Hubbell (HUBB) 29 Oct 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Third Quarter 2024 Hubbell Incorporated Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Dan Innamorato, VP of Investor Relations. Please go ahead.

Thanks, operator. thank joining and everyone, morning, you us. for Good a announcing of our this morning, for release issued we quarter Earlier results press the XXXX. third Investors CFO, at release posted Gerben Chairman, Bakker; press slides Vice section CEO, the of President Executive and The President and our Sperry. joined hubbell.com. I'm and website and today Bill by to are Securities and our note call. Litigation forward-looking by future results expected our to related the defined XXXX. Please of comments Please Act and to statements as our Reform this incorporated our company note statements the of this statements morning reference by Private press may include discussion considered forward-looking of the release in

Additionally, to release the comments measures press non-GAAP GAAP Those slides. included measures. are the in may and reconciled also measures include financial comparable and are

to the me Gerben. Now over let turn call

and Great. XX% thank and third the XXXX adjusted results. to for performance basis points adjusted delivered us year-over-year operating quarter, well earnings profit quarter of margin joining in Good morning, expansion. operating share growth strong as operating Hubbell as generating XXX discuss Hubbell's you per

the of the Hubbell's levels stages GDP+ new renewable that over long generation. of and early service outlook to raising in and substation in multiyear morning, Solutions customers We cycle sources utility to full and grid Utility we grid for automation XXXX. In year electrification upgrades profit position interconnect in this adjusted growth are We load that are confident electrification-driven term. our sustained positions and we growth and modernization markets infrastructure as at growth accommodate segment, T&D growth leading drive believe us delivering and double-digit strong our continue remain operating grid a investment transmission, invest in

distribution strategy operating model strong weak, integrated the the quarter, Solutions Utility an As and high-growth we the Solutions to was inventory along year-over-year which, customer we and recent in renewable continue delivered our operating adjusted with efforts, and margin to markets Telcom of customers. From new transformation reflect in challenges verticals operational anticipated, robust collectively returned in organic normalization. navigate Operational expansion. Electrical core service is ability by the of off execution another certain basis continue remained continue expansion the quarter markets of to an quarter. Overall, Hubbell productivity was solution-oriented pockets products to executing innovative markets, business in impact with we performance, led XXX to with effectively points large to margin our are strong operating high-margin center and margin expansion. for solid where to of strength and on compound and growth portfolio Performance contributed in businesses, standpoint, quarter data specified drive compete to operating efficiencies, in simplify of positions, proving outperformance. while utility

on strategy and modernization megatrends. portfolio our ahead, and to Hubbell look we capitalize electrification As grid position uniquely

We the our differentiated outlook full year as are well term. over ability shareholders long achieve our confident in to for increased our to performance deliver as on

storm activity more provide I'd recent the implication business. additional turn discuss and over I to quarter to Before detail, context Bill our like the potential to to some in on it

are in presence and and the these people U.S. a with First our thoughts catastrophes. large Hubbell foremost, impacted all has manufacturing communities by the

encountered disruptions Southeast, result Helene our impacted manufacturing and facilities X were Hurricanes and of and Milton. of as a

of well time support the all needs need Hubbell partners in responded key as highlight full our employees of where am who returned during customers differentiator to and have and safely prime on all as their industry, operation, restored depend our all with I'm a of example proud at our safe. I critical impacted our employees customers service quickly and and efforts and how ensure serve a to storms agility. the scale as serve are we that our trusted infrastructure collective this is and those However, in are relieved can community reliably that of efficiently. When in have

Our storm identify dedicated delivery our restoration capability is regard, prioritized emergency response well to never viewing team dedicated inventory, fees, it and XX/X unique logistics to alternative premiums support engineering solutions production, and with to in third and to provide but or providing this customers impact expedite obligation anticipated financial charging in as as a support, impact more the of quarter storm-related orders contribution positive minutes privilege times in will in storms fourth with on quarter. of need. Bill a make the the the during critical these of few you specifics as the

to the full year of over extreme details for to and the many typically mission-critical order over importantly, small weather our times but customers. With of they events more storms represent well of as As commitments offerings service harden ongoing only mitigate have of to a excellence we in our need impact increasing revenues, nature walk the some let years, the against through product you the critical Bill impact of to as the our more highlighted me infrastructure portion now it Hubbell to quarter. turn that, highlight

my and I'm about morning, that. to is fighting And this cold sharp, us I've you need Thanks patience. morning. voice sorry Gerb, Appreciate with much, I a everybody. good beg been to be very time so this week taking your the and

cash Overall, in OP sales Hubbell Page found X Gerben X% reiterate to basis that hope I XXX of share quarter, operating of points earnings and the strong the expansion, growth, growth in XX% you start XX% OP my on going third growth performance I'm very margin XX% per said. what flow. of comments free slides growth for and

sometimes looking performance. second we share, OP and per the had of we to dollars, OP margins back sequentially, to up healthy signs we at earnings quarter, compared prior so and growth financial year, at to sequentials, in addition all think look these In variances

Electrical Control, the a have lighting of weak demand the the some Utility that Telcom organic notably, from and contributions higher-growth most lower-margin EPS, the between compares that of sales favorably side utility we to about working contributing M&A points situation operating growth an basis still equaled end added the to of overstock portfolio, the see up sold profit growth lower-growth, where about and businesses slightly the second returning through mid-teens getting with of end we X%, customers. Operationally, points. adjusted M&A from down in we customer to our organic and also of Systems segments, residential expansion. channel you segment, comprised distribution the both as adjusted And we'll net QX being which to So about higher-margin, XX% $X.XX XXX improvements when margin get X The sequential improvement of in the and of we'll quarter being across of And as on industry. QX segment next refers to pages, particularly X business operating expansion strong that's Utility net profit. There's fact the side, points basis XX in Utility had across well. we and mentioned, had exception Gerben talk talk a the story, acquisition structural segment. Inside we're performance strong in margin that the but to strong and the those

EPS with the you'll in the there selling that and and And flow see growth. some portfolio lower business a you'll to offset tax due see lower-growth, profit operating transformation impact the some year good mid-teens of successful acquisition higher-margin I line cash bit of little adding full growth price lower-margin business. The productivity higher-growth, by cost, and hit line in execution the rate that more in OP, a an each other. little our targets. Below was bit to line interest expense think

the the performance start Page as disaggregate X, we'll into segment. company's Utility So to X do, the going with start, to usually on and I'm segments, we

So in were into XX% of via see different in to million. in unpack that organic. double-digit growth the in with to automation. grid divisions, you acquisition the you'll mid-single-digit we third quarter minus XX% sales grid and X% infrastructure growth both, If see and XX% That's of growth growth $XXX comprised

a to be we continues markets, we those as saw Just of continued disaggregate plus Aclara, both important growth growth both which maybe Power quarter. improvement think Control. and QX expecting X down to in has seasonality. If which weak, divisions, over healthy we've gas grid flatten as of to easier well everybody comms, meters as compares would grid remains the fourth though some good in here which a transmission in and third we is specialty, XXXX. well Telcom from plus sign Systems to infrastructure will and note as Fourth connected and QX, the have the infusing switching to we month-to-month, Sequentially, we little pretty quarter. softness half in sales the we're the that the we're bit bumpy And it old got old Hubbell flat as a XX% into components products. distribution, into some automation from automation, modest imply have enclosures sequentially, have in the and what the but includes System starting first represents It quarter remind

On grid Hubbell. new is megatrends T&D piece, interconnections, real that strength which renewables, miles benefiting and electrification on the the from double-digit of transmission growth, requiring the both side, new spending benefits and

distribution more to and channel and being to to On overstocking. continuing equipment customer be, side, the work is maintenance demand But through repair. harden healthy for grid installed and as the think, we there continues

really pausing ideas great period this So as to very provide December. is And some the reporting already. longer, we The attractive third Hubbell, little chance into very great are a on. very force get the there sales sales customer give their and of and They to proving Control actually a outlook growing our culturally see with Gerben consistent Gerben can customer interact they there a can quarter versus attractive we of with and excited is believe to healthy that's cycle into and is growth condition, delivering have them at to some for in start backlog off and levels Control They're selling Systems weeks customers. prior will us. base very energized, to a and with morning, I become I team to solution visibility is strong for ago. be force. couple provides our all bit base. The so watch temporary very They're short think out the that end a obviously margins. very to long-range in go worth our visit XXXX turnkey grow a a we very addition stub you This XXXX. Systems year

continue us are substation the in Good grid hear you'll as fusing our grid customers doing about control particular, Systems mid-single and up well in switching resiliency confident and grid quite solutions be in protection So in growth on automation Control. And side, applications. invest digits. and, to tailwinds quite

to $XXX million. to XX% dollars side very margin strong the in the on up you margins, see turning So right page, of performance,

represents over basis is margin point expansion a You see benchmark, XX%, think, of of that sequential XXX X quarter. which second points to over and the nice we from expansion

acquisitions you dollars. new contributing So have

You've absorbing cost of got really the and you on and contraction prior that decrementals in strong price of some Telcom. management, all is in some from year investments the productivity, returns see

So Gerben's elaborate the very strong segment. And a let the me in performance storms. comments little on bit on Utility

storms neutral So the a the impact to had the in Utility segment, quarter.

X/X in we those received. $XX And by about about we represented orders shipments believe Florida, We couple a and got closed have in we shipments million orders million to about and had that were last in and be facilities we Aiken, the that lost Largo, closures, million in but of that South days. inventory had was for offset that on impacted $X $X that the from Carolina, of we storm several of

third effect are and more the including in those net we'll $XX the storm out neutral, out in get shipments in million which quarter, already fourth there. orders, So is, quarter,

to to and Page going turn I'm the Electrical X So segment.

segment they've Electrical XXXX. in nice Another the as for done quarter

lighting. X% X% of see growth points margin of expansion growth. residential X% disposition organic organic and growth out profit the the XXX You The with nets of basis operating effect

normally, storms million If close you those would have several of to those about on of in have we're having Had million Electrical in Arden, we there, seen gone the the from facility of estimating sales North western growth. you part also to added segment, back the they quarter. out X% the last shipments near a $XX days Asheville, North $X Carolina, about effect And sales lost Carolina.

the effective. balance as enacted much vertical strategy, the on data So the Industrial marketing contributions products think is commercial. nicely integrated being the of and quite driven products is we've critical and very system verticals. Light doing more at side. That a by wide sales that as with continues Electrical across becoming good doing where development of product new couple those range industrial which growth proving well unified we from is effective force, becoming has well heavy got sales and to be a the innovative strategy our industries. installed in our materials, Lesser of be and range We've trends centers electrical renewable more to solid sales cross-selling in with really of wide content and

So portfolio, but industrial. clear light decent and is trends across the renewables centers, the strength data

right strong side the in the continues performance of On operating we've XXXX. seeing the been page, profit

if You profit. last X% operating resi see digits be out double you a from increase year. That in would netted

more and functional continue compete and the So Mike XXX healthy to growth, points continue that collectively, think Mark, force clearly. make future best efficient effective the expansion. geography portends I reorganize the very drop-through quite product, Seeing his redundancies margin what basis segments by eliminate watching and price seen the to and effect effective. team portfolio cost sales is growth, And business, of simplify on the the incremental ultimately more management management, good is of streamline versus for

So team excited Mark that and segment the on. see have we're path to his

I next for year. I X, multiyear comment to Gerben was think performance. On they're going Page on and to ask going outlook, the set of to I'm then 'XX good remainder up give

over full to is remind raising And in 'XX mid-single-digit that $XX.XX. that's everybody, off about to the years, year guidance XX%. 'XX, and our a we're $XX.XX That's to of X just last So up growth. base

of customers we've margin sales having trying And quite be we where CAGR expected us, by than this Investor convey new, so, what growing, the we to going and volume believe. The year believed. a lower we OP growing has generated kind holding we effect specifically And describing than XX% base. weakness as longer and we that's what levels to be new, is at inventory side both a and distribution persisted namely, think, off sales to utility we since differently going the in we're believe, market the is Telcom in Day little important, of we're XXXX to than the evolved January, back more on has were

business range. So high quite Hubbell managing headwinds, the high performing volume X end but model we're challenges, through despite at delivering original is the is and the nicely, really or EPS of those that above those pleased very

of year. just itself. quarter got be the a little productivity as We're we've operating XQ the price the expecting So levers Utility to that expect comment storm multiple sales into the revenues stronger and new the proving on created margins. level to to this very on some pull, out continue XQ effective. And cost segment. are relying of be performance as well lever But obviously, seasonally maybe the to a shifted as acquisition some fourth bit increase and we to those sales for We're

maybe gets for you next or And the us this as about of range we're high so high a point. as to modestly that thinking year end ask give above year. And end to balance the Gerben at I'll the the thoughts

utility with distribution full and and believe the substation drive that leading customers return on demand. unique is more most to XXXX that for pipelines energy budgets sales strength positioned our growth and renewable. year transmission XXXX the well will continue are through front I as meter, in our markets levels markets, beyond. deliver outlook markets, will the achieve visibility in across meter our positions Great. the infrastructure end grid backlogs end attractive With megatrends Utility ability Hubbell making customer and raised our Thanks, am the to we Solutions, grid Bill. reliable, continued high modernization interconnection behind as in confident corresponding healthy believe we GDP+ to in secular T&D confident at and that we Hubbell electrification edge, and cycle invest of and robust drive across and attractive accelerate. In growth and infrastructure of that the growth anticipate Project to resilient will

While project Control anticipate comparisons that positioned data automation, are be provide will strength. year, we centers, and markets in a easing and offset into meter Solutions, of be more markets our than stabilizing & Electrical reduced continued next exposure XX% by T&D grid more telecom portfolio for and in than will secular headed growth setups. In make Solutions. In Protection constructive of roll-offs our markets strength up renewables,

earnings in to demonstrated While several collectively market wide show and last per our and across driving environments we operating years in to performance. Hubbell to a over the growth their pockets business, XX% on of executing adjusted and ability profit playbook macroeconomic differentiated conditions are growth productivity execute range drive over some of to conditions, achieve well our continue compounded uncertainty positioned has share.

details performance to and we year. With initial to this provide forward next to expect the look strong with sharing you We and outlook me beyond, XXXX that, in more let building turn over Q&A. base of when our we off continue call

Our Research. from [Operator first with Vertical Sprague Instructions] question comes Jeffrey

in the X, I've of on looks of set got on results, Just in it's to give level used getting you the million-ish us Slide actual terms like organics. of quarter. kind revenues $XXX Systems Control, the

I if could right. grid you just But is X% maybe so. could know, or guess implies that organic let don't sort infrastructure you us know I And those maybe share If that's of numbers? down,

Yes.

got right, You've Control. Yes, Systems Jeff. that's

X% too? a automation? in how is grid good a about that of bit number? And organic there, There's little M&A Or

That's organic, yes.

if this the remaining there to sitting the all of at inventory and kind getting you is don't any riddle in do that But you channel so channel across year. storm we're need know. Carolina and impact normalization? think organic. then And confidence it's this flushes really the Where I North That's you moving solve maybe itself, in on not Arizona, it's been trying country, you've all the out suppose inventory? on

Yes.

And one. inventory. is that yes. to flush short This the it take helping is the I'll maybe Jeff, to out So answer

play very even specific this point with across they're enterprise whole branch. orders as clearly inventory going necessarily coming, perhaps. I to in exists out, very that specific looking they within network those prepare say And But not a the they going to their well inventories, that with what regions. in would for this flush storm you through. customers, is customers When see help storm is As at yes,

follow-on. just segments? how sense quarter Could the maybe cost. you price a And in separate performed give kind of strong mentioned X across Bill the of a us price

Yes.

be it's where just 'XX segments, my smaller So versus Jeff, enterprise. think, it it the I of positive part 'XX, equation want it's point just to about pivoting, a the I both because enterprise, going in think And such a X price about a remarks the -- thing, price/cost mention to point I didn't was on we're was X to period for to to in both. and positive in and but large going

Our next Steve with JPMorgan. question Tusa from comes

Great.

to that here up following think in should last next you're I'm How -- we are talking that on customers, for that utility? about like year, those of kind particular how playing sure pricing. Jeff year? for utility with passing mean, Just your guys on question you is negotiations how -- does I next from out

Steve, recent the rest call price lever It us in we've projects. taken year the Yes. inflation into pricing about what that we part forward. season our at and given do storms utilities price get the continue customers what service provide me you they again market. I'd some -- value additional it, proposition levels, a the with on There's broader modest be we of the the for if And the just our why true coming have both still specifics now. more in And will right in as going still has price comments blanket stick say The right? is outlier Telcom. right, of much the our to some storms focus is, look us. this be -- we business with shown the on but again first. on But been the We've We're price targeted business, business will actually held. price which and think to discussions. back to traction that Maybe let is the good, you segments have T&D

that quality of So price. course, while at a customers and much will the more value our and and modest believe first level that foremost, service then we competitive the still -- a much at

stated and is our think not set in So as views whole 'XX, as well. we've we for construct that go before, our up that's proven And to 'XX I backwards. and

Was look at of look So strong there a up out next margin as as in a this bit when you year we anything the year, of that headwind. the you put guys comps kind to plays pretty result.

a So grow base utility beating the obviously. keep 'XX least should off to just for for margins? those of we assume numbers, margins Because kind of at you year next are

be the still and big future of the cost of shifting think, we step way outlook to to bit our kind I little Look, in kind wanted set idea with of the walk Yes. in 'XX Investor from Steve, OP a our Day up a and really up was 'XX. going price 'XX,

a that more you that about as still, in that And from of drive bit so going of to on drop-through think little sort us our of think that's next And saw to little think largely year incrementals ability us investment about forward, of driving you I XX% why would to incrementals. XX% we're activity driven a kind volume. bit margins expecting. There's be but volume

last up other And the we -- of at the investments. in driving areas as year, investment the as of where keep levels is, what's that's Maybe we some bit of mind, absence of the is in prepare second for we what stepped margins well, a right, half thing had we're to were now really visible Steve, Yes. little demand. to our those

long-term still utility. last think Right. on on you kind just an these one because items? of year, comp average we should this destocking as And and flow more stock so easy of of then like year be your some it next Should have sorry, above quick one

And remain you're able I to back. are to that we Yes. right D really I mean should the that think bounce transmission be anticipating strong.

with your I so would agree And statement.

next Research. Our comes question Wolfe from with Nigel Coe

I But I the this core decompose too Jeff's the trying for of long X% to math like there, sound hopefully it do answer struggling So Telcom looks think question. right way mean, bulk utility down won't It here, Bill, to take like components. is you're is you I'm so that.

maybe to be getting couple a your telecom sort things. do sort of core. end infrastructure customer, one, spending of you if of going kind maybe your that from I'm just correct, X% businesses, utility So correct? And the and down what Number an that of Is to there, customer side? flattish, is across then estimate ex distribution

And this just have weakness is business? new impact a this on in then is the zones residential impact? an Or destocking really that

Maybe take the resi let one, me first one, and you take Bill. the

your correct. So is math

As the end you talking and the say or pointed I'd those the out mid-single with closures contributes we've digits, then about. rest is T&D. of Telcom both what And what demand been

think So right? -- but assessed, it you have I all

the on lighting think, I -- we us, had -- on of. I you business we got side, resi's And about continue rid had we impacts if mean, think you resi to a Yes. resi

I as the was On that's is way -- that your still electrical would be boxes some and affects to really goes think smaller applications. the exposure that of side, resi happening strong. maintenance have effect, effect But think. developments We new is question that into the it big in the a I drive we what's repair the think And that still through utility. and

in cetera. Okay. were impact, really on And given lot one than what et the a Utility had. quick then a mix margins lighter SG&A came especially we margins. the impressive,

But terms land here. SG&A that level there? onetimers did impact? SG&A X%. primarily in Was within some going some the down of of was changes is think a we've And sustainable And that I utility there obviously, SG&A? components on got in portfolio

level SG&A the is say would of I spread. I would spending say sustainable. was the

of Gerben saying, happening year. As some was at investments end there the elevated was last

of I and year's is maintainable kind So level. durable this between year's, SG&A last think this year's the

a And appropriately as address I'd to growth actions business, Systems maybe a a in the the -- And we've business, the that and reduces other Telcom in as for Enclosures in as in of some Nigel, of say area addition the cost then decline certainly with particularly taken that SG&A wise, some that percentage. Yes. volume. right, percentage Control sales

question And next with from our comes Mitchell Barclays. Julian

Just outlook wanted to on circle sales HUS back the again.

us help how thinking that's So maybe understand held. XXXX, And down if before that's be when perhaps maybe year? this in you'd what piece, to are Wondering down said thinking we're going think much of mid-XXs. you still the of Telcom slope on I about year? kind of backlog, what's transmission kind acceleration because is in of maybe Telcom steady of next side utility, sort that going on we understand bounce well. on as help the should piece growth of us see? And the that Any

I'd I'm on catching your Telcom the say Yes, -- cold.

I am sorry.

On like very how we're of was, up. business Telcom side, the in more careful build the XX% this first And stronger course, to half. year. to it's that It back

not come at Our very, just very just goal some as even recapture and projects see volume is grow to capture year, we to back projects being And going not that thoughtful to that profitably we're we're volume, some to that any but try forward. sizable now, price. quoting next pretty for

to kind back more have expect bounce wouldn't but that of I those steady forward. So growth levels at from here it going declined,

at I continue to was your say and question we're digits. to I around it your transmission, whether some transmission think was cranking half I continue. think wouldn't there acceleration, would expecting and anticipating to that double And second digits, been crank -- and I in was double we're has

That's helpful. And then just kind up following on of that.

On inventory at of the impression sense one be your the those customers? is lie early levels visibility as aspect inventory like. the talking year. still have it realized won't perhaps Do as some we Is the major you would next that where about the at high customers, not I inventory issue,

Yes.

me -- many are the In supply -- this that chain helping other is as cases, it's we part, is we as munis, been mainly what and line them an Let demand to it. customers. some in area this destock, in actually helped nice And to the insights comments relationships, prioritized the we long-term very what these driven smaller demand. this by give areas we as normalize, seeing create see our we public power actually on co-ops And we alliances. is bit. like a large see where strategic the see have think has Certainly, what where and when the about storms little with we're the pronounced, started IOU this. In said, growth, overstock less VIP

have We to conversations continue with our customers.

We continue outlook distribution I'd these a sell-through with to say for us in that the analyze provides 'XX. growth for constructive And customers. with conversations data

Now are orders, say some we're precise very of place for But now see call. of turn it for start year, is what's visibility, timing these projects too. having course, encouraging specifically that the 'XX at the I'd Those to they starting us to right the over? trying that to also hard of customers just of

that is gives confidence that us demand strong. So

date would specific here is importantly. I anticipate return calling So say We will this hard. very more and exiting growth much, improved to situation be much year this that a

great, And roughly of sense where Any of the to proportion? proportion utility is of type been sort inventories rough Gerb. revenue your what of just that That's clarify customer have high?

We haven't that, disclosed Julian.

question next from with Our comes Wells Fargo. O'Dea Joseph

I interesting. circle telecom selective the Gerben, to I go wanted thought, after volume on back. is and your comment and being

changing Just as like margin think of the transmission as the think gas be distribution and telco of HUS year, comes bit some telco considerations? as distribution? well mix just it, any versus to within back, growth mix we with any next kind selective margin a may considerations sort with of little perspective more about, you're about as margin there but contributions on substation Trying

pieces, I drivers I to I attractive to wouldn't consistent, this would don't get margins we've in much ton But back, volume comes mix high. it And with Yes, as levels. decline, think the they Telcom. interesting really through The margins been you'd have And there's worked those have about -- down. to thinking expect, all come Joe. mix, different say. of a It's as specifically more return

Got just particular the portfolio the it front? exists think of as tariff scenario then to anything sort we're terms of as I'm would relates but the sure it. exposure scenario today. diminished the tariff I as just sourcing? some considerations, direct considerations, you on of And of on And mindful in not moves have, have portfolio in it that anything

Yes.

And our the years of the exposed say resiliency chain that as or today, couple highly much And businesses the it's I we've particularly from one second lower crunch, those. I think say perhaps our is to a to last in were earlier when whether to we the I'd learned regions part last enough. also going than the a of and that think exposure to been self-critical days it of lighting of I'd proven also over say point years out the those lot reduced, we've that, of thing exposure reduced we've the right Hubbell, that highly it's other was. tariffs in inflation of that were to supply I'd reacted you're past. to fast tariff exposure we've better couple certainly but exposed strengthening during has we're after not

when that if I'm tariffs I'd we'll that our tariffs happen impact -- and do b, but business; a, to manage confident it. that So say when it's, smaller

next with question Our comes from Morgan Snyder Stanley. Chris

is it I digits wanted guys that just commentary. storm, single is all like up got. of seems QX at It the back envelope utility you on the kind seems utility driven follow deferment -- based low least of organic like to on up the of by and or math, growth my of the out storm orders it's the whether QX, in really, organic

from I think just get -- or that a business think up is, can of seems do this Or get that sounds like of half you above, because year mid-single-digit So more that target? like on fast back how kind you that just back start what's QX. there? It like we you plus It is question my could next level? step that to a guess implied you at the year think do at guys big

I is material that level. now. we the level, levels view -- end And their right think, level that at are that our find bounce market inventory when this higher could think back our are the than is mean at natural it shipments installed I Yes. getting a

-- a we given next at grow organic you and So growth haven't think better if said, every destocking mathematical as day. but that's still are which starting of you utility still guidance beginning situation -- anticipate do 'XX our I point the we the getting keeps at so for even Gerben yet, There's year. can customers

really Aclara I Aclara? just out a you what's of appreciate bit little lot on came that period the down working expectation of of some a Is enter growth, Aclara of should a flat following period that. are? expect for kind just It of the by Or to driven backlog. we that lines? was strong up a maybe the that. of expected given talk Can of decline but kind how about And then maybe comps

Yes. of grow to its business. I comps, mean half I got think ability Aclara has its

pointed, back, a of repair-type projects a of And the would I get new surge when growth, next piece. And become business I rolling at provide that a and there -- more the has are And so would is added and meter off is bit think, that maintenance couple big little business. projects the really the ultimately, question say. your

then put AMI & a it, to to think business to whole Controls finer as growth. and look I grid than down, And maybe look at Protection we on that's of how that be 'XX, but we point more the expect as automation. kind we by meters And a offset as

Our from Oppenheimer. next comes with Glynn question Christopher

better, Bill. Feel

the ask commercial Just industrial heavy wanted about and to markets.

a flattened. said it fundamental like particularly products? impact like it didn't facility some market of just the You softer. sound wonkiness that those kind feel maybe the little slowing, Does hit or end was in maybe It

Yes.

one. interesting it's think I an

been it, we look that indication And serving, As steel on example, of demand about steel. It's the industrial you when us an copper interesting prices demand kind that of start in you gives we're for you tells running plants. has heavier on at something if not strong see side, direction that steel Chris, from and different that. is down,

together very we're think, eye and guidance modest in keep contributions comparatively, there. And so the January, as have, to expecting I we bit on for something say give been about have a little that what we'll our 'XX we're you it's more just when --

commercial And Okay. markets, nonresi?

Yes.

So it's modest again, lighting right have for of now. it's used less now. interesting, a pretty to again, with a we lot the there, and exposure have we been, lot big us But to used we -- business

all a in half? the on first kind final-step then question quarter third interesting of book-to-bill versus just And Okay. the distribution the products discussions. Anything

terribly anything enlightening think don't I now.

in you're public sort and I on there think co-ops where comments and It's on the peeling not utilities of would power away side. distribution destocking anymore. be Gerben's how

just from right? would probably Florida through Houston The hurricanes ruling better of side, So on we out we getting out, keep have kind think started I in all the I say. flushed just that Southeast. that

next comes Our question from Brett Linzey with Mizuho.

Brett. is Costa Peter This for on

the any you So there political BEADs you're particularly and the Musk opposed presidency, just should risk on just outspokenly to to funding? thinking with Trump the the of there And a impact be how are to program. worried update Is about there about more X then that, trying costs cut any program? is

couple There's something said, and limited Yes. associated year mean, until until not probably flow. I this funding is later project Peter, a BEAD approvals big in to flow recently money that's for starts next year contributions we've yet. not been seen what BEAD. to terms with we've It's of of

think of And some next the when of so that case later year was I could contribute. to sort base of start

spaces fill All right. velocity, deal M&A white just just general out? looking pipeline, on the to on or you're anything And sizing

Yes.

million of typical is us the the a the traditional million say, things you've to pipeline our pretty M&A billion-ish but range, seen recently. A are the robust of there things range swirling in think of now. I in $XX also things and there's right do sizes, more $XXX size would around, couple I couple where

additive segments. to product margin the to Electrical good So we rates continue We continues brands us. and ways opportunities solutions And there. continue something and -- strengthen can There buy to our it's be strengthen to suite. both and we the that's us look for feel for to potential out to growth Utility be there will

the growth implications of or still of even able we're deliver because I same rates of to often is, that are yet, better multiples return. one of higher higher higher interesting rates, we So and think the the seeing margin and

it's So crept potential. warranted justified -- it's up think the X, feel I multiples that have given or year it's the like then interesting on an there last actually think I us us -- outcome the -- and return but I

question Our Deutsche from DeBlase next comes Bank. with Nicole

I of already. customer obviously, level. But just I to have channel just discussion around I asked lot a A guys where lot inventory, today? comfortable But with mean, end been happening that guess inventory confirm channel feel on is questions still what's want you the maybe at of

I'd working Yes, Yes, yes. out. say it's

impact then normal And the from are storm layer XQ. like it to of you on but then should Cool. I like outcome pushout Okay. the the and assuming just seems wanted outlook, we seasonal be guys of XQ a confirm, saying this, XQ guess just kind to on

in all quarter? that recapture to of expect guys the you So fourth

That's Yes. way. better a

be which -- you will seasonal, I it from it probably think said I pickup seasonal better but better, than it's a said storms. plus is the

I better You than said it did.

Scott comes Graham Our question Research from Partners. next Seaport with

territory? those Two really. was it XX%? The the actually center data in and questions businesses, XX%, up renewables sort were the XX% of Or

It's up strong double digits, Scott.

enough. Fair

a was just comment Okay. just being comment Is automation? Or and utility that was grid mid-single. infrastructure POS a both sort of level earlier There on made about running that infrastructure? across up

an on overstock aren't position. distribution the comment and in of markets a that customers There's utility within some

Our next question is Research. Sprague a follow-up Jeffrey with Vertical from

to come Systems want back to I Control. just

a business were with working year. million $XXX I assumption that last was think we the

XX% in could XX%, just this you some You I QX. growing did million in Maybe $XXX-ish mean, kind of just there's business seasonality. organically confirmed I'm us revenues sense. currently? a you here give sure is

order strong, offering, getting You modularization traction. mentioned

performing. kind of bit a little that color on Just more how is business

Yes.

didn't all, have first So year. of it last we

So I'm comparing...

No, I yes, the but was. whatever know, base

the But strong. that, very linear. nice I right was I But yes, over you're say handsomely is and at margins infer perfectly growth rate isn't quarter that that to But I investment believe, we and term, I our strong. sales It think in our term, long really this it's particularly important really would part. way. over business third our think long with and can a I relationships, require grow on think Jeff, would the growing but force the

systems have to pleased really we're So in the control family.

was revenues $XXX for clarification, Jeff. a this point million year, the expectation of Just

It was.

give Okay. And question, I'm a are asked sense tariff But what might have going your forth can back U.S.-based? bit somebody you between can a and now COGS percent of of us -- a calls. think you little I

was It it's had have smaller. via have fact the and would whatever that then lighting a was we in to second, we that of a, the sold you said; asked, smaller; productivity. of The what lot I X back off headwinds inverse. and volume tariff was don't head. that because It had ability question done top the redundancy And we a know manage we it's my some businesses a, exposure that off pulled price have confidence lot some secondly, and exposure; planning domestically. our and I more

now. the on we'll majority we're question. pretty our are U.S.-based COGS So tariff closely of a eyes our keep very But significant

I without portion of significant American too Jeff, don't is have -- I'd Yes, North say but a our COGS based. the number, it's

turn this now Innamorato like further back showing it closing to I'm at for to remarks. questions time. would Dan I no

us. Appreciate be joining it. all everybody, for around Thanks, day calls. for We'll

This concludes participating. today's conference for call. Thank you

disconnect. You may now