Lee Jagoda

Lee Jagoda asked about the Performance Materials business, specifically the assumptions on auto production volume, geographic commentary, and seasonal cadence given Q4 2025 to Q1 2026 headwinds. He also inquired if new products or programs outside automotive in Performance Materials, particularly in filtration, are assumed in the current guidance and how long it might take to see progress in reported results.

Answer

President and CEO Dave Li explained that the guidance comprehends a stable auto backdrop, noting the resilience of the market despite tariff uncertainty and supply chain challenges. He highlighted the slowdown in EV adoption, especially in North America, favoring ICE-efficient and hybrid vehicles, and mentioned Q4 2025 supply chain issues (Ford F-150, Honda chip shortages) are expected to be made up in 2026. Regarding filtration, Dave Li stated that the company is focused on higher-value applications like water, pharma, and food and beverage, leveraging unique separation properties of their hardwood-based activated carbon. He confirmed that the filtration aspect is built into guidance but is a small base, expected to expand over the next couple of years, while energy solutions investments are not yet reflected in the two-year outlook.

Lee Jagoda asked about Ingevity's assumptions regarding auto production volumes for the Performance Materials business, including geographic commentary and seasonal cadence, especially given Q4 to Q1 headwinds. He also inquired if new filtration products or programs are included in the guidance and the expected timeline for their impact on reported results.

Answer

President and CEO Dave Li indicated that the guidance assumes a stable auto backdrop without a strong recovery, noting the market's resilience in 2025 despite challenges. He highlighted a positive trend in North America due to slowed EV adoption and a shift towards ICE/hybrid vehicles. Dave confirmed that filtration is built into the guidance but is currently a small base, expected to expand over the next couple of years, focusing on higher-value applications in water, pharma, and food/beverage where Ingevity's activated carbon offers technical advantages. Energy solutions are not reflected in the 2-year financial outlook.

Lee Jagoda inquired about the volume of Crude Tall Oil (CTO) resales in Q3, the timeline for consuming remaining high-cost inventory, the current CTO spot price, and the criteria for the ongoing CEO search.

Answer

CFO Mary Hall stated that CTO resales were nominal in Q3 and are essentially complete, with high-cost production inventory expected to be consumed by the end of Q1 2025. She noted the CTO spot price has plateaued around $650-$750 per ton. Interim CEO Luis Fernandez-Moreno added that the Board is conducting a diligent CEO search and he is committed to leading fully until a successor is found, without offering a specific timeline or criteria.

Lee Jagoda asked about the expected growth in renewables for 2026, considering the anticipated growth in natural gas power and pipeline within the energy segment. He also inquired about the projected Q1 energy margins given the Q4 issues and the path to the 10%-12% full-year target. Finally, he sought clarification on normalized gross margins across various energy businesses and how a mix shift might impact confidence in the guidance range.

Answer

President and CEO Koti Vadlamudi noted the steep incline in renewables revenue in 2025 due to accelerated projects and highlighted strong Q4 bookings of $1.6 billion, expecting continued growth, especially with combined solar and battery storage solutions. CFO Ken Dodgen stated that Q1 energy margins would be at the lower end of the 10%-12% range as problematic projects are wrapped up, with sequential improvement expected from Q2. Mr. Dodgen reiterated that bid margins generally run 10%-12% across energy businesses, with upside potential from project closeouts in gas generation, pipeline, and renewables.

Lee Jagoda inquired about the expected growth in renewables for 2026 within the energy segment, the anticipated Q1 energy margins given Q4 issues, and the normalized gross margins for natural gas power, pipeline, and renewables.

Answer

Koti Vadlamudi, President and CEO, noted that 2025 saw a steep incline in renewables due to accelerated projects, with $1.6 billion in Q4 bookings, and expects continued growth, often combined with battery storage. Ken Dodgen, CFO, stated that Q1 energy margins would be at the lower end of the 10%-12% range as problematic projects conclude, improving sequentially from Q2. He added that bid margins for the segment are generally 10%-12%, with upside potential from project closeouts across all three businesses.

On behalf of Lee Jagoda, Will asked for more detail on the drivers behind the stronger-than-expected Q4 margins in the Utilities segment and the high single-digit margins in the Energy segment.

Answer

CFO Ken Dodgen attributed the strong Utilities margins to approximately $9 million in storm restoration work, improved productivity, and favorable weather extending the work season for the gas business. For the Energy segment, he explained margins were impacted by fewer renewables project closeouts and the non-recurrence of a high-margin pipeline project from the prior year, but he expects margins to normalize to the 10-12% range in 2025. CEO Tom McCormick also emphasized the impact of fewer renewables closeouts.

Lee Jagoda from CJS Securities inquired about the drivers behind the $30 million sequential increase in bookings within the Automation Enabling Technologies segment, asking for details on specific businesses and product categories, and the proportion of longer lead time versus quick book-and-ship orders. He also sought an update on the industrial robotics order announced previously, including 2026 revenue expectations and potential follow-through orders.

Answer

Robert Buckley and Matthijs Glastra explained that the bookings growth was broad-based across all businesses, including Medical Solutions, with particular momentum in Automation Enabling Technologies. They highlighted Robotics & Automation drivers like precision robotics (End-of-Arm, surgical, humanoids), a recovering semiconductor wafer fab equipment market, and Novanta's unique position as the sole qualified supplier for drilling AI-driven GPU boards. For Precision Manufacturing, Matthijs Glastra noted four consecutive quarters of double-digit bookings growth, subsiding customer destocking, strong design win performance, and new Intelligent Laser Beam steering subsystems. Robert Buckley provided specific book-to-bill ratios and backlog figures for Precision Manufacturing (1.2 book-to-bill, ~50% bookings growth), Robotics & Automation (1.13 book-to-bill, ~25% bookings growth), Advanced Surgery (1.12 book-to-bill, ~15% growth), and Precision Medicine (1.01 book-to-bill, 22% bookings growth). Regarding the industrial robotics order, Matthijs Glastra stated that momentum is building steadily, with a modest ramp in 2026 and sequential growth thereafter, emphasizing Novanta's technology leadership in Physical AI applications across various robotics sectors. Robert Buckley added that Novanta's servo drives and force torque technology are superior and well-positioned with leading players in humanoid and warehouse automation markets.

Lee Jagoda inquired about the drivers behind the $30 million sequential increase in Automation Enabling Technologies (AET) segment bookings, asking for details on specific businesses, product categories, and the lead time of these orders. He also sought an update on the industrial robotics order announced previously, including 2026 revenue expectations and potential follow-through orders from existing or new robotics customers.

Answer

Matthijs Glastra, Chair and CEO, and Robert Buckley, CFO, explained that the bookings growth was broad-based across all businesses, with particular momentum in AET. Key drivers included robotics and automation (precision robotics, End-of-Arm, surgical robotics, humanoids, warehouse automation), an improving semiconductor capital equipment market, and Novanta's unique position as the sole supplier for drilling AI-driven GPU boards. Precision Manufacturing also showed strong design wins and new intelligent laser beam steering subsystems. Robert Buckley provided specific book-to-bill ratios and backlog details for Precision Manufacturing (1.2 book-to-bill, 50% bookings growth), Robotics and Automation (1.13 book-to-bill, 25% bookings growth), Advanced Surgery (1.12 book-to-bill, 15% YOY growth), and Precision Medicine (1.01 book-to-bill, 22% YOY bookings growth). Regarding the industrial robotics order, Matthijs Glastra confirmed a modest ramp in 2026, building sequentially, highlighting Novanta's technology leadership and the halo effect for broader precision robotics opportunities. Robert Buckley emphasized the role of servo drives and force torque technology in warehouse robotics and humanoids, positioning Novanta strongly in these emerging markets.

Lee Jagoda of CJS Securities asked for a breakdown of the full-year revenue guidance, the primary drivers for organic growth in 2026, and the outlook for the industrial and precision medicine segments.

Answer

CFO Robert Buckley clarified that full-year organic revenue is expected to be between down 1% and up 1%, with the Keon acquisition performing better than expected. Chair and CEO Matthijs Glastra and CFO Robert Buckley identified 2026 growth drivers as the continued ramp in advanced surgery, AI-enabled robotics, and new design wins in additive manufacturing. They also indicated that both the industrial and precision medicine businesses have likely bottomed and are expected to show sequential improvement.

Lee Jagoda inquired about the financial impact of the Kion acquisition, including its revenue contribution and effect on EPS and EBITDA. He also asked about the strategic rationale, Novanta's prior relationship with Kion, and the specifics of the announced $20 million in annual cost savings.

Answer

Chief Financial Officer Robert Buckley explained that the Kion acquisition is expected to be slightly accretive to EPS in its first year, with a more material revenue impact anticipated in 2026. He noted that Novanta was already a key supplier to Kion, and the deal provides access to Kion's AI-based software. Buckley clarified that the $20 million in cost savings is primarily to offset lost profit from deferred shipments to China, giving the company confidence in meeting its full-year EBITDA guidance.

Lee Jagoda of CJS Securities asked for an update on the 2025 outlook, specifically concerning the recovery timeline for the DNA sequencing business and the potential for organic growth to accelerate in 2026 based on the new product pipeline.

Answer

Chair and CEO Matthijs Glastra explained that while DNA sequencing shipments have normalized, new headwinds from NIH funding cuts and trade policy retaliation have increased uncertainty. He affirmed confidence in future growth, stating that the $50 million in new product revenue for 2025 is just the first year of the launch cycle. He expects this, combined with a growing consumables business and over 50% more new product launches planned for 2025, to drive accelerating growth in subsequent years.

Lee Jagoda of Oppenheimer & Co. Inc. asked for a breakdown of the Q4 revenue guidance shortfall, questioning how much was due to macro pressures versus specific customer launch delays. He also inquired why the 2025 growth forecast is only 'up to 10%' despite significant revenue being deferred into that year, and asked about the expected organic growth trajectory for Q1 2025.

Answer

CEO Matthijs Glastra explained the Q4 revenue delta is a mix of customer-specific issues (primarily DNA sequencing, DUV/EUV lithography, and robotic surgery) and broader life sciences market weakness. CFO Robert Buckley added that the 'up to 10%' growth forecast for 2025 incorporates caution due to macroeconomic uncertainty, but confirmed no market share has been lost. Buckley also stated that organic growth is expected to continue its sequential improvement from Q4 into Q1 2025.

Lee Jagoda inquired about the expected cadence of gross margins for 2026, specifically asking for details on the anticipated low point in Q1. He also asked about the confidence in achieving higher new business wins in 2026 compared to 2025, including how much of this growth is from anniversarying prior wins and what new opportunities are already secured or expected.

Answer

CFO Rocky Kraft explained that Q1 2026 would be the low point for gross margins, likely slightly below the 46%-47% full-year range, due to it being the lowest volume quarter and having the highest cost inventory flowing through. He expects margins to step up sequentially in Q2 and be at the high end of the range in the second half. COO Jon Michael Adinolfi expressed confidence in new business wins, citing solid initiatives, the cascade of 2025 wins, growth in the business development team, new products, and a strong focus on the pro segment, highlighted by their presence at the International Builders Show.

Lee Jagoda of CJS Securities inquired about Hillman's strategy for the pro channel, asking how its retail advantages translate and for examples of recent success. He also requested an updated view on the back-half EBITDA cadence given the timing of tariff costs versus price increases.

Answer

President & CEO Jon Michael Adinolfi stated that over 25% of business is already pro-related and the company will continue to support its customers who serve pros, particularly in fasteners. CFO Robert Kraft explained that tariff costs will begin hitting late in Q3, leading to a strong Q3 as pricing will be in place, with both price and cost fully reflected in Q4.

Lee Jagoda inquired about the margin pressure in the Robotics and Digital Solutions (RDS) segment during Q1 and its expected trajectory for the remainder of the year. He also asked about the outperformance of the personal protective business, questioning if pre-buying ahead of tariffs or promotional activity was a factor.

Answer

President and CEO Jon Michael Adinolfi explained that RDS margins were impacted by the MinuteKey 3.5 rollout and seasonally low Q1 revenue, but he expects a return to 30%+ EBITDA margins for the rest of the year. For the protective business, he confirmed strong promotional performance, not pre-buying, drove results and that the full-year outlook remains in line with initial expectations.

Will, on behalf of Lee Jagoda, asked about the performance and outlook for Hillman's Canadian business, focusing on current trends, the impact of industrial production, and any potential effects from tariffs or trade disputes.

Answer

CEO Jon Adinolfi stated that while the Canadian market is facing pressure, particularly on the industrial side, new business wins are helping to offset some of the weakness. CFO Robert Kraft added that the Canadian team has successfully maintained profitability despite significant market headwinds and they are confident in the team's ability to perform in 2025 and capitalize on an eventual economic recovery.

Lee Jagoda requested a breakout of Intex's Q3 revenue contribution and Q4 expectations, and asked if there were early signs of new business wins from the acquisition. He also sought clarification on the SG&A impact from the $7.8 million True Value charge and the outlook for SG&A leverage in Q4 and 2025.

Answer

CFO Rocky Kraft reiterated Intex's annualized revenue of approximately $55 million rather than providing specific quarterly figures. COO John Michael Adinolfi confirmed that promising growth opportunities with existing and new customers are already emerging for Intex. Regarding SG&A, Kraft explained the True Value charge was an add-back for adjusted results and projected Q4 adjusted SG&A to be slightly above 31% of sales due to seasonality, with the full-year target remaining around 30% and leverage expected in 2025.

Lee Jagoda from CJS Securities asked for insights into the EBITDA contribution from ONCAP to the joint venture and the expected fiscal 2026 EBITDA for the combined entity. He also sought information on Hunter Fan's revenue contribution and how its integration would impact Home and Building Products (HBP) segment margins.

Answer

Brian Harris, CFO, stated that the combined entity's EBITDA is not being disclosed, but ONCAP's contribution is slightly smaller than Griffon's. He confirmed Hunter Fan's fiscal 2025 revenue was $211 million and reiterated that the HBP segment, post-combination, is still expected to maintain 30%+ margins.

Lee Jagoda inquired about the EBITDA contribution from ONCAP to the joint venture and the expected fiscal 2016 EBITDA for the combined entity. He also asked about Hunter Fan's revenue contribution and the expected margins for the combined Home and Building Products (HBP) segment.

Answer

Brian Harris, CFO, stated that the combined entity's results are not being disclosed but are slightly smaller than Griffon's contribution. He confirmed Hunter Fan's revenue was $211 million in fiscal 2025 and projected that the combined HBP segment would maintain a 30%+ EBITDA margin, consistent with the roughly 29% guidance.

Lee Jagoda of CJS Securities inquired about Griffon's pricing strategy for its Consumer and Professional Products (CPP) segment in response to tariffs and also asked about the current sell-through trends at the retail level.

Answer

Chairman & CEO Ronald Kramer acknowledged that some price increases have been implemented but declined to offer specifics due to ongoing, sensitive customer negotiations. He added that retail point-of-sale (POS) activity remains weak, attributing it to unfavorable weather, soft consumer sentiment, and broader concerns about tariffs and inflation.

Lee Jagoda from CJS Securities inquired about Griffon's market position and pricing power within the CPP segment, whether a trade-down could benefit certain products, and the competitive landscape for moving fan production out of China.

Answer

Chairman and CEO Ronald Kramer explained that they plan to mitigate tariff-related price increases by pivoting the supply chain and other cost actions. He noted the current environment is an opportunity to help retail partners transition. Regarding fans, Kramer stated that the entire U.S. market is largely sourced from China and that Griffon's supply partner is already planning to move factories, which aligns with Griffon's strategy.

Lee Jagoda inquired about the success of cross-selling commercial doors, competitive advantages in the residential door market, and the potential impact of tariffs on the business.

Answer

An unnamed executive, likely Brian Harris, detailed the long-term potential for commercial cross-selling and highlighted residential wins through superior design, dealer tools, and distribution. Chairman and CEO Ronald Kramer added that the Home & Building Products (HBP) segment is an American-made business unaffected by tariffs, while the Consumer and Professional Products (CPP) segment has a flexible global sourcing model to mitigate any tariff-related costs.

Lee Jagoda asked about the M&A platform created by the NV5 acquisition, comparing it to API Group, and inquired about the geographic and customer overlap between the two companies and the potential for accelerated organic growth.

Answer

Talman Pizzey (Executive) and Robbie Franklin (Executive) explained that the deal massively expands the total addressable market by combining Acuren's industrial focus with NV5's infrastructure, buildings, and civil engineering end markets. They confirmed the strategy for tuck-in acquisitions will continue after a deleveraging period, similar to API Group's history. Pizzey noted there is surprisingly little customer overlap, creating significant cross-selling opportunities, with the primary geographic overlap being in the U.S., leaving Acuren's strong Canadian presence as a key growth avenue for NV5's services.

Lee Jagoda of CJS Securities sought clarity on the largest state NEMT contract, asking if an upcoming RFP and an expected price increase were separate events, and also inquired about the expected cadence of free cash flow in 2025.

Answer

Executive L. Sampson confirmed the price increase and the contract RFP are separate events and stated he is confident in renewing the contract without structural changes. He also reiterated the 2025 free cash flow forecast of first-half usage followed by second-half generation, highlighting an expected net cash benefit from contract receivable settlements during the year.