Oliver Davies

Oliver Davies asked for an update on the fabrication CapEx that slipped to 2026, the current demand for fabrication, and the incremental growth assumed for 2026. He also inquired about the softness in traditional end markets like biotech and life sciences, asking if there were any sequential changes or signs of an improving backdrop.

Answer

CFO Stephen Butts clarified that the CapEx slip was primarily due to permit issues for tooling, despite facilities being leased and operational, and noted continued opportunities in data center, life science, pharma, and semiconductor markets. Regarding traditional markets, Stephen Butts stated that biotech and life sciences have been soft for a couple of years, but leading indicators like submitted and requested proposals are starting to tick up, suggesting an expected upward trend over the next several quarters as lab, R&D, and office space are absorbed.

Oliver Davies requested an update on the fabrication CapEx that slipped to 2026, the demand for fabrication, and the incremental growth assumed for 2026. He also asked about any sequential callouts or signs of an improving backdrop in traditional end markets.

Answer

Stephen Butts, CFO, clarified that the CapEx slip was due to permit issues for tooling, not facilities, and that demand for modular construction continues across data center, life science, pharma, and semiconductor markets. He noted that while biotech/life sciences have been soft, leading indicators like proposals are ticking up as lab and R&D office space gets absorbed, expecting an upward trend over several quarters.

Oliver Davies asked about the productivity gap between the best-performing sales region and the company average, and the reasons for recent success with national accounts.

Answer

CEO Kim Scott described the productivity in the top region as 'multiples higher' than the historical average, calling it a 'dramatic step change.' She explained that national account success stems from a new strategic focus on leveraging the company's 35% idle plant capacity, a priority that did not exist pre-spin, which is now supported by new leadership and a robust pipeline.

Oliver Davies asked if recent investments would accelerate organic growth beyond the 7-8% range next year and whether the easing of investment in late Q3 applied to both sales and advertising.

Answer

EVP and CFO Kenneth Krause stated he was pleased with the current 7-8% growth rate and was not prepared to commit to an acceleration. President and CEO Jerry Gahlhoff added that he does not believe maintaining this growth rate should require a higher cost basis. Krause confirmed that the investment easing seen in September was broad-based and occurred after more significant spending in July and August.

Oliver Davies questioned whether a specific automation example fell within the 7% transactional business category, sought to quantify the total portion of automatable revenue, and asked about the pricing model for the new IX Hello tool.

Answer

CEO Christopher Caldwell clarified the example was complex work outside the 7% transactional bucket and declined to provide a new total for automatable revenue, highlighting the difference between simple and complex automation. He explained that the IX Hello tool is priced on a per-seat basis and is expected to be margin-accretive, driving deeper client integration even if it cannibalizes some traditional services.