Christopher Glynn

Christopher Glynn asked about initial signs of life in the general electronics portion of the ATS segment and explored opportunities in emerging semiconductor technologies like packaged optics. He also sought clarification on the impact of foreign exchange (FX) on ATS and IPS margins, noting historical substantial impacts.

Answer

Daniel Hopgood, EVP and CFO, clarified that general electronics demand is stable at low growth levels, with early signs of capacity investment discussions trickling down from high-end semiconductors. Sundaram Nagarajan, President and CEO, confirmed that packaged optics (optical modules) is an area they play in and are seeing related orders. Daniel also confirmed that FX is a contributor to margin performance, especially for IPS, explaining that incrementals on FX movements are typically lower (25-30%) compared to organic growth.

Christopher Glynn from Oppenheimer asked about the initial signs of life in the general electronics portion of the Advanced Technology Solutions (ATS) segment. He also explored opportunities related to emerging technologies in semiconductor applications, specifically packaged optics. Finally, he questioned the impact of foreign exchange (FX) on ATS and IPS margins, noting historical substantial effects.

Answer

Daniel Hopgood, EVP and CFO, clarified that general electronics are seeing stable demand at low growth rates, with early signs of capacity investment discussions trickling down from high-end semiconductor demand. Sundaram Nagarajan, President and CEO, confirmed that Nordson has products for optical modules and is seeing related orders. Daniel Hopgood then explained that FX had a 6% positive impact on IPS sales, but incrementals on FX movements are typically lower (25-30%), contributing to the margin performance in the quarter.

Christopher Glynn from Oppenheimer & Co. Inc. inquired about the Atrion acquisition, asking if its better-than-expected performance was due to a conservative initial model or a genuine surprise, and what its long-term growth profile looks like. He also asked about the Advanced Technology Solutions (ATS) segment, seeking to understand where the 'center of gravity' is moving in terms of customer innovation and end-market drivers.

Answer

President and CEO Sundaram Nagarajan clarified that the Atrion valuation model was not conservative and attributed its strong performance to solid commercial execution and a successful new product launch, with more in the pipeline. For the ATS segment, he explained that growth is being driven by rapid, significant investments in complex GPUs and advanced semiconductors, primarily by customers in Asia. He also highlighted that new product categories, such as the WaferSense in-process sensors, are contributing to growth.

Christopher Glynn requested more detail on factory efficiency gains, the current EBITDA margin and D&A for the newly acquired Atrion business, and whether the ATS segment's current revenue run rate reflects any business attrition from the NBS Next strategy.

Answer

CEO Sundaram Nagarajan attributed efficiency gains to the NBS Next framework, better product mix, and improved on-time delivery. CFO Daniel Hopgood confirmed Atrion's EBITDA margins are in the 'upper 20% range' with slightly higher D&A. Nagarajan clarified that the ATS team used the downturn to strategically reposition the business for growth, including new capacity and innovation, rather than attriting business lines.

Christopher Glynn inquired about the commercial funnel development, specifically if there's traction in win rates for design-in and modified solutions, the maturity of AI customer relationships beyond early-stage startups, the broad-based nature of defense exposure (rotor, fixed wing, munitions, comms, radars), and a housekeeping question on share class consolidation.

Answer

Farouq Tuweiq (President and CEO) confirmed improved win rates and a better market, emphasizing a holistic approach including defining wins, bringing the full Bel portfolio to customers, creating key accounts groups, and improving customer service. Regarding AI, he noted positive momentum, scaling, and continued discussions, with networking also contributing to AI exposure. For defense, he confirmed broad-based exposure across major programs, munitions, flying assets, ground, space, and encryption communication. On share class, he stated the board would address it formally at the appropriate time, emphasizing fiduciary duty to all shareholders.

Christopher Glynn inquired about the traction and win rates in Bel Fuse's commercial funnel development, focusing on design-in and modified solutions. He also asked for an update on the AI customer base, its early-stage nature, and potential for coattail adoption. Additionally, he sought clarification on the broad-based nature and weightings of Bel Fuse's defense mix, and asked a housekeeping question about share class consolidation.

Answer

Farouq Tuweiq, President and CEO, stated that Bel Fuse is doing a better job defining wins and aiming for higher margins. He emphasized a shift towards selling the entire Bel portfolio (systems sales) and creating new internal groups like 'key accounts' to align with customers, alongside improving customer service. For AI, he confirmed positive momentum, scaling, and continued movement, noting networking customers bundling products for hyperscalers. He confirmed Bel Fuse's defense portfolio is very diversified, covering major programs, munitions, flying assets, ground, space, encryption, and communication. Regarding share class consolidation, he acknowledged the nuanced shareholder structure and stated the board would provide a formal response at the appropriate time, emphasizing fiduciary duty to all shareholders.

Christopher Glynn of Oppenheimer inquired about the Q2 revenue guidance allowance related to tariffs, asking if this revenue is considered deferred or lost and if a reduction in tariffs could resolve the issue. He also asked for details on the networking market's performance as it pertains to the Power and Connectivity segments, and for an update on general design-in activity.

Answer

CFO Farouq Tuweiq explained the revenue impact is due to customers, particularly distributors, pausing orders to avoid holding high-cost inventory amidst tariff uncertainty. He suggested the revenue is likely deferred, with a potential for a catch-up in orders once there is clarity. CEO Dan Bernstein and Tuweiq addressed design-in activity, noting a new go-to-market strategy is being implemented to drive growth. They highlighted strong activity in AI and defense, and noted that while networking was down in Q1, bookings have started to increase, signaling a potential rebound later in the year.

In a follow-up, Christopher Glynn of Oppenheimer & Co. Inc. requested modeling guidance for the quarterly or annualized add-backs for intangible amortization and stock-based compensation under the new adjusted EPS calculation.

Answer

CFO Lynn Hutkin advised that annual stock-based compensation would be around $4 million. For intangible amortization, she recommended using the incremental amount recorded in Q4 2024 as a proxy for future quarters, noting it should remain relatively consistent.

Christopher Glynn asked about the short-term impact of Winter Storm Fern on the Home Standby (HSB) business and the revenue and monetization implications of ecobee's new grid resiliency service.

Answer

President and CEO Aaron Jagdfeld noted that Winter Storm Fern provided a significant bump in portable generator sales and in-home consultations (IHCs), doubling expectations for the month. He highlighted promising results from the new lead distribution system in improving close rates during demand surges. Regarding grid services, Jagdfeld stated it's a small but recurring revenue stream, primarily from Enbala, and while slow to develop, it's expected to grow as grid constraints increase.

Christopher Glynn asked about the short-term impact of Winter Storm Fern on the Home Standby (HSB) business and the revenue and monetization implications of ecobee's new grid resiliency service.

Answer

President and CEO Aaron Jagdfeld stated that Winter Storm Fern provided a significant bump in portable generator sales and in-home consultations (IHCs), which doubled expectations for the month. He highlighted promising results from their new lead distribution system, showing improved close rates during demand surges. Regarding grid services, he noted it's a small but recurring revenue stream, primarily from ecobee, acknowledging slow utility adoption but anticipating future growth as grid constraints increase.

Christopher Glynn asked about the current size of the data center pipeline and the likelihood of future large orders. He also requested the CapEx guidance, inquired about Regal Rexnord's incumbency in the $200 million-plus robotic automation funnel, and confirmed the IPS backlog growth.

Answer

CEO Lewis Pinkham stated the current data center pipeline is about $600 million, and he doesn't expect another quarter of orders of the same magnitude soon due to capacity being filled through 2027, but anticipates continued focus on data center opportunities. He confirmed the $200 million robotics funnel is a mix of existing specified platforms and new relationships. CFO Rob Rehard provided a CapEx guide of about $120 million for the year, supporting growth and supply chain realignments. Mr. Pinkham also confirmed IPS backlog was up 6% year-over-year coming into the current year.

Christopher Glynn asked about the current size of the data center E-Pod pipeline and the likelihood of seeing more large orders in the next year. He also inquired about the CapEx guidance for the year and whether the $200 million+ robotic automation funnel includes incumbent or already specified projects. Finally, he asked for the year-over-year growth of the IPS backlog.

Answer

CEO Louis Pinkham stated the data center pipeline is about $600 million for all data center business, but large orders are unlikely in the near term as capacity is filled through 2027, though data center will remain a focus. He confirmed the robotic automation funnel is a mix of incumbent/specified projects and new relationships. CFO Rob Rehard provided CapEx guidance of $120 million for 2026, primarily for growth and supply chain realignments. Mr. Pinkham confirmed the IPS backlog was up 6% year-over-year coming into 2026.

Christopher Glynn asked for clarification on the mix shift within the IPS segment, inquired about the nature of tariff-related share gain opportunities, and questioned the outlook for the AMC segment's medical business.

Answer

CFO Robert Rehard confirmed the mix shift in IPS is toward OEM versus distribution, aligning with the company's 'first fit' strategy. CEO Louis Pinkham described the share gain opportunities as active, real-time negotiations where Regal Rexnord's 'in-region, for-region' footprint is an advantage, noting that any wins would be sticky. He characterized the weakness in the AMC medical business as short-term lumpiness due to customer inventory management and expects it to return to growth by year-end.

Christopher Glynn from Oppenheimer asked about the reasons for the 2024 free cash flow miss relative to the prior outlook and inquired if operator incentives are properly aligned to achieve the 2025 cash flow targets.

Answer

CFO Rob Rehard attributed the 2024 free cash flow shortfall to lower-than-guided EBITDA, timing of collections on late-quarter shipments, and a strategic decision to build inventory ahead of potential tariffs. He affirmed that operator incentives are well-aligned, as free cash flow generation from trade working capital is a key performance metric for the teams.

Christopher Glynn of Oppenheimer asked about the specific drivers of weakness in the international and general commercial markets within the PES segment and questioned if delivery lags could harm OEM relationships.

Answer

CEO Louis Pinkham detailed that general commercial (31% of PES) and non-U.S. commercial HVAC (part of 23% of PES) have been significant headwinds due to weak ISM and international market softness. He affirmed that relationships with HVAC OEMs remain strong and that the company is working closely with them through the production ramp-up, foreseeing no material long-term impact.

Christopher Glynn from Oppenheimer asked about the factors contributing to the High-Touch Solutions segment's outgrowth trend relative to long-term expectations and requested more details on the improved repeat purchase rates observed in the Endless Assortment segment.

Answer

D.G. Macpherson, Chairman and CEO, explained that HTS outgrowth was impacted by external factors like the government shutdown and internal adjustments to seller expansion, but is now benefiting from improved seller effectiveness, KeepStock performance, marketing, merchandising, and net contracts. He also highlighted Zoro's significant increases in repeat rates over the past 18 months due to focused efforts on customer acquisition, marketing, and service communication.

Christopher Glynn questioned the factors contributing to the High-Touch Solutions segment's outgrowth trend relative to its long-term target and asked for more details on improved Endless Assortment repeat rates.

Answer

Chairman and CEO D.G. Macpherson cited external factors like the government shutdown, a past pause in seller adds, and positive trends in seller effectiveness, KeepStock on-site performance, marketing, merchandising, and net contracts. He explained Zoro's focus on consistent purchases from core business customers, changes in customer acquisition, marketing, and service communication leading to significant increases in repeat rates.

Christopher Glynn inquired about the long-term strategic goals of deferring price increases and whether the flattish back-half guidance for Zoro was conservative given its momentum.

Answer

CEO D.G. Macpherson stated the pricing decision was about building long-term customer loyalty and trust, not a specific share gain tactic. CFO Deidra Meriwether explained that Zoro's outlook reflects cycling tough comps from a strong back half of the prior year, leading to a modest deceleration, but the company remains bullish on its performance.

Christopher Glynn of Oppenheimer and Company inquired about the long-term strategic goals behind deferring price increases and asked if the relatively flat back-half guidance for Zoro was conservative.

Answer

CEO D.G. Macpherson stated that the pricing decision was primarily about maintaining customer loyalty and trust, rather than a specific tactic for short-term share gain. CFO Deidra Meriwether clarified that Zoro's projected moderation in growth is not due to conservatism but because the business is cycling against tougher sales comparisons from a strong second half in the prior year.

Christopher Glynn asked about the growth dynamics of Zoro, questioning if its high growth rate has a multiplier effect relative to the High-Touch Solutions (HTS) segment's performance. He also inquired about any notable geographic divergences within the U.S.

Answer

Chairman and CEO D.G. Macpherson explained that there is no direct multiplier effect, as Zoro and HTS serve different end markets. Zoro's growth is driven by its own marketing efforts to acquire and retain small and midsize customers, making it largely independent of HTS's performance with larger industrial clients. He also stated that there have been no interesting geographic divergences within the U.S.

Christopher Glynn asked about the expected ramp-up of volume outgrowth during 2025 to reach the annual target. He also questioned if the strong Q4 gross margin of 39.6% was a clean jumping-off point for the new year.

Answer

CFO Dee Merriwether stated that while Q1 would have a slow start, targeting the low end of the 400-500 bps outgrowth range implies an expectation for share gains to ramp through the year. She clarified that the Q4 gross margin included a 40 basis point non-sustainable tailwind from lapping a prior-year inventory adjustment, making it not a perfectly clean base for 2025.

Christopher Glynn asked for an update on the diluted shares count, considering the recent refinancing and convertible notes, and requested a projection for the third quarter.

Answer

Alan Edrick, EVP and CFO, indicated that diluted shares decreased in Q2 due to the stock buyback, expecting a further slight reduction in Q3 before stabilizing, with Q4 comparable to Q3, while acknowledging that a rising stock price could partially offset this effect.

Christopher Glynn asked for clarification on the anticipated stronger Q4 performance compared to Q3, and whether the $1 billion back-half revenue would split approximately 45%-55% between Q3 and Q4. He also inquired if strong second-half bookings were primarily a CBP factor, commented on the aviation market pipeline, and asked for bookkeeping details on diluted shares.

Answer

Alan Edrick, EVP and CFO of OSI Systems, explained that Q4 is expected to be significantly stronger than Q3 due to the U.S. government shutdown pushing some items to the right, and the Mexico revenue headwind being most prevalent in Q3 and subsiding substantially in Q4. Ajay Mehra, EVP and CEO, clarified that strong bookings are a combination of CBP, other government orders, and international opportunities. He stated the aviation market pipeline remains strong, acknowledging longer timelines for airport projects. Alan Edrick added that diluted share count is expected to reduce slightly in Q3 due to buybacks and stabilize in Q4, with rising stock price having a counter effect.

Christopher Glynn of Oppenheimer & Co. Inc. asked about the health of the Security division's pipeline, specifically whether it is growing or if conversions are outpacing new opportunities. He also inquired if discussions with Optoelectronics customers about gaining wallet share have changed in tone due to global supply chain shifts.

Answer

Executive President & CFO Alan Edrick confirmed that the Security division's pipeline of opportunities is strong and growing, with increasing diversity that provides confidence in sustained growth. He also noted that while the trend of moving supply chains away from China was already underway, recent events have accelerated the urgency of these discussions with Opto division customers. OSI's global footprint, including facilities in Mexico and the U.S., allows it to offer customers a flexible menu of manufacturing options.

Christopher Glynn of Oppenheimer asked about the current stage of the global aviation security upgrade cycle and for details on the company's debt refinancing plans for its facility maturing in fiscal 2027.

Answer

President and CEO Ajay Mehra characterized the aviation market not as a single cycle but as a continuous business with ongoing opportunities across checkpoints, trace detection, and checked baggage, highlighting a significant future replacement opportunity in the U.S. EVP and CFO Alan Edrick stated the company will likely work to amend and extend its credit facility during calendar 2025, noting that OSI Systems currently enjoys favorable, investment-grade-like pricing on its debt.

Christopher Glynn asked if any Optoelectronics end markets are showing signs of cyclical recovery and inquired whether the organic revenue guidance increase was driven by the pacing of large contracts or other business activity.

Answer

President and CEO Deepak Chopra and EVP and CFO Alan Edrick identified strength in the defense end market for the Optoelectronics division, with some continued softness in medical OEMs. Alan Edrick clarified that the organic portion of the revenue guidance increase was related to strong business activity outside of the large Mexico contract.

Christopher Glynn asked about the cultural fit and integration challenges with the Basler acquisition, particularly concerning differences in go-to-market strategies and their systems/solution-oriented portfolio.

Answer

President and CEO Greg Henderson expressed excitement about Basler, highlighting its highly technical organization, strong engineering capabilities, and market leadership in protection solution excitation systems. He emphasized Basler's established go-to-market and market position in the utility industry, which complements Littelfuse's legacy portfolio and provides a channel for broader Littelfuse products into the grid/utility space. He noted that Basler's system-level, complete solutions approach aligns with Littelfuse's goals for growth synergies.

Christopher Glynn asked about Littelfuse's engagement in data center opportunities, specifically regarding partnerships or consortiums for higher voltage architectures. He also sought more details on the target markets for power semiconductors and the anticipated impact on earnings power from the planned portfolio rationalization. Finally, he inquired about the cultural fit and any integration challenges with Basler Electric, particularly concerning differences in go-to-market strategies and its systems/solution-oriented portfolio.

Answer

President and CEO Greg Henderson explained Littelfuse's active engagement across the data center ecosystem, partnering with hyperscalers, chip providers, and ODMs, and highlighted the focus for power semiconductors on high-value, high-growth markets like data center, battery energy storage, and grid/utility infrastructure, while rationalizing lower-value parts. He expressed excitement about Basler Electric's technical organization and established utility industry go-to-market, which complements Littelfuse's portfolio. EVP and CFO Abhi Khandelwal added that the company participates in platforms like Open Compute, is active in standards bodies for new high-voltage architectures, and aims for 'model level profitability' for the power semi business, with financial impacts incorporated into guidance as progress is made.

Christopher Gleen from Oppenheimer & Co. Inc. inquired about the specifics of data center design win growth, clarifying if it was an instance count or dollar value, the lead time to revenue, and the current scope of the data center business for Littelfuse. He also asked about the overall new business funnel beyond data center, particularly for the industrial segment, and its scalability given mixed market conditions like HVAC and construction.

Answer

President and CEO Greg Henderson clarified that data center design wins were up 2x year-on-year, noting data center as a relatively faster market for revenue conversion compared to automotive or industrial. EVP and CFO Abhi Khandelwal indicated that the electronics segment's strong performance reflects data center exposure, which contributes high single digits to total company revenue. Greg Henderson acknowledged solid industrial growth driven by energy storage, renewables, and data center infrastructure, but noted softer residential HVAC and construction MRO. Abhi Khandelwal added that the industrial segment was up 12% year-to-date. Christopher Gleen later asked about the transportation segment's performance, specifically the difference between passenger vehicle fuses (up 4%) and sensors (down 18% organically), and the ongoing sensor attrition. Greg Henderson confirmed core passenger products had a reasonable quarter, while sensor products, not a strategic focus, continue to see lower revenue and profitability due to realignment. Finally, Christopher Gleen asked about the power semiconductor strategy under Dr. Karim Hamed, its focus markets, and the scope for improvement. Greg Henderson explained that power semiconductors underperformed (5% growth vs. 19% for passive products in the electronics segment) and is a microcosm of Littelfuse's broader strategy: sharpening focus on high-growth markets (data center, grid, utility, medical), improving sales alignment to sell the full portfolio, and optimizing operational performance.

Christopher Glynn of Oppenheimer Holdings inquired about the recent passenger vehicle share gains, asking if this was a new development. He also sought to understand how the company's strategic priorities apply to the larger Electronics segment and questioned the drivers behind its sequential margin performance and a specific Q3 headwind from stock compensation.

Answer

President & CEO Greg Henderson explained that passenger vehicle share is strong globally but the core strategy is diversification into areas like agriculture. He illustrated the Electronics strategy with a design win in enterprise computing's shift to 48V power. EVP & CFO Abhi Khandelwal stated the Electronics margin was impacted by softness in power semiconductors offsetting strength in other areas. He clarified the Q3 headwind was due to the timing of stock comp recognition and a return to 100% target bonus accruals.

Christopher Glynn from Oppenheimer asked about the mechanics of tariff-related pricing, the demand outlook for power semiconductors, the M&A pipeline, the sustainability of Transportation segment margins, and the continuity of the strong book-to-bill ratio into April.

Answer

CFO Meenal Sethna stated that tariff pricing is a mix of list price increases and surcharges, depending on the customer. CEO Greg Henderson addressed power semiconductors, noting that while some areas like industrial automation are soft, others like data center power transfer switches are performing well. He emphasized that M&A remains a key part of the strategy, which will be refined in the coming months. Sethna affirmed the focus on continued margin expansion in Transportation through operational excellence and best practice sharing, which should support profitability despite market softness. She also noted that while Q1 momentum was strong, the company is monitoring potential second-half demand shifts closely.

Christopher Glynn from Oppenheimer sought clarification on the term 'cost scaling actions' and whether it implies positioning for high conversion margins. He also asked about the drivers of commercial vehicle growth in down markets and requested more detail on the Q4 impairment charge.

Answer

CFO Meenal Sethna clarified that 'cost scaling' refers to rightsizing the cost structure to the current state of the business through a combination of cost reductions, discretionary spending cuts, and footprint optimization. CEO Dave Heinzmann explained that commercial vehicle outperformance is due to both pricing actions from product pruning and market share gains in niche applications. Regarding the impairment, Meenal Sethna stated the $93 million noncash charge was almost all related to assets in the Industrial segment, primarily impacted by the weak outlook for EV charging infrastructure.

Christopher Glynn asked if the consistent design wins highlighted each quarter are sufficient to generate net growth if end markets remain flat. He also inquired about the company's capital allocation strategy, the M&A pipeline, and expectations for deal activity in 2025.

Answer

President and CEO Dave Heinzmann affirmed that design-in activity remains solid and contributes to growth, though he noted the conversion from design win to production is currently taking longer than usual in the electronics market due to customer caution. On capital allocation, Heinzmann reiterated that thoughtful M&A is a critical part of their strategy and the company maintains a robust funnel. While not announcing any specific deals, he stated he would be 'shocked' if there wasn't some M&A activity over the next 12 months.

Christopher Glynn asked about the over 10% organic growth in Engineered Solutions orders, seeking clarification on the organic basis and the book-to-bill ratio. He also inquired about the fluid power comparisons, specifically dissecting end demand trends versus destocking, and asked about January sales trends, including the high single-digit growth in Engineered Solutions and potential neutralization of December's pause.

Answer

President and CEO Neil Schrimsher confirmed Engineered Solutions orders were up over 10% on an organic basis, with automation up 20%, fluid power up 13%, and flow control up 8%. He noted the book-to-bill ratio was above 1 for three of the last four quarters. Schrimsher also stated that destocking in fluid power had largely worked through, with encouraging performance in mobile off-highway and industrial activity. He acknowledged a potential benefit in January sales from neutralizing the December pause but viewed the overall growth as favorable. CFO Dave Wells confirmed Engineered Solutions sales were up high single digits in January.

Christopher Glynn with Oppenheimer inquired about the over 10% organic growth in Engineered Solutions orders, seeking clarification on the organic basis and the implied book-to-bill ratio. He also asked about dissecting fluid power trends between destocking and end demand, and the factors influencing January sales, including the impact of December's pause and future comparison difficulties.

Answer

Neil Schrimsher, President and CEO, confirmed the organic basis for Engineered Solutions orders, noting automation at +20%, fluid power at +13%, and flow control at +8%. He added that the book-to-bill ratio was above 1 for three of the last four quarters. Schrimsher explained that destocking in mobile off-highway fluid power has largely worked through, with performance driven by mid-tier and smaller OEMs, industrial activity, and technology in semi-wafer fab equipment and data centers. Dave Wells, VP, CFO, and Treasurer, confirmed the high single-digit growth for Engineered Solutions in January and acknowledged a potential benefit from neutralizing the December pause.

Christopher Glynn of Oppenheimer Holdings inquired about the drivers of Hydrodyne's sequential EBITDA growth, the recovery status of break-fix MRO demand, and the level of caution in the fiscal 2026 guidance.

Answer

CFO David Wells clarified that Hydrodyne's strong performance was driven by the leverage on SG&A and faster-than-expected synergy realization, not reduced integration costs. President & CEO Neil Schrimsher added that both cost and sales synergies are progressing well, particularly in service and repair. Schrimsher also noted that local account sales turned positive in July, suggesting firming MRO demand, and confirmed the fiscal 2026 guidance is intentionally prudent due to macro uncertainties and a ramp in prior year comparisons.

Christopher Glynn of Oppenheimer & Co. Inc. inquired about the potential impact of China sourcing issues on Applied's customer base, sought details on the growth drivers within the Engineered Solutions segment, and asked about the timing for a recovery in the fluid power market.

Answer

President and CEO Neil Schrimsher acknowledged it was difficult to quantify customer exposure to China but noted positive trends in technology, food & beverage, and aggregates. He detailed strong order growth in automation (+30% YoY) and fluid power technology (+10%), with mobile and industrial fluid power orders also turning positive. CFO David Wells confirmed the 30% automation order growth was organic. Schrimsher anticipates a fluid power recovery could start in the first half of fiscal 2026 and strengthen thereafter.

Christopher Glynn inquired about the sustainability of recent improvements in the automation and technology-focused businesses, asking if the trend feels sticky. He also sought clarification on the more bullish commentary regarding the M&A pipeline, particularly the reference to 'midsized' deals, and asked what has changed to prompt this.

Answer

President and CEO Neil Schrimsher expressed confidence that the recovery has 'stickiness,' citing increased activity from chip manufacturers and strong interest in robotics and machine vision. Regarding M&A, Schrimsher explained that focusing on both bolt-on and midsized deals has been a consistent part of their strategy. He suggested that as economic cycles progress, attractive companies become available, and Applied's scale and integration track record make it a desirable partner.

Christopher Glynn asked for clarification on 'premium food services,' including campus meal plan infrastructures and hotel buffets, and the appropriate leverage ratio ranges for future acquisition deals.

Answer

President and CEO Jim Clark defined 'premium food services' to include casual dining (fewer locations, higher value per site, $250k-$1M) and campus/hospitality, where LSI acts as a one-stop shop. He noted building momentum in these areas. Jim Clark and CFO Jim Galeese stated comfort with leverage below 3x (ideally below 2x), highlighting the current 0.4x ratio and strong cash flow generation to quickly reduce debt post-acquisition.

Christopher Glynn asked for clarification on LSI's 'premium food services' strategy, including its scope and potential opportunities in campus meal plans and hotel buffets. He also inquired about the company's appropriate leverage ratio ranges for future M&A deals, considering its integrated team approach.

Answer

President and CEO Jim Clark explained that premium food services encompass casual dining (fewer locations, significantly higher project values, e.g., over $1 million per interior) and campus/food services, particularly for refrigeration. He emphasized LSI's unique 'one-stop shop' capability across various components, enhancing credibility. Regarding M&A leverage, Jim Clark stated comfort below 3x, ideally below 2x (currently 0.4x), distinguishing between incremental deals (within revolver capacity) and exponential deals (potentially pushing into the 3x range). CFO Jim Galeese added that strong free cash flow generation (over $30 million annually) supports rapid deleveraging post-acquisition.

Christopher Glynn asked about the energy segment, noting steeper organic comps in the second half, and inquired how orders and new applications are phasing into that, and if there would be a growth adjustment period before normalizing into the long-term investor day outlook.

Answer

CEO Terrence Curtin stated that momentum in the energy segment remains very strong and has not slowed, with an uptick also seen in Europe alongside continued strong growth in the U.S. He reiterated the expectation for double-digit organic growth this year, in line with the investor day outlook, driven by grid hardening and capacity expansion. He confirmed that capacity is being put in place to support this growth.

Christopher Glynn inquired about the Energy segment's organic growth, noting steeper comparisons in the second half, and asked how orders and new applications are phasing into this, and if a growth adjustment period is expected before settling into the long-term Investor Day outlook.

Answer

CEO Terrence Curtin affirmed that momentum in the Energy segment remains very strong, with no slowdown, and noted an uptick in Europe complementing strong U.S. growth. He reiterated expectations for double-digit organic growth this year, in line with the Investor Day outlook, driven by grid hardening and capacity expansion, with capacity additions on track to support this growth.

Christopher Glynn of Oppenheimer asked about the Energy business, questioning the interdependence of renewable energy and grid hardening drivers, the potential for cross-selling from the Richards acquisition, and the nature of the current demand strength.

Answer

CEO Terrence Curtin explained that while electricity growth is a common trend, grid hardening and renewables are largely independent drivers. He noted the Richards acquisition significantly broadens TE's grid hardening capabilities in North America and that while cross-selling into renewables is a future opportunity, it is not yet reflected in results. He confirmed the 20% organic growth reflects strong, structural demand in both areas.

Christopher Glynn asked for more detail on the Space market, including its scope, growth rate, and potential contribution to TE's business over the next few years.

Answer

CEO Terrence Curtin described Space as an important and rapidly scaling market within the Aerospace, Defense & Marine (AD&M) segment. Growth is driven by new commercial space ventures and low-earth satellite constellations, which require high-speed, high-reliability connectivity solutions similar to those in the AI space but for a much harsher environment. He confirmed it is a smaller but quickly multiplying vector for the company.

Christopher Glynn from Oppenheimer asked about the company's capital allocation strategy, noting the new $2.5 billion share repurchase authorization seems larger than usual and questioning if it signals any strategic adaptation.

Answer

CFO Heath Mitts clarified that the larger authorization does not represent a change in strategy but rather reflects the company's strong cash flow generation and provides optionality. He mentioned a more favorable M&A environment but emphasized that TE will remain disciplined. The authorization ensures TE can continue returning excess cash to shareholders via buybacks and dividends if suitable M&A opportunities do not materialize, preventing cash from accumulating on the balance sheet.

Christopher Glynn asked for clarity on the longer-term outlook for guided weapons programs (JDAM, SDB, AIM-9X), specifically whether growth is leveling off or ramping, considering the price aspect. He also inquired about the global capacity investment for the industrial aftermarket, asking if it is primarily oriented towards the marine sector.

Answer

Chairman and CEO Chip Blankenship explained that JDAM is substantially up and expected to remain level, while SDB and AIM-9X have no current orders but indications of future growth opportunities through capacity studies. Regarding industrial aftermarket investment, Mr. Blankenship clarified it involves establishing MRO shops closer to customers for power plant installations (aeroderivative or heavy-duty frame) to expand service content for fuel metering valves and reciprocating engines, rather than being solely marine-focused.

Christopher Glynn inquired about the long-term clarity for guided weapons programs (JDAM, SDB, AIM-9X), including lot orders and whether growth is leveling off or ramping, noting the significant price aspect. He also asked for details on the global capacity investment for the industrial aftermarket, specifically if it is oriented towards the marine sector.

Answer

Chairman and CEO Chip Blankenship stated that JDAM programs are substantially up and expected to remain level, while SDB and AIM-9X have no current orders but indications of customer interest for capacity studies. Regarding industrial aftermarket investment, Mr. Blankenship explained it involves establishing MRO shops closer to customers for power plant maintenance cycles (aeroderivative or heavy-duty frame), servicing fuel metering valves and other components on gas turbines, and supporting reciprocating engines.

Christopher Glynn of Oppenheimer asked about the drivers behind the strong performance in the Marine business and the reasons for the downward revision of the full-year effective tax rate.

Answer

CEO Chip Blankenship attributed the Marine strength to a combination of price, share gains by customers using Woodward platforms, and strong service demand. CFO Bill Lacey explained the lower tax rate was driven by significant tax benefits from stock option exercises at record-high stock prices, which led to the updated guidance.

Christopher Glynn asked about the drivers of Industrial segment performance, sought confirmation on second-half commercial aftermarket and corporate expense expectations, and inquired about the strong pricing realization.

Answer

CEO Charles Blankenship explained that strong oil and gas sales were due to lumpy project timing and confirmed commercial aftermarket growth would moderate to high single-digits. CFO William Lacey reaffirmed the full-year corporate expense guidance and attributed strong pricing to improved value-pricing execution and favorable mix.

Christopher Glynn inquired about the long-term demand signals in the power generation market and the expected production cadence for the guided weapons program throughout the year.

Answer

CEO Charles Blankenship expressed a very bullish outlook for power generation, citing demand for grid stability, renewables support, and data centers. He confirmed alignment with customers on capacity expansion. For guided weapons, he explained that while they plan for a level-loaded ramp, production could see some volatility due to supply chain issues affecting both Woodward and its customers.

Christopher Glynn from Oppenheimer & Company asked for comments on data center growth as the spearhead of Hubbell's vertical market strategy and how light industrial growth fits into this broader strategy beyond just data centers. He also inquired about the D&A numbers for DMC Power.

Answer

Bill Sperry (EVP and CFO, Hubbell Incorporated) confirmed that data centers are driving notable growth in the electrical segment, both through dedicated units like PCX and through connectors and grounding solutions. He agreed that other verticals besides data centers are also benefiting from sales and marketing specialists, proving the broader vertical market strategy effective. Regarding DMC Power's D&A, Sperry did not have the exact numbers but estimated D&A to be a couple of points of sales, noting that Hubbell plans to invest in the business to ramp up margins over time.

Christopher Glynn inquired about the growth rate of data centers and light industrial, and how these fit into Hubbell's broader vertical market strategy beyond just data centers. He also asked for the D&A numbers, specifically depreciation, for the DMC acquisition.

Answer

Bill Sperry, EVP and CFO, confirmed that data centers are a significant driver of growth in the electrical segment, both through dedicated units like PCX and connectors/grounding solutions. He also noted that other vertical market specialists are successfully driving cross-selling efforts beyond data centers. Regarding DMC's D&A, Sperry did not have the exact number but estimated depreciation and amortization to be a 'couple of points of sales,' noting plans for investment to ramp up margins over time.

Christopher Glynn of Oppenheimer & Co. Inc. asked for examples of benefits from the Electrical segment's unification beyond vertical growth, such as pricing power or service levels. He also questioned if Hubbell has achieved a new, sustainable level of pricing power.

Answer

CEO Gerben Bakker cited benefits from 'competing collectively,' where strong brands pull through other products, as well as back-office simplification and site consolidations via restructuring. Regarding pricing, Bakker stated that while recent high levels of increases are not the new norm, the company has become more capable and organized in its pricing strategy, especially in its speed of execution.

Christopher Glynn asked about the benefits of the 'Hubbell unification' process beyond vertical growth, such as pricing power and service levels. He also questioned if the company has reached a 'new normal' of sustainable pricing power after its recent experiences.

Answer

CEO Gerben Bakker detailed that unification benefits also include leveraging strong brands to pull through other products, back-office simplification, and ongoing restructuring. Regarding pricing, Bakker stated that while the recent magnitude of increases isn't the new norm (barring tariffs), the company has become significantly more capable and organized in its ability to execute pricing actions with speed and effectiveness.

Inquired about the benefits of the Hubbell unification process beyond high-growth verticals, such as in pricing power or service levels. Also asked if the company has reached a 'new normal' of sustainable pricing power.

Answer

The company stated that unification benefits include 'competing collectively' where strong brands pull through others, back-office simplification, and ongoing restructuring like site consolidations. On pricing, while they don't expect the same magnitude of increases going forward (barring tariffs), they have learned a lot and become more capable and organized in executing pricing actions with speed.

Christopher Glynn of Oppenheimer & Co. Inc. asked for more detail on the softer performance in heavy industrial and commercial markets and inquired about the book-to-bill trends for distribution products during the third quarter.

Answer

CFO William Sperry pointed to weaker steel prices as an indicator of slowing demand in heavy industrial and noted commercial markets are a modest contributor post-divestiture. He did not provide a specific book-to-bill but reiterated that the destocking situation is continuously improving.

Christopher Glynn (Oppenheimer) inquired about the consistent growth in Snap-on's Repair Systems & Information (RS&I) diagnostics business, the stabilization of undercar equipment sales, and the performance of European tools within the Commercial & Industrial (CNI) Group.

Answer

CEO Nick Pinchuk noted improved product launches and sequential performance across RS&I, with undercar sales stabilizing after previous declines. He also observed a bifurcation in European markets, with transactional business being flattish but project-based critical industries showing strength.

Christopher Glynn of Oppenheimer Holdings followed up on the C&I group's recovery momentum across geographies, the company's capital allocation strategy regarding its cash balance and M&A, and the specific factors influencing the Snap-on Tools Group's performance, such as sell-in versus sell-through.

Answer

Nicholas Pinchuk, Chairman & CEO, clarified that the C&I recovery was most pronounced in the U.S.-based critical industries, while Asia faces longer-term issues. On capital allocation, he stated they are constantly evaluating acquisitions but are extra cautious in the current environment and will not pursue a 'transformative' deal. He attributed the Tools Group's improvement to the company's strategic pivot gaining traction as uncertainty stabilized, rather than specific factors like inventory restock.

Christopher Glynn of Oppenheimer Holdings asked for clarification on the C&I group's upward momentum, the company's capital allocation strategy for M&A, and the dynamics within the Tools Group, including sell-in versus sell-through.

Answer

CEO Nicholas Pinchuk clarified that C&I momentum was most pronounced in the US industrial project business, while Asia remains challenged. On capital allocation, he stated the company is always looking for acquisitions but remains cautious and comfortable holding cash. For the Tools Group, he noted that sell-in and sell-through were largely in balance and the recovery was driven by the pivot to faster-payback items.

Christopher Glynn asked about the Snap-on Tools Group's unusual sequential strength, questioning if it represents a new baseline, and inquired about the performance drivers in the RS&I segment, particularly on the equipment side.

Answer

CEO Nicholas Pinchuk described the Tools Group's Q3 over Q2 sales increase as a sign of momentum from its pivot to quick-payback items but was hesitant to call it a new seasonal baseline. For RS&I, he explained that a decline in hardware (equipment) sales, driven by market uncertainty, was offset by strong performance in higher-margin software and diagnostics products.

Christopher Glynn from Oppenheimer asked about the company's confident revenue guidance despite listless markets, seeking more granular details on specific angles or zones in the commercial RFP environment that demonstrate Acuity's relative competitive momentum.

Answer

Neil Ashe, Chairman, President, and CEO, Acuity, highlighted strong performance in new verticals like healthcare, refuel, and sport lighting, contributing 50-100 basis points to the top line. He also noted the strong performance of the Contractor Select portfolio and specifier brands, indicating effective execution across the ABL portfolio in a tepid end market.

Christopher Glynn asked for anecdotal color on the performance of the Independent Sales Network (ISN), inquiring if certain agencies are excelling with Acuity's new strategies. He also asked if the backlog with legacy pricing has been fully refreshed.

Answer

Neil Ashe, Chairman, President & CEO, praised the ISN as the best in North America, noting that while performance isn't uniform, it is strong across the board. He highlighted that the most successful agencies are those most aligned with Acuity's strategic direction, particularly around controls. He also clarified that the backlog was not repriced, making Q3 a relatively clean quarter before the tariff and price impacts are felt in Q4.

Christopher Glynn of Oppenheimer inquired about the M&A pipeline and the potential for another acquisition on the scale of QSC. He also asked a broader strategic question about whether competitors are beginning to effectively counter Acuity's differentiation and performance.

Answer

CEO Neil Ashe responded that while there is no QSC-sized deal in the short-term pipeline, the company is actively looking for similar large, strategic acquisitions for the long term and has the capacity to execute them. Regarding competition, Ashe acknowledged that competitors are reacting but asserted that Acuity's integrated strategy, centered on its unique electronics portfolio from drivers to the cloud, is difficult to replicate and provides a sustainable competitive advantage.

Christopher Glynn from Oppenheimer & Co. Inc. inquired about activity within the ABL agency channel, asking if it suggests a build in momentum and whether financing and inflation are the primary factors pacing project releases.

Answer

Neil Ashe, Chairman, President and CEO, responded that the independent sales network continues to perform well and that economic indicators collectively point toward an improving trend in 2025. He characterized the outlook as a 'steady build' rather than a sudden floodgate opening. He agreed that using normal seasonal patterns as a baseline for ABL's performance is a reasonable starting point.

Christopher Glynn of Oppenheimer & Company asked for an update on the market reception and agent adoption of the 'Design Select' product portfolio. He also inquired about the significance of data center projects as a growth driver for the Intelligent Spaces Group (ISG) and requested context for the quarter's miscellaneous expense.

Answer

Neil Ashe, Chairman, President and CEO, reported that the 'Design Select' portfolio's reception is 'universally positive' among distributors and agents, who are eager for more products to be added. Regarding data centers, he explained that Acuity is a leader in the digital control technology used by hyperscalers, which drove a strong quarter for the ISG segment. Karen Holcom, SVP and CFO, clarified that the $8 million miscellaneous expense was primarily due to unfavorable foreign currency movements related to the Canadian dollar and lease liabilities in Mexico.

Christopher Glynn focused on the EES segment, asking if the return to growth in its industrial business represents a true pivot in demand and whether strong gray space data center growth could drive further acceleration for the EES segment in Q3.

Answer

Chairman, President & CEO John Engel characterized the industrial improvement as part of a broader, accelerating momentum vector for EES, evidenced by growth across all its end markets and a rising backlog. While acknowledging gray space as a key positive driver, Engel emphasized that the main takeaway is a general step-up in overall electrical demand, suggesting a broad-based recovery.

Christopher Glynn asked for a performance comparison between public power and investor-owned utilities and inquired about the steeper decline in the Enterprise Network Infrastructure (ENI) business.

Answer

CEO John Engel clarified that both public power and investor-owned utilities were down mid-single digits in Q4, showing similar headwinds. He explained that the perceived weakness in ENI was primarily due to the reclassification of data center-related sales into the data center reporting line. The underlying security business, for example, actually returned to mid-single-digit growth in the quarter.

Christopher Glynn sought to understand the visibility into the UBS segment's destocking, the types of projects being delayed, and the margin runway for the CSS segment considering its mix dynamics.

Answer

CEO John Engel explained that UBS project delays are driven by high interest rates and regulatory cycles, a dynamic consistent with Q2 affecting about two-thirds of their utility customers. He expects a recovery in 2025. For CSS margins, he pointed to the 90 basis points of sequential EBITDA margin expansion in Q3 as proof of the operating leverage model working as growth returns, driven by data centers and a recovery in the security business.

Christopher Glynn from Oppenheimer Holdings asked about the M&A pipeline specifically within the aerospace and defense market. He also questioned if the EMG segment's sales might be more evenly split between the two halves of the year due to current momentum.

Answer

Chairman and CEO David Zapico confirmed that Aerospace & Defense is a market where AMETEK would like to deploy more capital and is actively evaluating deals. He also agreed that strong first-half orders in EMG could lead to a solid second half for shipments, potentially altering the typical seasonal sales distribution for the segment.

Christopher Glynn of Oppenheimer & Co. asked for details on the newly acquired Current Microtechnique business, including its market, competition, and AMETEK's history with the company. He also inquired about the potential for future portfolio divestitures.

Answer

Executive David Zapico described Current Microtechnique as a leader in high-precision systems for med-tech, semiconductor, and space markets, fitting strategically with AMETEK's existing Precitech business. He highlighted it as a typical AMETEK acquisition: highly differentiated and a niche leader. Regarding divestitures, Zapico stated there are no large or substantial plans that would impact guidance, as the company is satisfied with its current portfolio.

Christopher Glynn asked for details on the sequential order pattern for the Electronic Instruments Group (EIG), an update on previously mentioned defense project delays, and the composition of the M&A pipeline.

Answer

Chairman and CEO David Zapico confirmed that the book-to-bill ratio was above 1.0 for both operating groups. He noted that defense project timing created lumpiness in Q2 and Q3 but expects a positive reversal in Q4. He described the M&A pipeline as strong and active, with a variety of deal sizes and an accelerating pace of activity.

Christopher Glynn asked for the primary driver of the sequential revenue decline in the Q3 guidance and inquired about the potential impact of relaxed EV mandates in Europe and the timing for achieving market outgrowth in China.

Answer

CFO Andrew Lynch confirmed the Q3 sequential revenue decline is driven by Performance Sensing, due to lower auto production and softness in off-road. He noted that while a slowdown in European EV production would be a content tailwind, it hasn't materialized yet. He expects China to perform in line with the market in 2H 2025, with new wins driving outgrowth in 2026.

Christopher Glynn inquired about the expected pace of margin expansion into 2026, how tariffs are treated in margin guidance, and the outlook for the aerospace business.

Answer

CFO Brian Roberts explained that margin guidance for sequential improvement should be viewed on a pre-tariff basis. CEO Stephan Von Schuckmann and Mr. Roberts both expressed a positive outlook for the aerospace business, citing a strong backlog and expecting steady growth in revenue and margins for 2025. They noted it is too early to comment on the pace of margin expansion in 2026.

Christopher Glynn asked for more detail on the targeted supply chain improvements within the operational excellence initiative and whether the ICE share gains from 2024 represent an ongoing trend.

Answer

Chief Executive Officer Stephan Von Schuckmann explained that he sees opportunities to systemically scale up operational excellence across all plants, focusing on cost, quality, delivery, and inventory reduction to drive continuous productivity. Both he and CFO Brian Roberts confirmed that ICE share gain is an ongoing trend, with Schuckmann highlighting a potential reversal of the combustion engine ban in Europe as a factor that could drive a refocus on ICE and hybrid systems.

Christopher Glynn requested specific examples of operational efficiency initiatives beyond product exits and asked if price increases were tested on products slated for discontinuation.

Answer

Executive Martha Sullivan detailed several initiatives, including smart automation to offset labor costs, lean reimplementation at production sites, and design-driven cost reductions for core products. She stated that while pricing is a tool, products being exited are typically at a life cycle stage where such strategies are no longer effective.

Christopher Glynn from Oppenheimer & Co. Inc. asked about the composition of the book-and-ship business required to meet guidance, the potential to sustain a positive book-to-bill ratio, and the maturity of the company's improved pricing models.

Answer

CFO Christopher Thome clarified that the short-cycle book-and-ship business is primarily the aftermarket segment, and the company's annual goal remains a book-to-bill ratio of 1.1, with a strong start to FY26 from a large Navy order. President & COO Matthew Malone added that while pricing models for legacy products are mature, a significant opportunity remains in pricing for new, disruptive technologies and full lifecycle solutions where Graham can offer unique value.

Christopher Glynn of Oppenheimer & Co. Inc. asked about the pace of competitive conversions in control systems and any updates to the revenue model. He also inquired about the specific drivers behind the record profitability in the Measurement & Analytical and Control Systems & Software segments.

Answer

President and CEO Lal Karsanbhai reported no major changes in competitive displacement activity, stating it remains consistent and strong. CFO Mike Baughman attributed the high profitability in the Control Systems segment to favorable project closeouts and lower SG&A spend. For the Measurement & Analytical segment, he cited consistent gross margins combined with SG&A benefits from prior cost-cutting actions and current discretionary spending control.

Christopher Glynn asked about the M&A environment, specifically if buyer activity per deal is diluted, and inquired about momentum at Deltek related to government stimulus and mega-projects.

Answer

President and CEO Neil Hunn noted that the M&A team is engaging in more proprietary deals, like Transact, and speculated that the high volume of upcoming deals might lead to lower competitive intensity. Regarding Deltek, he reiterated that after a slow period due to uncertainty, they are seeing 'green shoots' in enterprise-class government contracting activity, as the appropriations for 2025 are becoming better understood.

Christopher Glynn requested clarification on management's statement that Barnes is not a rate-limiting factor in Aero OEM, asking if the constraint is from the broad supply chain or specific sourcing issues. He also questioned the timing of Aerospace margin improvement, noting that mix benefits were offset by inefficiencies in Q2 but are expected to drive margin expansion in the second half.

Answer

President and CEO Thomas Hook explained the issue is an 'imbalance' where the supply chain for inputs like castings and forgings cannot adjust quickly enough to the rapid shifts in OEM demand between platforms like Boeing and Airbus. This leaves Barnes with inventory for some parts and a shortage of inputs for others. Regarding margin timing, he stated that while the shift was too fast to mitigate labor inefficiencies in Q2, they can now make conscious choices in the second half, such as shifting skilled labor from OEM to the high-demand aftermarket. This provides partial mitigation, allowing the favorable mix to have a more positive impact on margins going forward.

Christopher Glynn of Oppenheimer sought clarification on why Barnes is not a rate-limiting factor in the supply chain and questioned the basis for the improved second-half Aerospace margin guidance given the inefficiencies seen in Q2.

Answer

President and CEO Thomas Hook clarified that the core issue is a supply chain imbalance from a rapid OEM mix shift (e.g., Airbus vs. Boeing), for which the supply of castings and forgings takes multiple quarters to adjust. For the second half, he explained that with more foresight into this shift, Barnes can better mitigate labor inefficiencies by reallocating skilled workers to its high-demand aftermarket business, allowing more of the favorable mix benefit to positively impact margins compared to Q2.

Christopher Glynn of Oppenheimer & Co. Inc. inquired about the components of the 2024 free cash flow guidance, seeking to understand the impact of one-time items like restructuring and transaction costs. He also asked for the specific amount of MB Aerospace acquisition-related amortization and the company's stance on excluding it from adjusted EPS.

Answer

CFO Julie Streich clarified that while normalized cash conversion should exceed 100%, the 2024 figures are impacted by one-time items including a $17 million transition tax payment and $16 million in taxes related to the Associated Spring and Hänggi divestiture. She stated that Q1 amortization from the MB Aerospace deal was approximately $6 million and that the company provides adjusted EBITDA as a key metric to neutralize this non-cash charge.

Asked about the composition of the divestiture's EPS impact, the strategic fit and competitive position of the automation business, and for clarification on the high tax rate guidance.

Answer

The divestiture's EPS impact includes transaction costs and a non-recurring gain/loss, with a core operational impact of ~$0.28. The automation business is seen as a strategic fit with the industrial segment's tooling focus and has growth potential with a new product line; performance is the priority before M&A. The guided 30%+ tax rate is the new standard going forward due to interest expense and geographic business mix.

The analyst asked about the impact of 52-week lead times on win rates for multi-cavity molds, sought directional guidance on MB Aerospace's earnings dilution for 2024, and requested parameters for 2024 free cash flow expectations.

Answer

The 52-week lead time is causing friction with customers, but win rates remain high due to the company's unique product offering; the issue is manufacturing output, not demand. The company declined to provide specific 2024 dilution or free cash flow guidance, stating that while synergy plans should buffer dilution, they are not ready to share detailed projections and will do so with full 2024 guidance.