Ian Zaffino • Oppenheimer & Co. Inc.

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CEO Jeffrey Thiede confirmed there were no significant weather impacts in Q2. Regarding the Las Vegas hospitality market, he noted a backlog uptick and emphasized the company's strong local positioning. While activity has not returned to the peak levels of 2022-2023, he stated Everest is well-positioned to capture new projects as the market recovers.

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Executive Maximillian Marcy stated that the level of non-backlog work is a function of resource allocation, and with a healthy backlog, resources are currently deployed to execute on those visible projects. Executive Jeff Thiede added that the company's backlog in the Las Vegas hospitality market has increased since year-end, reflecting a strong position to capture future opportunities. The response regarding T&D weather delays was cut off by an audio gap.

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Executive Jeff Thiede emphasized the importance of non-backlog work and noted that the company's backlog in Las Vegas has increased since year-end, reflecting a strong position in that market. Executive Maximillian Marcy added that the balance between backlog and non-backlog 'book and burn' business is a matter of resource allocation, with resources currently focused on executing the healthy existing backlog. The question on T&D revenue recovery was cut short by an audio issue.

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Executive Jeff Thiede confirmed that larger projects are slightly altering the backlog burn rate and that MSA work remains strong. On M&A, he outlined a disciplined approach targeting companies with strong cultures for geographic expansion. Executive Maximillian Marcy added that with net leverage at 1.0x, the company has the capacity for significant acquisitions. Both executives described prefabrication as a multi-year opportunity, with benefits expected to materialize over time as more facilities are built near large projects.

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CEO Ryan Caswell detailed the use of the $130 million BKFC capital raise, allocating funds for the stadium acquisition and renovation, the Moriense FC investment (with only $4 million upfront), and operating expenses for the teams. He explained the Moriense deal originated through BKFC's President of Football, Thiago Pinto, who has deep connections in Portugal. Caswell stated that future team acquisitions are evaluated based on their ability to provide access to regional player talent and integrate into the network. Regarding the restaurant portfolio, he indicated that while the teams are working hard, he does not view it as a long-term holding and expects the trend of divesting brands to continue over time.

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Executive Ryan Caswell explained that redeveloping Vitality Stadium is financially compelling, targeting a mid-teens return on investment. On future M&A, he clarified that while Cannae participated in a recent Black Knight capital raise, the near-term priority for capital is shareholder returns (repurchases, dividends) and debt repayment, though the company will remain opportunistic.

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Ryan Caswell, an executive, outlined that Black Knight Football's funding levers include player sales, which create value, alongside investments in infrastructure like the stadium and training facility. He noted future capital needs would be less than historical amounts. Regarding Alight, Caswell clarified that Bill Foley remains an active board member and that recent management and board changes position Alight for standalone success. He suggested that questions about a strategic sale of Alight are better directed to Alight's management.

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Ryan Caswell, an executive, stated that going forward, new investment sizes would likely be in the $100 million to $300 million range, resulting in a more concentrated portfolio. On Black Knight Football, he explained that they are building out a holding company structure to create synergies in recruiting, commercial processes, and sporting performance across all clubs, which they believe will become a significant competitive advantage.

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President and CEO Antonio Carrillo stated that after converting one plant to utility structures, three plants remain for wind towers, operating at approximately 60% capacity. This leaves significant available capacity to ramp up production to meet new demand. Carrillo emphasized that recent policy clarity has boosted customer confidence, and he anticipates securing additional orders in the coming quarters to support the industry's needs.

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CEO Antonio Carrillo described the price-versus-volume decision as a localized effort to balance margin per ton with fixed cost absorption. He confirmed that mid-year price increases are already planned for several regions. Carrillo highlighted strength in industrial and infrastructure projects, particularly in Texas, the Gulf, and Florida, while noting that housing remains a soft spot, though some leading indicators are improving.

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CFO Gail Peck confirmed that lower steel prices were the primary cause of the Q4 revenue miss, representing a high single-digit impact on transmission revenues. CEO Antonio Carrillo added that volume volatility is normal due to shifts in product mix (small vs. large towers). He also noted some pre-buy activity specifically for tank barges, which has extended delivery times deep into 2026.

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Executive Antonio Carrillo anticipates a solid Q4, noting that while weather delays are hard to recover quickly, underlying project demand remains strong. Executive Gail Peck added that storm recovery in the Southeast could affect the timing of utility structure deliveries. Regarding wind towers, Carrillo expects new orders to materialize in 2025 for 2026 deliveries, driven by a fundamental shift in U.S. electricity demand from data centers and AI, which necessitates more renewable power.

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CEO Richard Zimmerman explained that extreme weather disproportionately impacted high-spending single-day visitors, increasing the mix of lower-spending season pass holders. CFO Brian Witherow added that promotions focus on adding value, not discounting tickets. Witherow stated that lost attendance is very high-margin (55-70%), so the significant volume drop in Q2 had a severe impact on decremental margins.

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CEO Richard Zimmerman stated that the company has seen broad-based strength across F&B categories, including meals and beverages, on good weather days. Regarding geography, he noted that while it's early with only 15% of operating days complete, performance has been as expected in all regions when weather is favorable. He emphasized the benefit of the company's geographic diversity, which prevents over-reliance on any single region and mitigates localized impacts.

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CFO Andrew Flynn addressed these points, stating the company is managing potential tariff impacts by building inventory, negotiating with suppliers, and considering price increases. He confirmed ample production capacity in India while also investing in U.S. manufacturing capabilities. Flynn declined to provide a sales split between ALP and Free due to the joint venture agreement and affirmed that competitive slotting fees are an ongoing investment factored into guidance.

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CEO Graham Purdy stated that it is too early in the ALP launch to provide a detailed performance breakdown and that their agreement with TCN restricts specific disclosures about the brand. He emphasized the company is focused on achieving its overall double-digit market share goal. Executive Andrew Flynn noted that the increased investment was already contemplated in previous guidance and that the company will make incremental investments as the segment grows.

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CEO Graham Purdy explained the guidance is informed by FRE's continued growth and positive early indicators from the ALP launch, viewing the two brands as synergistic. Executive Andrew Flynn stated that modern oral gross margins are in the mid-30s, with plans to reinvest profits into sales and marketing. Flynn confirmed that slotting fees are being considered and that the company is evaluating all supply chain options, including U.S. manufacturing.

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Thomas Surran, President of Products & Solutions, stated that P&S is targeting a long-term gross margin range of 45% to 50%, driven by new products, manufacturing efficiencies, and mix. Rob Aarnes, President of ADI Global Distribution, confirmed ADI mitigates tariffs by leveraging its scale with suppliers and getting them to absorb some costs. CEO Jay Geldmacher, along with Aarnes and Surran, affirmed that M&A remains a key part of the strategic plan for both ADI and P&S, with ADI focusing on adjacencies like ProAV and Datacom.

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Robert Aarnes, President of ADI, confirmed the environment is similar to past high-inflation periods and that ADI is passing through supplier price increases and taking other actions to mitigate tariff impacts. Thomas Surran, President of Products & Solutions, stated that less than 10% of P&S products are affected by tariffs and he does not expect a material impact on demand due to proactive customer communication. CFO Michael Carlet added that while there could be some top-line upside from pricing, the company is maintaining its full-year guidance due to market uncertainty.

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CEO Brian Gray estimated the company is about 50% through its dynamic pricing rollout and that the guidance reflects a more normalized, yet still strong, pricing environment for the high-volume second half. He reiterated that the 20% adjusted EBITDA margin is a long-term goal with multiple paths, including aggregates growth and operational excellence, and that it remains achievable despite the temporary setback in Oregon.

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President and CEO Brian Gray characterized the $20 million SG&A step-up as a 2025 investment to build out capabilities, with the resulting run rate expected to be ongoing but without another similar step-up. He confirmed this investment level supports the path to the 20% long-term EBITDA margin target. Gray specified that delayed projects are exclusively on the private side, impacting materials sales for various developments, with most owners anticipating a Q3 restart.

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President and CEO Brian Gray stated the M&A pipeline is robust and diverse, with a continued focus on materials-based, aggregates-led companies in or adjacent to existing markets, though vertically integrated targets are also attractive. He reiterated the company's commitment to the 20% long-term margin goal, highlighting that growth, PIT Crew efficiencies, and dynamic pricing are the key levers to achieve it.

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CEO John Zillmer and CFO Jim Tarangelo expressed confidence in the Q4 guidance, citing a strong start to the quarter, new education contracts commencing in August/September, and lapping prior-year facility exits. Zillmer attributed the Q3 events weakness to lower concert activity and facility renovations, characterizing it as lost business rather than postponements.

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CFO Jim Tarangelo confirmed that the company's Q4 exit rate for revenue growth is expected to be north of their 5-8% multiyear target range. CEO John Zillmer added that Avendra is well-equipped to manage supply chain disruptions and that consumer behavior remains strong, with no evidence of a slowdown in per capita spending. He also detailed the monthly revenue acceleration from January through April.

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CEO John Zillmer stated that the Nebraska contract was not yet official but represented an exciting opportunity. CFO James Tarangelo quantified the facility exits as a 2% negative impact on revenue. Zillmer added that potential tariffs would have a de minimis impact, estimating a 30 basis point increase in food costs before mitigation, given that over 85% of products are sourced domestically.

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Chairman & CEO Martin Schroeter addressed focus accounts, stating the initiative is profit-focused and has already delivered $925 million in cumulative benefits. He noted that the complexity of these deals can affect timing, but progress is continuous, citing a deal that closed shortly after Q1 ended. CFO David Wyshner discussed buybacks, confirming $65 million was spent in Q1. He stated future repurchases depend on cash flow, share price, and market conditions, with over $140 million remaining under the current authorization as the company enters its stronger cash flow season.

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Chairman and CEO Martin Schroeter explained the guidance reflects the full backlog, which includes signings from fiscal '23 and '24 when the company was still heavily focused on remediating low-margin accounts. He noted that while two-thirds of the P&L will come from post-spin contracts, one-third is still from the inherited business. On capital allocation, Schroeter reiterated that priorities are reinvesting in the business, including potential tuck-in acquisitions, and returning capital to shareholders via the existing share repurchase program.

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CEO Martin Schroeter stated that while they are investigating innovations like DeepSeek, Kyndryl Bridge's existing AI and machine learning capabilities are already central to their delivery automation and customer insights. CFO David Wyshner explained that Consult's growth is a share-gain story, driven by their independence and ability to offer multi-vendor solutions, which allows them to capture work previously done by competitors or in-house by clients.

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Chair & CEO David Graziosi attributed the guidance change to significant reductions in North America on-highway OEM build rates due to softening demand and elevated inventories, which he views as a deferral. CFO & Treasurer Scott Mell detailed the tax impact, noting a substantial one-time cash tax benefit in 2025 from the bill, with a smaller, ongoing annual benefit in future years.

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G. Bohley, COO, CFO & Treasurer, stated that while the company is relatively naturally hedged, the primary FX impact comes from balance sheet revaluations. A strengthening U.S. dollar can negatively affect assets held in foreign currencies. He noted that the FX impact on EBITDA margin was approximately negative 100 basis points from 2023 to 2024, with the Q4 impact being more negative than typical.

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CFO Fred Bohley responded that Allison Transmission is in a strong negotiating position due to the substantial value its fully automatic transmissions provide, especially as end-user costs for vehicles, drivers, and maintenance continue to rise. He highlighted the very strong demand for Allison's products and anticipates that most negotiations will be finalized toward the end of Q4.

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Executive James Gentile attributed the Sealing segment's strong margin primarily to favorable product mix, driven by growth in high-margin areas like aerospace and aftermarket. President and CEO Eric Vaillancourt added that general pricing has returned to a traditional ~2% annual increase. Regarding the AST segment, Eric Vaillancourt reaffirmed the mid-to-high single-digit growth forecast for the year, describing semiconductor OEM demand as 'still choppy' and confirming 'very little contribution from Arizona' in Q1. EVP and CFO Joe Bruderek highlighted that the strong growth in Precision Cleaning Solutions is driven by continued penetration into leading-edge nodes.

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CEO Eric Vaillancourt specified that while leading-edge cleaning applications remain very strong, the weakness in AST is concentrated in legacy products and capital equipment spending due to low factory utilization. Executive James Gentile added that shorter-cycle coatings orders were also choppier than expected. Regarding the growth outlook, Gentile stated that while Q3 saw year-over-year growth, the first half of 2025 is expected to be slow and a "hockey stick" type of acceleration is unlikely. Vaillancourt confirmed they expect year-over-year growth but not a substantial sequential improvement in the near term.

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CEO Geoffrey Ballotti acknowledged a slowdown in Q1 versus Q4 due to a temporary halt in fund disbursement but noted that allocations are resuming. He cited a recent meeting with the Transportation Secretary, who affirmed the administration's focus on getting funds spent. Ballotti stated that GSO revenue from infrastructure room nights outgrew the industry by 380 basis points in Q1 and that private investment near data centers is also strong. He reiterated that the $1.2 trillion infrastructure bill is viewed as a multiyear tailwind.

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CEO Geoffrey Ballotti highlighted strong RevPAR gains in oil and gas states and noted that infrastructure demand is in its very early stages, representing a multi-year driver. He cited specific market share gains for Super 8, Microtel, and Days Inn. He also pointed to ECHO Suites as a key upside in the economy segment, given the high demand for new extended-stay properties.

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Executive Brian Webb-Walsh described the retail environment as active, with strong customer conversations around expansion, next-gen solutions, and services to improve efficiency and reduce shrink. CEO James Kelly supported this, pointing to the 26% growth in platform sites as evidence of strong demand from both existing and new customers for the company's software and services.

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Executive Jeff Thiede confirmed that larger projects are altering the historical backlog burn rate and that MSA work remains strong. On M&A, he stated the company is seeking targets that offer geographic expansion and have strong cultures. Executive Maximillian Marcy added that with net leverage at 1.0x, the company has significant capacity for acquisitions. Both executives described the benefits from prefabrication as a multiyear opportunity that will materialize as new facilities support large projects.

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CEO David Maura explained that GPC's online point-of-sale (POS) continues to see double-digit growth, though factory shipments were impacted by a retailer's capacity issues and the Q1 sales pull-forward for the ERP system upgrade. He noted aquatics has been a 'slower slog' but remains a dominant, high-margin business. On M&A, Maura stated that the company has passed on many deals due to high valuations, preferring to repurchase its own undervalued stock, but remains interested in acquiring assets in cat, wellness, and food categories at disciplined prices.

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CFO Matthew Siegel indicated that while the number of digital conversions would be lower in 2024, he is confident the number will be higher in 2025. CEO Jeremy Male explained that MTA revenue growth is driven by a vastly improved, digitized product offering more creative and timely advertising opportunities, which attracts advertisers even without a full ridership recovery. He also highlighted the growing contribution from automated channels.

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CFO Jessica Ross stated that pricing is now more aligned with inflation and leverages their dynamic pricing capabilities. CEO Bill Cobb added that strong retention rates in the renewal channel support the increases. Cobb also clarified the distinct purposes of the two apps: the AHS app serves existing home warranty members, while the Frontdoor app is for the on-demand business and is open to all, thus they are seen as complementary rather than cannibalistic.

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Executive W. Rush declined to comment on specific M&A plans but noted there is not a lot of large-scale activity at the moment. He speculated that M&A could pick up as the 2027 EPA regulations get closer. Regarding the vocational truck market, Rush confirmed that demand remains strong and is expected to continue through 2025, supported by government infrastructure spending. He also noted that some transmission supply shortages have pushed some of this year's vocational sales into 2025, further bolstering the outlook.

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CEO Mark McFarland acknowledged the company would leverage its experience from the AWS deal for future opportunities but would not comment on commercial activities until they are finalized. CFO Terry Nutt addressed the buyback, confirming the Board's approval and stating the company will use various methods to execute the program with purpose and in a timely manner through 2025.

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