digits with their existing customer funnel, and any new customers would represent incremental growth. Regarding the Auto ICE business, he stated that commercial pricing agreements are structured as long-term programs, typically for 2-to-5-year periods, not as temporary measures.

Chris Moore questioned the sustainability of the S&I segment's 16.2% margins, asking for insights into future expectations. He also requested a comprehensive overview of the fiscal 2026 cash flow perspective, particularly after the Q1 timing issues. Finally, he inquired whether backlog is becoming a more significant metric for Atkore, especially with the increased focus on data centers, and if it is currently building.

Answer

CFO John Deitzer indicated that S&I margins are anticipated to normalize to 12%-14% due to mixed dynamics and discrete Q1 benefits, expecting some regression throughout the year. Regarding cash flow, John Deitzer explained that Q1 was a headwind due to strong Q4 FY25 cash flow and timing of large receivables falling into fiscal January. He expects cash from operations to improve, becoming modestly positive in Q2 and ramping up in Q3 and Q4, with capital expenditures modestly reduced. President and CEO Bill Waltz clarified that while backlog is not historically crucial for the core business (5-10 day shipping), it is growing for the data center and global construction segments, including orders and Letters of Intent, though not yet dimensionalized publicly.

Chris Moore questioned the sustainability of the S&I segment's 16.2% margins, asking for insights into future trends. He also requested a fiscal 2026 cash flow perspective, considering the Q1 timing issues, and inquired about the increasing importance of backlog, particularly with the company's focus on data centers, and whether it is currently building.

Answer

CFO John Deitzer stated that S&I margins are anticipated to normalize to the 12%-14% range, noting that Q1 included some discrete benefits and that margin regression is likely throughout the year due to mixed dynamics. For cash flow, John Deitzer explained that Q1 was a headwind due to strong Q4 fiscal 2025 cash flow and the timing of large accounts receivable collections falling into fiscal January. He expects cash from operations to improve, becoming modestly positive year-to-date in Q2 and ramping up in Q3 and Q4, with a modest reduction in capital expenditure expectations. President and CEO Bill Waltz clarified that while backlog is not historically critical for the core business, it is growing for data center and global construction projects, both in terms of orders and letters of intent, indicating optimism for this business segment.

Chris Moore sought clarification on the products manufactured at the three facilities slated for closure and whether shifting production to other sites would involve a learning curve. He also asked about the potential value proposition and 'bull case' for the HDPE business for a potential acquirer, given its strategic review.

Answer

President and CEO Bill Waltz detailed the closing facilities: Phoenix (metal conduit/S&I products moving to existing capacity in Harvey, Hobart), Fort Mill (PVC facility, production ramping up at other locations), and Chino (cable products moving to East Coast facilities). He emphasized that existing capacity and lean practices mitigate learning curve risks, and the closures align with an 80/20 focus. Regarding HDPE, he highlighted returning double-digit volume growth and the potential for increased productivity and profits by optimizing factory utilization and longer production runs for a new owner.

On behalf of Chris Moore, an analyst from CJS Securities asked for color on the puts and takes for free cash flow generation in fiscal 2025 compared to the prior year.

Answer

CFO John Deitzer explained that Q3 free cash flow was weaker due to the timing of accounts receivable collections around the quarter's end on June 27th, but noted this has largely normalized in July and August. He identified inventory optimization as a key opportunity for improving free cash flow generation heading into fiscal 2026 and expects cash from operations to be back on track in Q4.

Chris Moore inquired about the purchase accounting for the redeemable non-controlling interest related to the Amran and Narayan acquisitions, seeking clarification on the calculation and implications. He also asked about the competitive landscape for the Grid business's instrument transformers, specifically regarding OEM relationships and sole sourcing. Finally, he sought management's thoughts on the recent India-EU trade deal.

Answer

CFO Ademir Sarcevic provided a detailed explanation of the non-controlling interest, noting it stemmed from the inability to obtain Indian government approval for Indian nationals to own foreign equity, leading to an alternative cash acquisition method based on a 12x trailing twelve-month EBITDA multiple. CEO David Dunbar added that the increased value reflects the business's phenomenal performance and aligns incentives. Regarding the competitive environment, Mr. Dunbar characterized it as a 'customer intimacy market' where OEMs outsource custom-designed components, with Amran/Narayan becoming a valued partner against regional suppliers. On the India-EU trade deal, Mr. Dunbar stated that clarity in trade is beneficial and makes the Croatia site, which serves the European market and leverages the India supply chain, even more viable long-term.

Chris Moore from CJS Securities inquired about the $17.98 million redeemable non-controlling interest redemption value related to the Amran and Narayan acquisition, seeking clarification on the accounting and underlying math. He also asked about the competitive landscape for the Grid business, specifically if OEMs maintain multiple relationships or if Standex is sole-sourcing, and the expectations moving forward. Finally, Moore asked for management's thoughts on the recent India-EU trade deal.

Answer

Ademir Sarcevic, CFO, explained the non-controlling interest as a technical accounting adjustment reflecting the increased value of the Narayan business, stemming from an inability to acquire the remaining 10% with Standex shares due to Indian government restrictions, leading to a cash acquisition method based on a 12x trailing twelve-month EBITDA multiple. David Dunbar, CEO, characterized the Grid market as "customer intimacy," where Amran Narayan is a valued partner, noting that 40% of instrument transformers are still made by OEMs, with the remaining 60% supplied by various regional players. Regarding the India-EU trade deal, Dunbar stated that clarity and consistency in trade are beneficial, and the deal can only be positive, especially for the Croatia site leveraging the India supply chain.

Chris Moore asked about the status of the Engraving segment's restructuring and its competitive dynamics. He also inquired about the impact of NIH funding on the Scientific business and the potential effect of a 50-100 basis point interest rate cut.

Answer

CEO David Dunbar and CFO Ademir Sarcevic stated that the 'heavy lifting' of the Engraving restructuring is complete, though minor footprint adjustments may continue. Dunbar noted that demand has likely bottomed and competitive pressures have eased. Sarcevic explained that while NIH funding cuts have impacted about a third of Scientific sales, the FY26 outlook does not assume a recovery, making any funding return an upside. He also confirmed a rate cut would be beneficial but the primary focus remains on debt paydown through operations, targeting a leverage ratio of ~2.0 by year-end.

Chris Moore asked about the sustainability of gross margins for fiscal years 2027 and 2028, specifically if the 18% range is a reasonable target, and inquired about pricing differences for large natural gas projects today compared to two to three years ago. He also asked about manpower challenges and specific limited skill sets required for multiple significant natural gas projects running concurrently.

Answer

President and CEO David Watson stated that Argan's pricing model remains consistent, factoring in market conditions, inflation, labor, and various risks, noting that pricing is not one-size-fits-all due to project scope and complexity. Regarding margins, he mentioned Argan's conservative guidance of 16%+ and that year-to-date gross margins were 18.8%, but it's too early to provide specific FY2027 guidance due to changing project mix. On manpower, Mr. Watson acknowledged labor as an ongoing challenge, with specific skill sets like procurement, engineering, and commissioning allocated across multiple jobs. He confirmed the project capacity remains 10-12 jobs and that Argan is intentionally increasing headcount to its largest in history to manage the current workload.

Chris Moore inquired about Argan's future gross margins, specifically comparing current pricing on large natural gas projects to two to three years ago and whether an 18% range is a sustainable target for fiscal years 2027 and 2028. He also asked about potential manpower challenges for multiple significant natural gas projects running concurrently in calendar 2026 and beyond, particularly regarding limited skill sets.

Answer

David Watson, President and CEO of Argan, Inc., explained that their pricing model remains consistent, factoring in market conditions, inflation, labor, and various risks, noting that pricing is not one-size-fits-all due to project variability. He stated that while the company exceeded its 16%+ gross margin benchmark year-to-date at 18.8%, it's too early to provide precise guidance for fiscal 2027 due to changing project mix. Regarding manpower, Mr. Watson acknowledged that procurement, engineering, and commissioning are shared skill sets, and labor remains a challenge. He confirmed the company's project capacity guidance of 10-12 jobs, with efforts to grow this capacity through training and experience, noting Argan's headcount is currently at its largest in history to manage the increased workload.

Chris Moore asked about the remaining work and timeline for the Trumbull project, the sustainability of the strong 18.6% gross margin, and the types and scale of potential new projects expected to be added to the backlog in fiscal 2026.

Answer

CEO David Watson confirmed the Trumbull project achieved first fire in Q2 and second in August, tracking for completion on time and budget in the first half of next year. He attributed the strong gross margins to significant execution excellence in the power sector and favorable weather, expecting to exceed last fiscal year's gross profit margins but declining specific guidance due to business lumpiness. Watson expressed bullishness on adding more power jobs this fiscal year, potentially exceeding $2 billion in backlog, and highlighted Argan's capability to handle diverse project sizes from 170 MW to 1.2 GW.

Chris Moore asked about the company's expected annual free cash flow after the $250 million equity raise, the historical NV5 data center revenue target and if the combination with Acuren accelerates it, and the continuation of exiting lower-margin customer contracts in Q3.

Answer

CFO Kristin Schultes provided free cash flow building blocks, including cash interest, cash taxes, and CapEx, noting no specific FCF guidance yet. Executive Chairman Robby Franklin and CFO Kristin Schultes discussed the data center business, highlighting over 100% year-over-year growth and the strategic plan to combine Acuren's on-the-ground services with NV5's technical expertise. Kristin Schultes also clarified that Q3 softness was primarily due to LNG project timing and chemicals market, not a significant continuation of exiting lower-margin contracts.

Chris Moore inquired about Acuren's projected annual free cash flow post-integration, considering the recent $250 million equity raise and current leverage. He also asked if NV5's historical $400 million data center revenue target remains valid and if the Acuren combination could accelerate this goal. Finally, Moore sought an update on Acuren's strategy of exiting lower-margin customer contracts in Q3.

Answer

Kristin Schultes, CFO of Acuren, outlined free cash flow building blocks, including cash interest of approximately $105 million, cash taxes between $20 million and $30 million, and CapEx at roughly 3% of revenue. Regarding data centers, Ms. Schultes noted revenue growth exceeding 100% year-over-year, while Robby Franklin, Executive Chairman, mentioned the ongoing development of a five-year strategic plan to integrate Acuren's on-the-ground services with NV5's technical expertise. Ms. Schultes confirmed the company continues to evaluate and exit lower-margin relationships, attributing Q3 softness to project timing and LNG construction rather than contract exits.

Chris Moore of CJS Securities asked if the NV5 integration has uncovered opportunities beyond what was initially anticipated and questioned which areas of the combined Acurin and NV5 businesses would be most impacted by a potential economic slowdown.

Answer

CEO Tal Pizi confirmed that new opportunities are emerging daily, citing the ability to offer NV5's services through Acurin's Canadian footprint and bundle NDT services into NV5's projects. Regarding an economic slowdown, Pizi noted Acurin's resilience but mentioned potential discretionary spending cuts in the chemical sector. President & COO Ben Hurad stated that NV5 is focused on mandated services and feels they are past any downturn-related issues.

Chris Moore from CJS Securities asked if the NV5 integration has uncovered opportunities beyond initial expectations and questioned which business segments would be most impacted by a potential economic slowdown.

Answer

CEO Talman Pizzey confirmed new opportunities, such as leveraging Acurin's Canadian footprint to expand NV5's infrastructure services and integrating Acurin's NDT services into NV5's projects. Regarding a slowdown, Pizzey noted the business is resilient but the chemical end market could see reduced discretionary spending. President & COO Benjamin Heraud added that NV5 is focused on mandated services and feels confident about the next twelve months, having already moved past challenges in its geospatial group.

Chris Moore asked about the current pricing strategy and the AAON premium within the Rooftop business, along with the big-picture outlook for the Rooftop market in 2026. He also sought to understand if there are structural reasons preventing Basics gross margins from reaching the mid-30s like Rooftop, or if rapid growth is the primary challenge.

Answer

CEO Matt Tobolski detailed two price increases in 2025, totaling over 9% compounded, and noted that the AAON price premium still exists despite a soft commercial HVAC market. He indicated an uptick in bid activity but soft order conversion, expecting continued softness into early 2026 with conversion strengthening mid-year, driven by Alpha-class heat pumps and national accounts. For Basics gross margins, Matt Tobolski set a 30% near-term target, explaining that reaching mid-30s, like AAON, requires sustained manufacturing process improvements and pricing competitiveness over time, with the current focus on stabilizing production lines amid rapid growth.

Chris Moore asked about the current pricing strategy and AAON's premium in the Rooftop business, along with the outlook for the Rooftop market in 2026. He also questioned whether there are structural reasons preventing BASX gross margins from reaching the mid-30s, or if rapid growth is the primary challenge.

Answer

CEO Matt Tobolski detailed two price increases for the Rooftop business in the current year, totaling over 9%, and confirmed the AAON price premium still exists. He noted the commercial HVAC market remains soft with increased bid activity but slow order conversion, expecting continued softness into early 2026 with potential strengthening mid-year. Key growth drivers for outperformance include Alpha-class air source heat pumps and the national account strategy. For BASX gross margins, Matt Tobolski stated that the 30% range is the near-term target, acknowledging that reaching mid-30s, like AAON, requires long-term execution, manufacturing process improvements, and pricing competitiveness, but the organization aims to outperform.

Chris Moore asked for an outlook on the prolonged softness in the commercial rooftop market and questioned the fundamental reasons for the different long-term gross margin targets between the Basics brand and the higher-margin rooftop business.

Answer

CEO Matt Tobolski stated that while the non-residential market is soft, it appears to be at the bottom of the cycle, and AAON is outperforming it due to its national accounts and Alpha Class strategies. He explained there is no fundamental reason Basics cannot achieve margin parity with the rooftop segment over time; the current difference is due to the margin pressures of investing ahead of its rapid growth.

Chris Moore asked broadly about Mirion's pricing power and whether it is trending differently between the nuclear safety and medical segments.

Answer

Brian Schopfer, EVP, CFO, and Medical Group President, stated that the price-cost impact in Q3 was $2 million positive. He noted that Mirion is likely less aggressive on pricing in the medical segment, particularly in the U.S., compared to the nuclear safety side, attributing this to the strong moats around their product portfolio.

Chris Moore of CJS Securities inquired about the quantifiable increase in new nuclear plant opportunities over the past two years and sought details on the strategic fit and synergies of the recent CertRec acquisition.

Answer

CEO Tom Logan explained that while not providing a specific number, the quantity and pace of new nuclear projects are accelerating, citing potential for up to 10 new Westinghouse reactors in the U.S. and ongoing SMR development. Regarding CertRec, Logan described it as a unique, high-growth asset with a strong margin profile and significant AI potential from its vast industry data. He highlighted its strategic fit in the core nuclear power market and its expansion into the broader electrical grid, with synergies expected from leveraging Mirion's global commercial network.

Chris Moore inquired whether pricing and volume contributed relatively equally to the 12.3% utility growth in Q3 2025. He also asked if the sub-17% SG&A as a percentage of revenue achieved in Q3 is a realistic long-term target.

Answer

EVP and CFO Tom Liguori confirmed that pricing, stemming from Q1 tariff actions, and volume were roughly equal contributors to the utility segment's growth, expecting this trend to continue into Q4. He also stated that an SG&A percentage below 17% is a realistic long-term target, acknowledging potential quarterly fluctuations.

Chris Moore from CJS Securities sought clarity on the timeline for Valmont's long-term growth roadmap, asking if the projected $7-$12 EPS increase would be smooth or back-end loaded. He also inquired about the current and future margin profile of the international agriculture business compared to North America.

Answer

CFO Thomas Liguori confirmed the growth trajectory is smooth and not back-end loaded, with benefits expected as early as Q4 2025. CEO Avner Applbaum added that this growth is grounded in megatrends like the energy transition. Regarding agriculture margins, Liguori stated that international margins have improved, with Brazil and North America now at parity, while EMEA is closing the gap.

Chris Moore of CJS Securities inquired about the forward visibility for the Vegetation Management division, the potential impact of tariffs on demand and production, and the current capacity within the Industrial Equipment division to support further growth.

Answer

President & CEO Jeffery Leonard stated that he expects the recovery trend in Vegetation Management to continue for several more quarters, driven by low field inventory and a recovering ag market. He noted that tariff impacts have been largely mitigated by shifting production from Canada to the U.S. and that inflationary pressures have been less than anticipated. Regarding capacity, Leonard confirmed that while some plants are busy, there is still available capacity in other facilities, with labor availability being a more significant constraint than physical space.

Chris Moore of CJS Securities inquired about the forward visibility for the Vegetation Management division, the potential impact of tariffs on operations, and the Industrial Equipment division's capacity to handle sustained revenue growth.

Answer

President and CEO Jeffery Leonard stated that the Vegetation Management recovery trend should continue for several quarters, driven by a rebound in the agricultural market and cost structure improvements. He noted that tariff risks have been largely mitigated by shifting production to the U.S. and that inflationary pressures were less than anticipated. Regarding the Industrial division, Leonard confirmed they have sufficient capacity in Wisconsin and Huntsville, viewing labor availability as a more significant constraint than physical plant space.

Chris Moore of CJS Securities inquired about the forward-looking visibility for the Vegetation Management division, the potential inflationary impacts of tariffs, and the Industrial division's current production capacity.

Answer

President & CEO Jeffery Leonard stated that the recovery trend in Vegetation Management is expected to continue for several quarters, driven by a rebound in the agricultural market. He noted that tariff impacts have been effectively mitigated by shifting production from Canada to the U.S., with inflationary pressures being less than anticipated. Regarding capacity, Leonard confirmed the Industrial division is not yet constrained, with available capacity in its Wisconsin and Huntsville plants, though he highlighted that labor is becoming a tighter constraint.

Chris Moore of CJS Securities inquired about the forward-looking visibility for the Vegetation Management division, the potential impacts of tariffs, and the current capacity constraints within the Industrial Equipment division.

Answer

President & CEO Jeffery Leonard stated that the recovery trend in Vegetation Management is expected to continue for several quarters, driven by ag market improvement and cost structure efficiencies. He noted that tariff risks, primarily related to the US/Canada snow removal business, have been largely mitigated by shifting production. Regarding industrial capacity, Leonard confirmed they are not yet overwhelmed and have room to grow, particularly in their Wisconsin facility, with labor being a more significant constraint than physical plant capacity.

Chris Moore of CJS Securities inquired about the status of the proposed workers' compensation rate increase in California, its expected timing, and the nature of the $8.8 million workers' comp adjustment in the quarter.

Answer

President and CEO Gary Kramer clarified that California's commissioner approved a 9% rate increase, lower than the initial 11% recommendation. He views this as a positive market signal that will encourage clients to shop for services, with the impact rolling out over the next year as policies renew. Kramer also stated the $8.8 million adjustment was comparable to the prior year's Q2 adjustment and considered normal.

Chris Moore of CJS Securities inquired about the sustainability of high GCR gross margins, the expected margin impact from the recent Pioneer acquisition, and which vertical market beyond healthcare and industrial manufacturing holds the most potential for future growth.

Answer

President and CEO Michael McCann explained that the strong GCR margins are due to a focus on high-quality projects and robust risk management. EVP and CFO Jayme Brooks added that quarterly margins will fluctuate and the company guides to a consolidated gross profit line. Brooks confirmed that Pioneer's margins will be dilutive in the short term during the integration phase. McCann further clarified that the company's focus is on the 'mission critical' nature of work within its existing six verticals, rather than expanding to new ones, with a key strategy being the conversion of short-term OpEx spend into long-term capital programs.

Chris Moore of CJS Securities asked if strong Q2 orders included any pull-forward from tariff concerns, inquired about the competitive dynamics related to rivals sourcing from China, and requested an outlook on cash flow.

Answer

President & CEO Jennifer Sherman confirmed there was no significant order pull-forward, attributing the broad-based strength to strategic execution. SVP & CFO Ian Hudson reaffirmed the full-year target of 100% operating cash flow to net income conversion, highlighting that strong Q2 cash generation was achieved despite higher year-over-year tax payments.

An analyst on behalf of Chris Moore inquired about the progress and key 2025 milestones for the CCC Payments solution. He also asked how CCCS's competitive positioning has changed since it went public.

Answer

CEO Githesh Ramamurthy reported that CCC Payments went live with a couple of smaller customers in the last quarter, allowing the company to execute various payment workflows. He asserted that CCCS's competitive position has improved due to heavy investment in innovation, the strength of its network, high customer retention (99% GDR), and the strong ROI of its solutions.