Matt Summerville • D.A. Davidson & Co.

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CEO Kimberly Ryan stated that the MTS book-to-bill was stable, while APS saw a slight dip expected to recover in Q4, but did not provide a sub-segment breakdown. She noted FHN order activity is stable, with growth driven by cross-selling and geographic expansion. Regarding the dividend, Ryan explained that capital allocation is regularly reviewed with the board to ensure long-term shareholder value, but had no specific changes to announce at this time.

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CFO Bob VanHimbergen explained that orders were stable through February but then paused due to tariff uncertainty, particularly impacting larger projects in food, health, nutrition (FHN), and plastics. He noted a shift in quoting activity from China to India for the MTS segment. CEO Kim Ryan added that despite delays, the FHN business saw year-over-year order growth, validating their full-solution strategy. Regarding synergies, she confirmed they are on track to achieve targets ahead of schedule, citing progress in functional integration and site consolidation. On portfolio moves, Bob VanHimbergen stated that the company continuously evaluates all assets to ensure they are the right owner, pointing to the recent Milacron and TerraSource transactions as examples of this ongoing process.

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CFO Bob VanHimbergen attributed the Q4 APS margin pressure to lower volumes, incentive compensation timing, and project mix. He stated the fiscal 2025 outlook reflects better flow-through due to cost controls and synergies. He confirmed ongoing price-cost pressure in the MTS segment. Regarding capital allocation, CEO Kim Ryan stated that the dividend and all priorities are continuously evaluated with the Board to maximize shareholder value, and any changes would be communicated when appropriate.

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COO Michael Rosenthal explained that recent optimizations allowed the team to increase concentrate grade without a significant sacrifice in recovery. He clarified that while higher-purity concentrate benefits the cost structure and throughput of the midstream operation, it is not a requirement to reach the Stage 2 nameplate capacity, as they are comfortable with the current concentrate's ability to ramp the facility.

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COO Michael Rosenthal responded that while the goal has always been to ramp as quickly as possible, there is now a marginal refocusing of upstream operations to optimize concentrate production specifically for the midstream assets. On the supply chain question, CFO Ryan Corbett stated definitively that MP Materials is in a position to be self-sufficient, having already secured the required heavy rare earth feedstock to scale its Independence facility as planned.

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COO Michael Rosenthal explained that the 2025 focus will shift to uptime and throughput, driving significant volume growth and a return to profitability, with increased confidence following the Q2 maintenance outage. Regarding China's policy, Rosenthal noted it aligns with a long-term consolidation trend, which could lead to greater supply discipline and higher prices, thereby validating MP's mission to build a diverse supply chain.

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CFO Ryan Corbett indicated that positive EBITDA for the refining business should follow 'not too far behind' the achievement of positive gross margin, which is expected as the company exits Q1 2025. For Q4 production, Corbett cited a long planned maintenance outage in October and short-term instability from new equipment commissioning as the primary reasons for the flat output. COO Michael Rosenthal added that rebuilding work-in-progress inventory post-shutdown also contributes, but expects improved uptime to drive stronger Q1 performance.

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President & CEO Aaron Saak confirmed that gaming inventory has normalized, expecting strong double-digit growth in H2. He noted that other CPI verticals are performing as expected, with the business positioned for long-term low single-digit growth. SVP & CFO Christina Cristiano added that H2 revenue and operating profit would be slightly weighted to Q4. Regarding the authentication business, Aaron Saak stated it was too early to quantify 2026 EPS accretion but confirmed they are on track for the 20% operating margin target by the end of 2026.

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President and CEO Aaron Saak confirmed the demand pushout is approximately $20 million, primarily affecting the vending vertical in Q2 due to tariffs. He outlined full-year expectations for CPI's markets: gaming at low single-digit growth, retail with a high single-digit decline, financial services at mid-single-digit growth, and vending now a low single-digit decliner. For Crane Currency, he stated performance was as expected, with U.S. operations on track and international performance being slightly better, supporting a raised sales outlook.

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CEO Aaron Saak expressed high confidence in the gaming market's health and a Q2 order inflection, citing direct OEM feedback. He and CFO Christina Cristiano confirmed that the Q1 margin pressure is primarily due to a temporary, high double-digit decline in U.S. currency sales from planned equipment upgrades. Christina Cristiano clarified that revenue and operating profit would be more heavily weighted to the second half of 2025. Aaron Saak also affirmed that the target of 10-15 annual international design wins remains a reasonable expectation.

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President and CEO Aaron Saak explained that while non-gaming CPI verticals are growing at mid-single digits, gaming is seeing slower order rates due to OEM inventory adjustments, leading to a flat Q4 outlook for CPI. For 2025, he clarified that the 'flat' total revenue guidance for Crane NXT includes a full year of OpSec contribution and is composed of a double-digit decline in U.S. currency, strong mid-single-digit-plus growth from international currency and OpSec combined, and low-single-digit growth for the CPI segment.

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Founder, Chairman & CEO Richard Cohen confirmed he expects customer acquisition to accelerate, as the new structure offers more flexibility for both smaller and larger systems. On GreenBox, he noted that sites are being rolled out and the sales force is growing. He also stated that while they are working with some new manufacturers for specific steel components, the installation will be handled by their existing, trained teams.

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CEO Rick Cohen confirmed that with the ASR acquisition, they are developing bots for both perishable and frozen goods and are in discussions with customers about building perishable warehouses. He also mentioned work on smaller systems and a second-generation BreakPack system. CFO Carol Hibbard clarified ASR revenue was a mid- to high-single-digit percentage of total revenue. Cohen added that GreenBox is accelerating sales efforts with its new CEO and the first site will have C&S as a customer.

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CFO Carol Hibbard projected completions would continue around four per quarter, while noting the nine starts in Q4 was unusually high and not a new run-rate, though annual starts should increase. CEO Richard Cohen explained that vision technology improves robot reliability and enables remote operations, which is key for scaling. He stated there was nothing new to report on non-ambient systems.

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President & CEO Neil Brinker explained that confidence for the investment comes from a combination of their highest-ever backlog, incumbent status at expanding data centers, and deep strategic relationships. He confirmed that while there is exclusivity on certain designs, particularly with hyperscalers, the modular data center *concept* can be adapted into unique versions for other customers.

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President and CEO Neil Brinker explained that the North American challenge is one of execution and ramping up capacity to meet strong chiller demand, confirming relationships with five hyperscalers. He attributed European softness to technology adjustments by customers and Modine's premium pricing stance. EVP and CFO Mick Lucareli expressed confidence in executing an acquisition in the first half of the year and a strong focus on divesting the automotive business. Neil Brinker later clarified the new modular DC solution accelerates deployment speed rather than expanding the TAM and stated his immediate focus is on execution, not long-term strategic options for the business.

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President and CEO Neil Brinker attributed the SSM growth to gaining market share with a key hyperscaler by proving Modine's ability to scale production and co-develop next-generation products, thereby building significant trust. EVP and CFO Mick Lucareli addressed the vehicular market outlook, noting a slight rebound in European auto sales, expected softness in medium/heavy-duty trucks through 2025, and a potential pickup in ag and construction in the second half of 2025.

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President and CEO Neil Brinker affirmed that market headwinds in the PT segment help identify underperforming product lines, and the ongoing 80/20 initiatives can accelerate strategic portfolio decisions. He also confirmed that neither liquid cooling revenue nor contributions from the third hyperscaler were material assumptions in the fiscal '27 financial forecast shared at the Investor Day.

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Chairman and CEO David Zapico reported that the inventory destock in the automation business is over, leading to strong order growth and contributing to EMG's profit increase. On M&A, Zapico stated the pipeline remains strong and the company is actively looking at deals, highlighting a financial capacity of $4.5 to $5 billion for future acquisitions.

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CEO David Zapico explained that after a post-acquisition destocking period, Paragon Medical's orders were up substantially greater than 25% in Q1. He noted that overall company orders rose 8% (3% organic), with March being the strongest month and April remaining solid. Zapico also confirmed that price increases successfully offset inflation, resulting in a positive spread.

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Executive David Zapico explained that EIG project delays were consistent with recent trends but noted that orders remained strong and continued into January. He stated that while some EMG OEM customers have completed destocking, others have not, though order patterns are improving. For 2025, Zapico anticipates pricing of 1.5% to 2% will slightly more than offset inflation, which has mitigated.

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EVP & COO Alejandro Alcala described PFT orders as stable, with softness in chemicals offset by strength in cryogenics and water/wastewater. EVP & CFO Rich Maue stated the 2025 intangibles amortization is approximately $7 million and confirmed the company is considering a shift to cash EPS guidance. CEO Max Mitchell characterized the M&A funnel as robust and balanced but noted no deals were imminent in the next quarter.

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EVP and CFO Rich Maue confirmed the $60 million is the gross number that the company expects to substantially mitigate. EVP and COO Alejandro Alcala provided color on PFT, noting strength in the Americas and Middle East chemical markets, softness in Europe, and strong double-digit growth in cryogenics. For earnings cadence, Rich Maue guided for Q2 to be slightly down from Q1, with the full year being roughly equally weighted between the first and second half.

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Chairman, President and CEO Max Mitchell described two recent M&A targets—one in A&E, one in PFT—as high-quality businesses in the 'hundreds of millions' enterprise value range. EVP and CFO Rich Maue provided the A&E 2025 growth outlook: low-double-digits for commercial OE, mid-single-digits for military OE, and mid-to-high-single-digits for both commercial and military aftermarket. Maue also guided to a roughly 50/50 first-half/second-half earnings split, with Q1 being seasonally lowest. EVP and COO Alex Alcala confirmed the insurance recovery is included in guidance and expected in Q2 or Q3.

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CFO Rich Maue and SVP Jason Feldman clarified the Boeing strike's Q3 impact was not material, but guided to a ballpark impact of $5 million in sales per month for Q4. Rich Maue then detailed that PFT's end market performance was consistent with prior quarters, highlighting project strength in the Americas and Middle East for chemical and pharma, while noting continued slowness in European chemical markets.

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CEO Joe Ruzynski explained that guidance was maintained to allow flexibility for accelerated investments in supply chain optimization and factory projects. Water Systems CFO Russ Fleeger noted these investments are back-half loaded. Ruzynski stated backlogs are up in the low-double digits year-over-year and book-to-bill is above one across all segments. CFO Jennifer Wolfenbarger added that price realization covered costs in Q2 and is expected to remain positive for the year.

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CEO Joseph Ruzynski quantified recent tariff exposure at approximately $60 million, which the company plans to mitigate through pricing and productivity. Interim CFO Russell Fleeger reported strong Q1 growth in the groundwater business, with residential up 11% and agriculture up 3%, and noted the Water segment's book-to-bill was above 1. Ruzynski confirmed that the company remains open to larger, strategic M&A, leveraging its strong balance sheet.

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CEO Joseph Ruzynski stated that the 2025 groundwater market is expected to be similar to 2024, with growth driven by new products and share gains in the stable replacement market. On tariffs, he explained the company is prepared to mitigate impacts through pricing, its global footprint, and supply chain actions. CFO Jeffery Taylor provided the restructuring charge breakdown: Water Systems ($2.3M), Distribution ($0.6M), and Energy Systems ($0.4M).

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CEO Stephen Shafer described the M&A pipeline as active, with a few exciting spaces where A. O. Smith could be a good owner, though actionability varies. He did not rule out transformational M&A but noted the associated risks. Regarding boilers, Shafer explained the cautious back-half outlook is due to uncertainty about the extent of the first-half pre-buy and project timing.

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CFO Chuck Lauber and CEO Kevin Wheeler acknowledged that China's recovery has been slower than anticipated and that government stimulus is needed to achieve their 5-6% growth target, but they remain confident in the long-term prospects. Regarding water treatment, management clarified they are de-emphasizing the retail channel to focus on the more attractive direct-to-consumer, dealer, and wholesale channels. They believe the business can return to double-digit growth, supported by both organic initiatives and acquisitions.

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CEO Kevin Wheeler stated it was too early to quantify the impact of China's stimulus but viewed the government's actions as a positive sign. CFO Charles Lauber confirmed they are very comfortable with their capacity and market share in both electric and gas commercial products, describing the recent mix shift as an "unwind" of a prior gas-heavy trend.

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CEO Tim Oliver and COO Stuart MacKinnon stated the ATM as a Service backlog has an ARPU of over $9,100 across more than 8,000 units, with backlog up 105% year-over-year. Tim Oliver detailed service improvements, citing positive customer pulse surveys and a 160 basis point increase in customer health scores. He confirmed the company would be aggressive with its $200 million buyback at current stock prices, utilizing a 10b5-1 plan once net leverage is below 3.0x.

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CEO Tim Oliver stated that 2025 is expected to be the best hardware year since 2019, with the ATM-as-a-Service ramp being back-end loaded. He indicated a more definitive plan on capital returns, likely share repurchases, would come after leverage falls below 3x. Oliver noted U.S. network withdrawals were up while U.K. was down, and that the LibertyX business has been de-emphasized. He also mentioned a pipeline of M&A opportunities that could be pursued once debt targets are met.

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CEO Timothy Oliver explained that the backlog's average ARPU shifted due to the implementation of high-value units and a mix change towards regions like India. He affirmed that 2025 implementations will still be accretive. Oliver also noted strong hardware demand in Western Europe and the U.S., driven by a new recycler product and a modest refresh cycle, while AaaS sees traction in India, Western Europe, and the U.S.

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CEO Tim Oliver projected significant free cash flow growth in 2025, driven by 8-10% EBITDA growth and a higher conversion rate. He stated the Board's priority is deleveraging to below 3x by mid-2025, after which share buybacks would be a 'no-brainer'. CFO Paul Campbell clarified the ARPU difference is due to the backlog's higher mix of North American, multifunction units versus the existing base's India and asset-light deals. Campbell also noted the cost of cash would be a slight headwind in 2025 before turning into a tailwind, smoothed by derivative swaps.

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EVP & CFO Thomas Timko and President & CEO Octavio Marquez addressed the questions. They explained that Retail's H2 confidence is based on a strong backlog and a growing North American pipeline with numerous active pilots. For Banking, Marquez noted they are in the "third, fourth inning" of the TCR adoption cycle. On margins, Timko reaffirmed the goal of 100 bps of service margin improvement, projecting a Q4 exit rate at least 100 bps above the prior year, despite near-term investment costs. Regarding OpEx, Timko confirmed the $50M savings target, citing opportunities in shared services and operations, with more details to come.

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CEO Octavio Marquez stated the ATM refresh cycle is still early, with about 70% of the installed base yet to be upgraded, and detailed strong order momentum across the U.S., Europe, Latin America, and Asia Pacific. He confirmed active pilots with major North American retailers. CFO Thomas Timko explained that the company has a clear path to mitigate 50% of the tariff impact through a balanced approach of LEAN productivity, supplier negotiations, and pricing, with additional levers like SG&A control available if needed.

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CEO Octavio Marquez explained the retail recovery is supported by large European orders for SCO and POS, coupled with investments in the North American sales team to capitalize on a market shift toward unbundled solutions. Regarding the banking refresh, Marquez used a baseball analogy, stating the company is in the 'third inning' of the cycle, or about 25% complete. He highlighted major wins in Brazil, steady demand in Europe, and a new opportunity in North America for end-to-end branch cash automation.

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CEO Octavio Marquez and CFO Thomas Timko addressed the questions. Timko noted retail weakness was due to project timing pushouts into Q4. Marquez described strong banking demand from recycler refreshes in North America and Windows 11 upgrades in Europe. He explained the Asia Pacific re-entry is a long-term strategy to build a profitable service base, supported by a new cost-competitive factory in India. Timko attributed the Q4 EBITDA outlook to product mix shifts, projected services margins would reach 30% in 2025, and detailed the free cash flow bridge, citing EBITDA growth, lower interest, and reduced professional fees. The high tax rate was explained as a strategic move to lower future cash taxes.

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Executive VP & CFO Daniel Hopgood explained that the company's 'in region, for region' strategy mitigates most tariff risk, with 85-90% of sales having very little import/export exposure. He stated that the bigger concern is the potential impact of trade policies on overall end-market demand. President and CEO Sundaram Nagarajan estimated that approximately 50% of the ATS business is now tied to semiconductor and high-performance computing, a significant increase from his estimate of 20-30% a few years prior.

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CEO Sundaram Nagarajan explained that the Advanced Technology Solutions (ATS) segment's results were impacted by the timing of shipments, but noted that order entry and backlog grew by double-digits. CFO Daniel Hopgood addressed the medical business, stating that tough year-over-year comparisons will persist through the first half of the fiscal year, with an expected inflection to growth in Q3 and Q4.

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CFO Daniel Hopgood stated that current order patterns support the guidance and that there has been no discernible post-election shift, though some customers are showing uncertainty. He declined to provide specific segment guidance but implied that with flat overall organic growth and low-single-digit growth in ATS, the other segments would be slightly down. CEO Sundaram Nagarajan added that the company's operating model is built to perform in uncertain environments.

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Darren Wilson, President of Retail, confirmed continued interest in self-checkout driven by retailers' needs for cost and shrink efficiency, linking it to the broader platform strategy. Nick East, Chief Product Officer, added that their platform is hardware-agnostic, allowing software deployment on existing competitor hardware. Regarding restructuring, CFO Brian Webb-Walsh updated the cost estimate to $65 million to achieve $100 million in savings. CEO James Kelly stated that tariff mitigation involves sourcing from non-tariff markets and that the majority of the company's rightsizing is complete.

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CEO James Kelly explained the ODM delay was caused by system integration challenges at a U.S. facility, and he prioritized a smooth, non-disruptive transition for customers over a partial launch. Regarding in-sourcing, Kelly and another executive acknowledged the trend but expressed doubt it would become widespread due to the high cost, complexity, and continuous investment required, noting that NCR's platform can uniquely support retailers on any path.

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CEO David Wilkinson projected that while the overall hardware market has been weak, self-checkout demand remains strong, driven by software. He reported that customer feedback on the ODM transition has been positive. Wilkinson confirmed that NCR Voyix is currently net-adding sites across its segments and aims to accelerate this growth with its new strategy.

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CEO Richard Soloway detailed the StarLink radio lines and the new MVP cloud-based access control platforms, noting the goal is for recurring revenue to exceed 50% of total business. President and CFO Kevin Buchel highlighted encouraging sell-through statistics, with sequential growth in intrusion (7%), Alarm Lock (16%), and Marks locking (7%), suggesting that strong end-user demand will compel distributors to resume ordering soon.

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President and CFO Kevin Buchel explained that device activations increased by approximately 1,000 compared to the prior quarter. He projected RSR growth would dip to around 12-12.5% in Q3 before re-accelerating in Q4, with a long-term optimal target of 20%. Buchel noted that a difficult year-over-year comparison for Q3 equipment revenue, due to a large project in the prior year, would make growth challenging. He also confirmed the company views the current stock price as a potential opportunistic moment for buybacks, which are balanced against M&A, dividends, and maintaining cash reserves.

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President, COO, and CFO Kevin Buchel explained that the locking hardware inventory situation is a temporary, one-quarter event based on direct conversations with major distributors, who cited factors like the election and budget cycles. This contrasts with the radio destocking, which followed a massive build-up for the 3G sunset. Buchel affirmed his belief that locking sales will recover and grow as the year progresses. He also noted that the strong radio sales were driven by targeted promotions, management changes, and highlighting product superiority, which he expects to continue driving future recurring revenue growth.

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Kevin Buchel, President, COO & CFO, attributed the Locking business's 18% annual growth to market share gains during competitors' supply chain issues, diversification into schools and hospitals, and a focus on higher-value electrified locks. For the Radio business, he explained that while lower-end radio sales were down, the high-value fire radio segment remains strong, driving the 27% recurring revenue growth. He expects distributor inventory issues to resolve, leading to increased overall radio sales.

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CFO Abhi Khandelwal clarified that the incremental $20 million in cost savings provides a buffer to absorb a potential 3-4% top-line decline versus their prior outlook, though this decline is not in the current guidance. CEO Eric Ashleman described the order cadence as 'pretty uniform,' with some attributable strength in the HST segment. He reiterated that any customer pre-buying was minimal, estimated at around $6 million to $8 million.

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CEO Luca Savi stated that friction aftermarket growth was 6% year-to-date and expects more normalized growth in the independent aftermarket for 2025, with destocking now complete. He reported that the IP project funnel remains very high, up 9% year-over-year, with key opportunities in green energy and traditional oil & gas, particularly in the Middle East and Asia Pacific.

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CEO Thomas Hook clarified the issue is now 'labor efficiency,' not productivity, as Barnes consciously retains staff despite lower OEM rates to be ready for a future ramp. He identified the supply chain for castings and forgings as the primary rate-limiting step. Regarding strategy, he confirmed Barnes is actively evaluating all portfolio options to unlock value, citing the recent MB Aerospace acquisition and divestitures as evidence of this ongoing process.

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President and CEO Thomas Hook attributed the issue to "labor efficiency" rather than internal productivity failures. He explained Barnes is consciously retaining its workforce despite lower short-term OEM demand to be prepared for the eventual production ramp-up, which is currently limited by the external supply chain for castings and forgings. Regarding strategic options, Hook confirmed the company is actively evaluating all alternatives to unlock value, referencing the MB Aerospace acquisition and recent divestitures as part of this ongoing process, but had no new updates.

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CEO Thomas Hook expressed confidence in the Industrial segment's back-half performance, attributing it to the full-year effect of transformation initiatives and stronger commercial execution rather than macro shifts. He confirmed an ongoing strategic review of the entire industrial portfolio. CFO Julie Streich detailed that about $16 million in restructuring savings would be realized in-year for 2024. Regarding cadence, she projected Q2 EPS to be slightly better than Q1, with a ramp in the second half. Hook elaborated that in Aerospace, aftermarket growth is expected to be stronger than OEM, while in Industrial, growth will be driven by internal commercial excellence initiatives across all units. For Molding Solutions, he noted strong global demand for molds with lead times reduced to ~40 weeks, while the hot runners business is stabilizing in EMEA and Asia with work remaining in the Americas.

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