Jerry Revich • Goldman Sachs Group, Inc.

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CEO Preston Feight noted a per-truck cost decline is possible but is offset by labor cost factors. He confirmed the backlog remains strong in vocational trucks. Feight agreed that PACCAR is at a 'structurally stronger' performance level that should persist. For EPA 2027, he estimated a cost increase in the $10,000 to $15,000 range, to which CFO Harrie Schippers added the impact of extended warranty costs.

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CEO & Director R. Preston Feight explained that the impact of tariffs was present in Q2 and is expected to increase in Q3 under the current structure. He noted significant variability due to potential court rulings and new tariff announcements. Feight stated that PACCAR builds over 90% of its U.S. trucks domestically and is hopeful for a favorable Section 232 outcome, estimating the quarterly tariff effect could be around $75 million.

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CEO & Director R. Preston Feight explained that the impact of tariffs on price versus cost will increase in Q3, noting variability based on policy outcomes. He estimated a quarterly tariff effect of around $75 million. Feight also commented on the Section 232 investigation, suggesting a decision could come sooner than the maximum 270-day period.

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CEO Preston Feight stated it was too difficult to forecast Q3 recovery until there is more clarity on tariff policy. Regarding production flexibility, he acknowledged the capability exists within PACCAR's plants but affirmed the company likes its current manufacturing layout and has no plans to change it.

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President and CFO Harrie Schippers noted that truck content and costs increased in 2024 due to new regulations in Europe but expects these cost levels to be relatively stable entering 2025. CEO Preston Feight expressed high confidence in PACCAR's ability to adapt to any regulatory changes, viewing it as an opportunity to outperform competitors by quickly providing customers with the right products for any environment.

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President and CEO Aaron P. Jagdfeld explained that close rates were under pressure in Q1, which is a typical historical pattern following a surge in demand that strains sales and installation capacity. He noted the rate of decline has moderated and the company models a recovery for the remainder of the year, consistent with past cycles, cautioning that close rates mature over time.

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CFO York Ragen clarified that with lead times normalized, the 2025 guidance assumes a return to normal historical seasonality, which is more weighted to the second half of the year. CEO Aaron P. Jagdfeld added that unlike in the past, the company did not enter the year with a large backlog because its increased production capacity satisfied the Q4 surge, removing the 'emotional ordering' from the system. This results in a more normal, sequential growth pattern starting from Q1.

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President and CEO Aaron P. Jagdfeld confirmed that October was on track to be a record month for IHCs. CFO York Ragen clarified the sequential guidance, explaining that while home standby shipments will increase from Q3 to Q4 as production ramps, this will be offset by a decline in portable generator shipments, which had surged in Q3. This mix shift makes the total residential segment growth appear flatter sequentially.

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CFO D. Kesler stated that while the June quarter has heavy maintenance costs, he expects cement margins to improve over the year, especially if volumes rebound. CEO Michael Haack clarified that wallboard and cement from Mexico and Canada are excluded from tariffs, and tariffs on cement from other countries are not substantial, having a low impact. For wallboard, Kesler noted that while near-term demand is uncertain, the company is well-positioned for margin expansion when homebuilding recovers more meaningfully.

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CFO D. Kesler attributed wallboard margin sustainability to structural industry changes, primarily the scarcity of synthetic gypsum, which has raised competitors' cost structures. He noted Eagle's raw material access is a key advantage and confirmed they continue to explore opportunities. For cement, he expects normal seasonality with optimism for the construction season beginning in the June quarter.

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CFO Craig Kesler described the new Houston slag facility as complementary to the Texas cement business and mentioned a longer-term partnership with Terra CO2 for other alternative materials. He declined to provide a monthly volume breakdown but noted that market-specific issues like a hurricane in Texas and general project push-outs affected the quarter. For the December quarter, he stated that results are weather-dependent but could benefit from a favorable comparison to the prior year, which experienced adverse weather.

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CEO Robert Painter stated that TC1 now accounts for two-thirds of ACV bookings and is a key driver of cross-sell efforts. He clarified that longer sales cycles are confined to the largest customers and do not meaningfully alter the outlook. CFO Phil Sawarynski added that stranded costs from the mobility divestiture will be a headwind in 2025 but are expected to be neutralized in 2026, with margins improving through the year.

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Executive Robert Painter attributed the AECO ARR growth primarily to the Trimble Construction One (TC1) platform, which now accounts for two-thirds of bookings. He confirmed longer sales cycles are limited to large enterprise ERP deals and do not change the outlook. Executive Phil Sawarynski added that margins will improve throughout the year as Transporeon revenue ramps and stranded costs from the mobility divestiture, a 2025 headwind, are managed toward a neutral impact by 2026.

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CEO Robert Painter reported that Transporeon achieved record bookings in Q4 and for the full year, with over 20% growth, despite a challenging freight market. He also highlighted significant innovation in Field Systems, citing a $2.5 billion R&D investment over five years that has produced new products like the BX992 for machine control and the R980 for surveying, driving a 21% ARR growth in the segment.

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Executive Phil Sawarynski clarified that the 2025 outlook assumes low single-digit growth for the Field Systems segment, impacted by headwinds from the federal business and a revenue shift related to the evolving CAT JV, though this is profit-neutral. Executive Robert Painter added that the M&A pipeline is focused on software tuck-ins within AECO, balanced against a commitment to share buybacks, and does not anticipate large-scale capital deployment.

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Executive Phil Sawarynski clarified the 2025 outlook, noting Field Systems will see low single-digit growth due to headwinds from the CAT JV evolution, though this is profit-neutral. Executive Robert Painter added that the M&A pipeline is focused on AECO software tuck-ins and is balanced against a commitment to share buybacks, not anticipating large-scale capital deployment.

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Chair and CEO Bob Pragada described the growth potential in the Middle East and India as substantial and unconstrained by resources due to a global delivery model. He clarified that U.S. net service revenue is growing. He also reaffirmed that the company's project risk governance is strong and the write-down was a highly infrequent event, not indicative of broader portfolio risk.

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CEO Bob Pragada deferred providing a specific long-term margin target, stating that more clarity would be given at the upcoming Investor Day, but reiterated confidence in the FY25 margin expansion. He identified the biggest operational change as a renewed external focus on clients' businesses, moving away from an internal focus on transactions. He cited the strong Q3/Q4 sales performance, 22% backlog growth, and 1.67x book-to-bill as direct proof of this successful shift.

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President and CEO Stuart Bradie reported that HomeSafe's customer satisfaction has risen to nearly 90% due to technology adoption, improved customer care, and timely claims settlement. He noted that supplier capacity continues to increase. For Lake Charles LNG, he directed the question to Energy Transfer's own earnings call, but noted other LNG projects in Indonesia and Oman are in early stages, creating a staggered timeline.

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President & CEO Stuart Bradie expressed confidence in the guide, noting that after accounting for HomeSafe and LinQuest, the base business growth assumption is in the low single digits, which is a conservative and balanced view given potential uncertainties. EVP & CFO Mark Sopp explained the Q4 equity income dip was due to two main factors: a non-cash accounting adjustment on a contingent liability and a scope increase on the Plaquemines project that lowered the percentage of completion temporarily.

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President and CEO Stuart Bradie explained that new project development models, like those used by Venture Global, allow customers to manage risk directly, creating a market for KBR's preferred services-based, no-EPC-risk profile. For heritage tech, he noted that the catalyst for new Hydro-PRT plastics recycling licenses will be the successful start-up of three plants by early 2025, with bookings expected later that year. He added that the ammonia market remains attractive, particularly in the Middle East, with continued buoyancy expected in 2025.

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Executive Randy Lake noted that after weather impacts in Jan/Feb, activity picked up to high single-digits in March/April. He reaffirmed guidance for low single-digit aggregate volume growth and mid-to-high single-digit pricing for the year. Executive Jim Mintern attributed the International Solutions margin performance to a recovery in Western Europe, strong infrastructure-led demand in Eastern Europe, a good pricing environment, and positive contributions from the Adbri acquisition.

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COO Randy Lake stated that for 2025, CRH anticipates low single-digit volume growth and mid-to-high single-digit pricing growth for aggregates, supported by strong backlogs. He added that margin improvement is a core expectation for all acquisitions, driven by operational, commercial, and procurement synergies, citing the Hunter acquisition as a successful example.

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CFO Mark Smith confirmed the Power Systems results had no significant one-off items but noted aftermarket sales were unusually high, attributing the strong performance to broad operational improvements. CEO Jennifer Rumsey stated that while they anticipate revisions to GHG Phase III rules, they still expect NOx regulations for 2027 and are proceeding with new product platform launches as planned.

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Chair and CEO Jennifer Rumsey attributed 2024 revenue growth to new Centum product launches and capacity ramp-ups. CFO Mark Smith added that units are not a perfect indicator due to a mix shift toward larger, higher-priced generator sets. Smith confirmed China typically contributes 15-20% of earnings and that the business is well-positioned to convert higher volume into profit with attractive incremental margins.

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CFO Mark Smith attributed the Engine segment's strong margins to ongoing operational improvements, robust medium-duty demand, and a retroactive pricing agreement in the light-duty business that benefited Q3. CEO Jennifer Rumsey stated that Cummins believes its new natural gas engine could achieve up to an 8% market share, driven by fleet interest in both decarbonization and lower operating costs, citing a significant order from UPS.

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CEO Stephanie Disher responded that Atmus is not contemplating long-term manufacturing shifts, instead focusing on short-term actions like USMCA certifications and optimizing delivery routes. On M&A, she confirmed it remains a core strategy and the team continues to evaluate targets, although the uncertain economic landscape has increased the difficulty.

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CEO Steph Disher affirmed that the guided 19-20% adjusted EBITDA margin range is a strong, sustainable level, with the company's focus now shifting to using its transformed supply chain to drive top-line growth. Regarding China, she stated the outlook is for continued weakness with low visibility, but confirmed Atmus has the operational flexibility to scale up production if market conditions were to surprise to the upside.

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CEO Stephanie Disher explained that Q4 revenue would be impacted by fewer working days and a continued decline in the heavy-duty truck market. CFO Jack Kienzler added that a $4 million variable compensation benefit from Q3 would not repeat, affecting sequential margins. Regarding 2025, Disher expressed confidence in sustaining margin gains but noted the unusual market condition of both first-fit and aftermarket segments being at a cyclical bottom, with recovery timing still uncertain.

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CFO Jennifer Kong-Picarello attributed the strong ES margin to a sequential sales increase, record throughput driving favorable factory absorption, and early integration synergies, noting margins would moderate due to expenses for production ramp-ups. CEO Simon Meester added that the company is in "full mitigation mode" for tariffs, prioritizing supply chain adjustments before using pricing and surcharges to maintain price-cost neutrality.

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Executive Simon Meester attributed ESG's success to strong execution, stating they are "firing on all cylinders" and expect the performance to continue. Executive Julie Beck confirmed strong bookings support the 2025 outlook. Regarding tariffs, Meester emphasized that Terex has significant operational flexibility, including dual-sourcing and unused capacity in its U.S. factories, to mitigate potential impacts without a significant effect on guidance.

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CFO Julie Beck stated that AWP margins will be impacted by lower Q4 production but should trend toward normal decremental targets in 2025. CEO Simon Meester added that considering all adjustments and the ESG acquisition, Terex is comfortable with its typical 25% decremental/incremental target for 2025. Beck also noted that while the Monterrey facility is performing well, its benefits are currently offset by lower production volumes at other plants, though it remains a key long-term advantage.

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COO G. Bohley explained that they have already reduced overtime in the separate medium-duty plant due to softer demand. For the still-robust severe service lines, reducing overtime would be the first step if demand wanes. He clarified that elevated inventory is not due to tariffs but is to support the significant ramp-up in the Defense business expected in the second half of the year.

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G. Bohley, COO, CFO & Treasurer, justified the comparison by citing Allison's consistent cash flow, stable municipal business, and ability to expand margins even on lower volume. On costs, he explained that while overall manufacturing costs are guided down, purchased component costs are expected to rise due to raw material inflation and negotiated supplier price increases. Performance improvements are expected to offset some inflationary pressures.

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CEO David Graziosi responded that while Allison is well-positioned for 2027, he is not certain it will necessarily impact long-term penetration rates. CFO Fred Bohley addressed demand, stating there are 'no signs of it slowing down,' citing early-stage stimulus programs and a potential pre-buy. He added that industry-wide capacity constraints are a governor on production, which may extend the demand cycle.

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President and CEO Kyle Larkin attributed the difference in cash gross profit per ton versus peers to geographic and product mix factors but emphasized significant internal improvements from operational focus and investments. He projected Materials cash gross profit margins would expand by over 3% in 2025. He noted strong demand in January/February, some weather impact in March, and a strong April. Regarding tariffs, Larkin stated the company anticipates cost increases and mitigates this by pre-ordering capital equipment well in advance.

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CFO Staci Woolsey projected 2025 operating cash flow at 9% of revenue and free cash flow around 50% of EBITDA, noting that 2024 benefited from normalizing receivables. She clarified that Q4 cash flow was not driven by unusual closeouts but by normal collections, including one large milestone payment. CEO Kyle Larkin added that they anticipate inflation around 3% in 2025, which is already factored into pricing. He emphasized that current contracts are 100% designed with supplier coverage, mitigating inflation risk.

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CEO Eric Hansotia explained that moving major production requires long-term stability that is currently lacking, though component sourcing is more flexible. He announced the launch of a new guidance technology, the NAV960, and stated that AGCO is experimenting with both upfront and subscription pricing models for its precision ag technology, intending to use a mix to best serve different markets and be 'farmer-focused'.

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CEO Eric Hansotia explained that AGCO's "Farmer-First" strategy favors one-time, upfront pricing, as farmers prefer to own assets and minimize recurring costs, though subscriptions are used selectively for new technologies. CFO Damon Audia reiterated the South American margin cadence, expecting a negative Q1, slightly positive Q2, and a significant jump in profitability in Q3, the region's strongest seasonal quarter.

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Executive Luke Pelosi explained that the sequential margin improvement is typical due to higher seasonal volumes, and the Q2 guide implies over 100 basis points of underlying core margin expansion. CEO Patrick Dovigi added that the operational RNG projects are tracking to plan and the remaining projects are expected to come online over the next 2.5 years without any current impediments.

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CEO Patrick Dovigi stated the M&A pipeline is a mix of U.S. and Canadian opportunities focused on densifying existing markets, with an expected 75/25 split in capital deployment favoring the U.S. Executive Luke Pelosi explained that the guide is based on a year-over-year recycling price delta of about $40-$45 per tonne. He added that due to the transition to a fixed-fee EPR model, the sensitivity has been reduced, with every $10 change in price now impacting EBITDA by about $5.

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CFO Luke Pelosi clarified that margin strength comes from moderating cost inflation and prior pricing actions, not new increases. CEO Patrick Dovigi stated the RNG strategy is stable, with a long-term goal of a 60/40 split between voluntary and spot markets. On taxes for an ES sale, Dovigi noted a prior reorganization preserved favorable Canadian capital gains rates and estimated a potential tax bill of $500-$600 million, considering available losses in Canada.

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Chair and CEO Ward Nye affirmed the statement, highlighting the segment's record performance driven by pricing actions and operational efficiency. He explained that the business shares key attributes with aggregates, such as high barriers to entry and pricing power, and provides a differentiated, counter-cyclical earnings stream that was crucial during the financial crisis. While aggregates remain the core focus, Nye stated that responsible organic and inorganic growth in Magnesia Specialties is something the company will actively look at to benefit shareholders.

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CEO Ward Nye highlighted successful cost management in Q4, with organic COGS flat despite revenue growth. CFO Jim Nickolas elaborated on the 2025 cadence, stating that underlying COGS inflation should be consistent throughout the year. However, the P&L effects from inventory reduction efforts will be a headwind primarily in the first half. Nickolas clarified that gross profit per ton growth should be in the low-teens consistently quarter-over-quarter, perhaps slightly lower in the first half but with less variation than suggested.

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CEO C. Nye attributed the 2024 revision to weather-related project delays impacting geographic mix and fewer mid-year price increases than in the prior year, resulting in a low 80-basis-point carryover benefit for 2025. For 2025, he expressed confidence in achieving mid-to-high single-digit pricing, driven by strong fundamentals in heritage businesses and continued price optimization at acquired operations.

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CEO James Hill stated that Q1 pricing momentum was strong, with a 7% increase (8.5% mix-adjusted), driven by January price hikes and a well-priced backlog. He affirmed the full-year price guidance of 5% to 7%. Hill noted that discussions for midyear increases have begun, with the impact expected to be more significant in 2026 than 2025. He attributed the strong margin performance to the successful execution of the 'Vulcan Way of Selling' and 'Vulcan Way of Operating' disciplines.

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CEO Tom Hill clarified that costs are not flat or deflationary, reiterating guidance for low-to-mid-single-digit increases in 2025. He specified that there is no deflation in key inputs, citing expected increases in diesel, wages (mid-single-digit), and electricity (high-single-digit), which will be partly offset by operating efficiencies. He also noted that quarterly costs can be choppy.

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Chairman and CEO James Hill confirmed that the vast majority of price increases are planned for January 1, consistent with the strategy of the last few years. While acknowledging that lower volumes are not helpful for pricing, he noted that strong visibility into future public and residential demand supports a constructive pricing environment. SVP and CFO Mary Andrews Carlisle added that Q3 sequential pricing was in line with expectations, creating good momentum for Q4.

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CEO John Pfeifer confirmed that protective terms were implemented after the last inflationary cycle but reiterated the strategy is to mitigate costs internally first. Regarding capital allocation, he stated that mitigating tariffs is 'job 1,' but the company maintains an 'always-on' M&A approach. However, he stressed that given the current stock valuation, returning capital to shareholders is an increasing priority.

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CEO John Pfeifer attributed the Vocational segment's success to its resilience and growing margins, highlighting strong backlogs and order intake in the municipal fire truck business. He noted investments in throughput and capacity are underway to meet demand. Regarding Defense margins, CFO Matt Field stated that while the NGDV program is accretive, the company would not provide specific exit rate guidance but would share more at its upcoming Investor Day.

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President and CEO John Pfeifer projected a margin step-up in Defense in 2025, with a larger improvement in 2026, driven by new, better-priced contracts and the NGDV ramp. EVP and CFO Michael Pack noted Access incrementals are strong on a full-year basis and, while not providing specific decremental guidance, expressed confidence in delivering solid margins amid market softness.

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Joe Creed, COO and incoming CEO, reaffirmed his commitment to the current strategy, which he helped develop. His priorities include accelerating services growth to dampen cyclicality, using the O&E model for disciplined resource allocation, and focusing on OPACC dollar growth. He highlighted key growth opportunities in power generation for data centers, natural gas infrastructure, long-term mineral demand for RI, and critical infrastructure for CI, supported by technology like autonomy. He also committed to maintaining the company's capital return priorities.

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Executive D. Umpleby stated that while backlog and inquiry activity are strong, capacity can be increased within existing facilities through measures like adding test cells, without needing new factories. He identified the supplier base as a potential limiting factor but affirmed they can meet demand without major new facility investments.

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Chairman and CEO Jim Umpleby responded that Caterpillar's primary goal is increasing absolute operating profit after capital charge (OPACC) dollars, not just margin percentage. He emphasized that the company remains focused on being competitive across its diverse markets and that the provided margin targets remain the best guide for investors.

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EVP and CFO Devina Rankin agreed with the assessment, expressing confidence in achieving the upper end of the 50-100 basis point margin expansion target for the year. Executive Tara Hemmer confirmed voluntary market pricing is in the low $20s and noted that for 2025, about 75% of RNG volume is locked in, reducing sensitivity to RIN price changes. She also highlighted a 75% YoY increase in generated RNG volume.

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Rafael Carrasco, head of WM Healthcare Solutions, and President and CEO Jim Fish confirmed that cross-selling is a major long-term opportunity but is not yet factored into 2025 guidance. Jim Fish attributed strong base business performance to sophisticated, granular pricing and disciplined cost control, including headcount reduction. EVP and CFO Devina Rankin acknowledged that higher OpEx, particularly electricity costs, is a factor in the renewable natural gas business ramp-up, impacting the 2027 outlook.

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SVP & Chief Sustainability Officer Tara Hemmer detailed strong recycling returns, including a 30% lower labor cost per ton and a 17% higher blended commodity value. She also noted a portfolio approach to landfill gas, with 40% of 2025 volume already contracted. Regarding Stericycle, EVP & CFO Devina Rankin stated that diligence has focused on operational integration rather than customer pricing, but the strategic growth thesis remains strong. EVP & COO John Morris added that Stericycle fits well as a fourth line of business where WM's operational playbook can be applied.

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CFO Brian DelGhiaccio credited improved service delivery and higher Net Promoter Scores (NPS) for enabling strong pricing while maintaining high retention. CEO Jon Vander Ark noted that demand for recycled PET from the Polymer Centers is robust enough to sell out the facilities multiple times over. While he confirmed they are pricing appropriately, he declined to quantify the potential for future price increases, stating they will capture market upside as it develops.

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CEO Jon Vander Ark confirmed the Polymer Centers are performing well and meeting assumptions. CFO Brian DelGhiaccio quantified the 2025 contribution from sustainability investments at approximately $70 million in revenue and $35 million in EBITDA. He also explained that Q1 is seasonally the lowest margin quarter, making a sequential decline from Q4 normal.

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CFO Brian DelGhiaccio identified a 50-basis-point insurance recovery and a 10-basis-point bad debt adjustment as the main one-time items contributing to the strong quarterly performance. CEO Jon Vander Ark addressed the polymer centers, noting a delayed start due to permitting but confirming strong pricing and a positive volume ramp-up, with the Indianapolis facility remaining on its original timeline.

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CEO Rafael Santana explained Wabtec is managing supply chain shifts to minimize disruption and is using levers like USMCA, alternative sourcing, and pricing actions. CFO John Olin added that the Integration 3.0 strategy remains unchanged, with the $100M-$125M savings target unaffected. Regarding aftermarket, Santana noted that mature service businesses grow at 6-7% and that international fleets are running hard, with megawatt-hours up, suggesting strong service demand.

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CFO John Mastalerz attributed the strong 16.4% Q4 Transit margin to a favorable mix, with aftermarket sales up 11.5%, and significant savings from Integration 2.0. CEO Rafael Santana added that the Transit team remains focused on profitable growth. Regarding Services, John Mastalerz explained that the core parts business has a stable cadence, while quarterly volatility is driven by the timing of mod production, which can shift between the Services and Equipment P&Ls.

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CFO John Olin clarified that receivables growth was largely in line with revenue growth when accounting for securitization timing. CEO Rafael Santana stated that significant momentum remains for margin expansion, driven by ongoing business simplification, continuous improvement, Integration 2.0, and portfolio optimization, committing to profitable growth for 2025 and beyond.

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CFO W. Humphrey confirmed that dollar utilization improved in March to prior-year comparable levels and that this trend continued into April, setting up a normal seasonal cadence for the year. CEO Lawrence Silber added that they feel comfortable with industry pricing discipline, describing it as 'fairly constant and stable' and noting the industry is not overfleeted.

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CFO W. Humphrey stated the company will no longer provide specific rate metrics but confirmed that positive pricing is embedded in the 2025 guidance. CEO Lawrence Silber described the M&A pipeline as 'prevalent' and noted the company is prepared to participate in market consolidation opportunistically, evaluating targets for cultural and geographical fit.

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President and CEO Lawrence Silber stated that while a hurricane-related uplift is expected, it's too early to quantify its full impact on time utilization. He noted that core fleet efficiency was positive, but M&A activity created a temporary drag. Regarding pricing, he suggested the exit rate would be in the low-to-mid single-digit range, which, all else being equal, should be sufficient to support stable margins.

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Chief Financial Officer Lawrence Wilt noted that while the company focuses on M&A in synergistic adjacencies, there was nothing specific to announce regarding capital deployment. Chief Executive Officer Vassilios Zarkalis detailed the company's diverse import sources, including Greece, Turkey, and Egypt, which provides significant flexibility. He stated that the company feels confident in its supply chain and is not taking any special measures to alter its standard inventory policy.

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CFO Amy Campbell attributed the strong Fire orders primarily to elevated industry demand, which remains above long-term trends, but declined to comment on specific market share figures. CEO Mark Skonieczny confirmed that applying surcharges is a mechanism the company could and has used in select situations to manage significant, unexpected cost increases, allowing them to track and potentially remove the charges later.

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CFO Amy Campbell explained that for legacy F&E, revenue grew in the low to mid-teens, with approximately 60% from price/mix and 40% from volume, leading to significant year-over-year and sequential EBITDA margin growth. While unable to break down the 1.3x dollar book-to-bill between price and content, she noted the introduction of semi-custom units. CEO Mark Skonieczny added that RV dealer inventories are down 20% since the start of the calendar year, approaching pre-COVID levels, with retail sales outpacing wholesale shipments.

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CFO Ken Dodgen stated that achieving the high end of the margin range is increasingly likely, with expectations for low-to-mid 10% margins, potentially higher with storm work. CEO Tom McCormick reported they have 18 solar teams and are building a 19th, with a focus on quality and margin improvement over sheer team count growth, though they could reach 20-21 teams.

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Co-CEOs Eric Gerstenberg and Michael Battles responded that there has been 'no real change' in customer churn due to pricing, with attrition being minimal. Regarding SKSS, Battles stated they are a price taker on base oil and guidance assumes no market price recovery. An executive added they will remain dynamic with used motor oil collection pricing to offset any further deterioration in base oil prices.

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CFO L. Mallard clarified that efficiency gains, primarily from material savings, are expected to be linear, while operating leverage should improve as the year progresses and volumes recover from a soft Q1. CEO Ivo Jurek detailed the data center strategy, highlighting differentiated products like its industrial pumps and a new proprietary coupling design expected later in the year, which he believes positions Gates to compete effectively against peers.

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