Modine Manufacturing (MOD) 3 Aug 232024 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Modine's First Quarter Fiscal 2024 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Ms. Kathy Powers, Vice President, Treasurer and Investor Relations.

you quarter our fiscal thank discuss call and first Modine's XXXX morning for conference joining to Good results. Executive and I'm Neil joined Lucareli, Officer; Brinker, by and our Mick our President Financial on and Chief this Officer. Vice President call Chief Executive

be posted today’s presentation, using website, Relations of in either the be which accessing by modine.com. for link our webcast Investor the or slides the will can accessed We through PDF file section

contain forward-looking On in as forward-looking Slide the will is Commission. This X release our as Exchange with statements regarding in well statements. earnings notice filings our Securities outlined and call our as company’s

that, With my the turn call to over it Neil. is to pleasure

morning, Thank you, good Kathy, and everyone.

quarter Modine. an been exciting has This for

EBITDA the First, of an we delivered year. record prior with another adjusted $XX.X XX% of increase quarter from XX% and million, growth top-line

Second, product acquisition we transformation brand the addition announcing the in Napps strategy portfolio into early with our Jetson completed Technology and first of our since our July.

product forward our is This to chiller continuing look this nicely their differentiated technologies to line manufacture to on Texas. welcome address line Sam range schools excited for focused I'm and in Napps product has and needs. his facility market. Neale growth that that Longview, acquisition great real-world in to directly our additional which is at with indoor strategy, systems and a within air Napps' business, an fits Modine, small target providing quality team our President,

grow verticals than importantly, our Most the our demonstrates to to in this acquisition faster where investing commitment objective is responsibly key market.

that growth. journey. planting making But on end of the future the for targets we're we're financial the progress and result, a great reaching As this doesn't mean seeds our

as stages transformation. further column, still to greater products. as additional In a rationalize the shifts simplify in is we're growth growth percentage revenue incremental the say an fact, and our of and portfolio of margin low-margin I business this early opportunity for and There would we

adjusted the of segment Solutions Solutions, XXX this points providing well X. up margin along by XX.X%, are approach. and the the sphere, out margins resources The our way I've to journey the that improvement. with to operating revenue stabilized from in revenue strategies data We turn the delivered accelerate necessary margin Climate centers Climate tip XX% from our this the year. quarter effectiveness an top-line performance proved up another improve business is often growth Please have XX/XX In we Slide EBITDA and of strong and and leadership, and prior year the said in basis and of leading it's both the growth. prior

year. resources at done center the targets. for a In minute. of But a we've outlook the and prior above to doubled This from grow, dedicated year provide strategy raising detail before. segment investing the we're This half first to quarter, of primarily to capital is data $XXX will million the Mick in data the revenue forecast in would revenue year, growth large a targeting over QX, which now higher-than-expected change data equate impact to this this positively up from is fiscal center XX% XX% orders million which due the margins than and more result our sales center increase, will back focus never more in year, our as year. $XXX in our

both including a customers. and backlog, hyperscale strong have We colocation

it particularly will questions products data and get often computing, growth new In the center are future. addition, that above-market high-performance we our next-generation to and have the technology higher it's interested we've R&D some still AI, in machine we're a in, as fuel developing, confident customers other that heat supporting that in to pipeline is arena, we technology learning of relates area deal new about in and load. advanced a and here This an more very done technologies applications cooling require past. I with

continue see data are and portfolio great landscape. as actively will and monitoring products. opportunity develop a technology assessing center We We cooling the our both, add this this of to or inorganically for organically, to us to

data HVAC diversification products portfolio, become provides heating stream portion center both this bigger HTP in HVAC our of our from a level away a revenue markets, and could As verticals. traditional of and the

greater to and fact, shifted material X% due of a sales were nearly market lower from quickly efficiency. change, to due operational started improvements XX% Despite heating improved our efforts performance. quarter products actually the and solid In leading demand and weak sales prior When the labor were freight down transfer margins we the decline, costs in our to down key to year. conditions this to

Please Slide XX% up results improvement XX.X%, strong EBITDA and Performance year revenue this XXX quarter, margin segment Technologies The from with basis X. of turn an adjusted to also prior of an points. the delivered

improving is from gain has In this to commercial our helping contracts, work and Much to of loss material, is the overhead hard fact, prior to the several recapture year. inflation margin into past labor the team exactly doubled terms margin the long-term years. and the put due over

benefited exceeding than many expectations. our expected, our from these to adjustments cases, earlier we've leading In quarterly performance

are to is focused our our fair to that The teams to understand deliver on customers and negotiating are we they're that agreements both thing the important value that parties.

this with we've PT is segment. the work so targeted winning incremental margins. markets to done Much that business due in far the XX/XX we're addition, of In accretive in

approach We are are business simplifying, wherever evaluating using our possible. improving a and data-driven

negotiate cooling as that over applications revenue SKUs, nonstrategic $XX For eliminated commercial gross we're of million exits some getting XX our we've margins. business, on annual lines. liquid at representing negative In cases, was terms example, we product in favorable

opportunities. down, example business the before. higher business, An replace this it is genset margin to I've which with mentioned plan As of wind we the

for in been a business never this it was focus. We long time, have a but strategic

customers exchangers, the performance did we to we advantage. region. brass copper heat the to has with to Now, aluminum deliver have Aluminum and built a a and global in cost potential support and decades what conversion working vehicular And footprint the new are to existing similar from OEs ago. technology

There to energy of the for business in a year to drivers supply. other secure us about X data have the growth years, the this over This as in XX% CAGR definitely we growth was centers, million continuity this and business hospitals business guarantee for are backup a next last and $XX critical applications, great expect power column.

Another the Systems business in growth our is business. EV column

being is We important number but demand launches are of some constraints, year, have a this but supply the due chain to there. delayed

to for pushes fuel over our funnel, production wins, annual up XX X $XXX including at product. revenue million. our wins we to This the cell peak As program for commercial are awarded

going to PT remarkable the that results. like I'd on just business are seeing in but reiterate Again, we XX/XX early getting are

investing businesses We low-margin different right the addressing are segment. that business in in the those have and growth throughout ways drivers

are in the exits, while commercial to segments very negotiating of results the to and recapture We've of have simplified quarter. in all this our proud terms the also while we the value technology work that further product customers, delivered improve and our favorable working future. to investing both we offering the provide done I'm being

results to who provide call updates. like financial I'd Now the our turn Mick, segment the for over will and quarter to review

morning, Thanks, everyone. and good Neil,

driven it our and to had another higher of sales quickly review is Please Solutions attractive XX%, The the portion markets center by quarter of revenue. earnings results. data with up million. was given becoming Climate $XX up turn total XXX% vertical, improved with sales. and great very Slide supports is one most segment revenue Segment to data large Modine's our or a center increase fantastic, X

new some to quarter. A ramp and as a sales which sales significant realized much plant up production year at increase is originally we the Virginia. first North of added related our of the earlier entered with backlog to the than stronger-than-anticipated piece a the in year American chiller We planned, to strong

or were remains field heating offset products, which XX%. heating indoor lower transfer X% a X% $X modest down largely up stocking products heat partially air Sales to million, quality inventories $X lower driven by due sales The or sales. down of market were decreased HVAC&R million. by and preseason sales, higher higher sales of

customers there XX/XX activities. product commercial markets. also some market rationalization softness And anticipated, are continuing with in various was As we residential-related refrigeration and

with and volume primarily driven earnings initiatives. benefits and XX/XX improvements sales adjusted in increased We're basis resulting improvement point conversion margin EBITDA the very margin a XXX by higher from to were earnings The pleased strong as XX%, XX.X%.

is center sales has data is segment Solutions revised backlog, very been the a transfer incorporated to Climate continuing outlook continues in to year. robust which which our heat products, driven of heating grow. a and we're With perform and to strong cautious to into off by regards start well year, The is second the growth guidance. to The half a maintaining for the

years. seasonality see these factors, more level loaded we in likely we're quarters than to previous believe or less Given

very Sales a from accounted $XX and or many were XX% growth. strong Slide sales had of to another million. also turn with improvements, X. volume Revenue Please both quarter or up great earlier Technologies million revenue realized $XX Performance volume than expected. commercial which for benefited XX%

Solutions our XX% $XX sales were increased XX% end to cooled all to component with across systems million higher sales continued million sales of application $XX growth EV Advanced or up sales. markets. Liquid and due

off-highway sales cooled a in increased primarily demand as significant we which air customers, area. Lastly, due genset stationary or sales application higher with see or XX% applications, $XX power a continued strong to from growth million,

a resulting the converted XXX-basis of up margin improvement. earnings. XX.X% Adjusted extremely high in EBITDA to level Technologies XXX%, an higher Performance and was point revenue an

worked has at modifying we As contracts, adjustments Neil expected. benefited Performance mentioned, segment in long-term cases, hard these some than earlier Technologies the and from

this towards I want will be match sequentially out making that QX margin difficult While great progress to results. we're it targets, point our to

projects a over with As results we believe of the had long we to the of year, consistent entered year, team last year. the execute. would most list ramp the And

than the just that negotiations capture benefits completed some And I of our also quarter. were earlier mentioned, retroactive to commercial commercial during some able we're we're As pleased expected.

to that which business are previously team to XX/XX want revenue. some discussed, in could as I multiple pursuing has actions rationalization of year, of and more our even be that to the and margin outlook Based as see on of result four cannot relate clear the strategies, quarters. Lastly, improved, the we planned these product segment and our these reduced for meet is objectives. over full year all now the balance we each results look factors, this

turn Now company X. Please total Slide results. let's to review the

added The or growth. were factors XX% Performance sales basis Solutions points, Technologies. quarter pricing million. another by of XXX or primarily $XX million sales improved $XX incremental to $XX reviewed XX% I driven Commercial gross million drove that up Climate top-line. for Higher margin approximately First and sales the volumes

increased employee compensation higher SG&A expenses. million, due $X primarily to and incentive

SG&A was than points XX the lower prior as a basis year. of However, percentage sales

of year-over-year adjusted an of $X.XX quarter EBITDA report the prior to I'm per very from margin an adjusted happy the improvement. increase from an XX.X%, strong XX% margin This also represents improvement the a consecutive with or that quarter the equates increase of point This or $X.XX, million. XXX-basis year. of was EBITDA was Adjusted in year. to or XXX% earnings sixth share, $XX prior

I'd moving level to stronger to We the that for than was sheet, Before like the now balance reiterate loaded several reasons. clearly year see a more expected. quarter

than than plan, expected was such initially as centers. in some in revenue higher QX our areas faster anticipated a First, ramp including data

Second, some achieving and agreements including that earlier XX/XX expected, carry commercial not settlement Performance than benefits Technologies the to will retroactive future is quarters. adjustments through of new

pass-through on costs the Third, our quarters. which projections, we few next to pass material through over our raw lower have previous cost the Modine is been material below until favorable agreements

items. benefit the further As from and into due strong accelerated of how portion impacts rolling a strong was outlook. few our In earnings a QX minutes, these I'll we're discuss the full these the year result, performance timing operating to some of a and

offset working of quarter, turn fiscal the to million was primarily flow This Please higher payments Now capital higher metrics. significant moving and Slide $XX the flow which in to higher driven cash earnings, improvement quarter operating compensation. partially of We over cash by XX. incentive is the first for a 'XX. generated by

support earnings $XX we X.X. and Net debt a year We expect flow free acquisition Napps free cash growth year to in that demonstrated we as July. ready of capital. in of the coupled growth continued of by range early with organic This by our announced sheet initiatives, driven working focus X% million both quite of leverage quarter. sales. debt, was full cash the Modine's anticipate acquisition in on continued X% $XXX Technology flow, this will strong million fall a target of and ratio balance to remains decreased higher in fiscal resulted strong, Net earnings

turn on to fiscal XX. let's Slide our Now 'XX outlook

earnings As release, announced are the raising in 'XX. sales fiscal press we our outlook and for

report we to Before review guidance, discuss want sales. I updated how the to product some I group modifications

group product General more manage by location. refined by how Manager the order First, of with manufacturing in reporting we've be in within to Climate revenue Solutions we segment consistent

with align As and part our our continuing each manufacturing product XX/XX, of of groups general we're managers. to

revenue reported As recast with how a 'XX result, in products consistent fiscal 'XX. we've fiscal to the be for are now

There products this within Technologies, made we are a Performance slide changes revenue Climate transfer We and within changes some of heat the provided data presentation. summary numbers table centers, the to but recast between no appendix minor HVAC&R in Solutions.

For be product $XX million recast revenue rather clear, no in a resulted classification a heat just increase total a change million in offset by the data prior fiscal transfer groups. increase the minor in revenue, year, revenue the center Climate HVAC&R, changes products. is to there To in three Solutions $X reduction between for

this and outlook previously was a As expectations quarter leading for our several our the improved certainly factor reasons, our I first mentioned, year. to exceeded for

now In from be guidance. revenue our segment, anticipate the we data a revenue now XX% to significant Solutions And increase million. previous $XXX data grow to more center XX%, than expect Climate center we to

to revenues Moving expect ongoing the the we weakness market. to single-digits range cautious HVAC&R, top and end this remain lowered in of have we about low as the in heating grow

sales should anticipate be offset ventilation school by growth we very products. in strong However, this

a in to Europe This from primarily Also reduction incentives. to within to which still somewhat regulations especially the single-digits, now previous commercial us, regards refrigeration and a our We transfer slower to heat for ramp-up be a heat sales over guidance. this in anticipate we're in slowdown, anticipate customers With products, to and but products, projected pump changes applications. we is adjusting high-growth decline market due a rate. sales in is economic transfer general residential at our concerns low for a heat ramp due

Moving to Performance Technologies.

markets benefits We relatively from expect our and from XX/XX continued momentum stable rollout.

for from in be systems quarter. which change Solutions' to to program Advanced is XX% and demand driven EV growth expect XX% Growth and did launches components. range, last We the not by continued

growth air products throughout lower cool roll we expect out XX/XX We for as liquid the segment. and

as exits deemphasize somewhat Market revenue associated growth rationalization we select continue could product negotiated result lower-margin be from or to expected rationalization divestitures. product from and is offset by business. The lower to program

results we expect Again, first raising in the million anticipated many market million and the increase was operational adjusted to EBITDA We on volume, trends, move sales EBITDA. Based be $XXX Let's the recent adjusted of up margins to XX% year. based the million, than range for material year. we're now adjusted EBITDA the $XXX factors, versus of our quarter XX% our and fiscal much stronger improvements. including to on from $XXX 'XX to million prior an $XXX and to representing outlook

the to of commercial increase. QX subsequent outlook at in Again, won't the a in looking of and new necessarily of retroactive earnings when much realization the performance our the repeat change million quarters, represents adjustments. ranges, the Also, midpoint of nearly is due $XX first including this some quarter the benefits

X for we now more year full higher our a $XX around plan anticipate and quarters loaded the outlook, million that hover year. versus this previous on will Based back-end the next

second somewhat million QX quarterly The be average below third average. potentially with quarters above could the $XX the and

around earnings Now free QX of the will outlook, that associated that with for trends, that We assumes improve expenditures and and covered the very to be the strong capital strong higher sequential outlook $XX I I've to reiterate cash balance anticipate want year-over-year ongoing our expected the year. flow improvement very with million.

the Our this attached taxes, amortization and and presentation all expense, to assumptions, included our interest press including release. are depreciation in appendices

we've first extremely quarter we're pleased and with 'XX. To how fiscal started wrap results the up,

targets. timeline trending goals. many and We're our we're cases, making well towards Our our transformation of strong. in outlook initial And ahead financial progress remains

on say stages. we're work in our us, we we're with pleased of said, transformation. Neil still firmly but I'm But entire was quarter, track still Modine in as quite the confident we're to team. and great early ahead the that This plenty of a have

With your that, questions. take now and Neil I'll

Matt of the from comes question first Our Instructions] with [Operator D.A. Davidson. line Summerville

great quarter. a of couple thoughts. Obviously, A

Performance that you in forward? not nature be in retroactive respect can of would you you extent necessarily to saw kind maybe onetime you benefit expect to with Tech, quarter can, repeat that to how the quantify that would more looking Just much the

The earlier Yes. Things got Hey, of some company. plus the is quarter there estimate million pull-ahead. company, retroactive thought total Matt. at It's happen in that's Mick. least total than Good we would adjustments, and the morning. $XX we we for

and about As I of PT X/X, about that probably look PT X/X, estimate coming at X/X and in in it between Solutions. Climate it's CS, that that I'd X/X of

quarter Okay. first more you're computing And some strategy, a approaching going center you the you bit liquid high-performance understand about to cooling paths then a realizing development business. had market, a I amazing here? on little the pretty current have Neil, follow-up. here. want Data how Obviously, may

standpoint, of I able on? we guess what like bit provide. you And timing Modine to when willing you're either more the and should specifically center, give year-on-year color that from head orders incoming address backlog to whatever to look But be Thank sequentially? you. granularity around little expect section Just a a cross might to then, could data market

are Good when is these make build Thank pipeline out Yes. colocation very base, our question, our continue when customer healthy Matt. you. large they side, data We've Sure. they customer a particularly the within around in centers. to seen broaden and the potential base swings. And we orders Neil. pipeline, that This break,

to don't to through that continues grow. see process larger that's to they orders. this into tollgate some typically you're of until funnel and some and orders More starting transitioning these we the POs of So cut over predict is actually more where as adjustment purchase

our appreciate targets. support we this the them work sustainability meet there and that. So We doing that, that with help and we to like customers enjoy we're

going that something this. clear a and the there been chip isn't to decade. a that for that to cooling, liquid technology. shift cooling. technology cooling this. close we has in Relative also in been This Modine is understand over going we've to whether be close remain liquid has immersion participated We're or to the We to understand But winner,

to we or greatest where will continue for penetrate. agreements through And continue we're becomes to is organic the growth. And understand cooling, liquid that want or evolve. to going And to Modine again, around this the to to market observe be see where growth as dynamic market inorganic can opportunity more

either. do good We to are in a position

market accordingly. And we'll the those rate we'll move market adjustments as at make the adopts, the And adopts. as

We it. keen we're to market. the understand So very

it. understand customers Our

Our these we'll customers adjustments look Modine for to the and solutions, make appropriately.

just Thanks, And intend I'll just what one a within fully use And baseball Climate inning would we're benefits the you within then, the maybe Neil. with kind Thank respect achieve sneak in you. to and maybe business segments two characterize generating XX/XX you more. to Performance? analogy, of how to

A Neil - Brinker

question, Good is Matt. Yes. This Neil.

Performance So Technologies, in a And series. of just halfway we're first Climate we're the in game getting Solutions, through X-game started.

they're put they teams, organized strategic markets in. leadership order the objectives. the in execute initiatives that grow we've want They the So those right They've to on objectives, the and team and appropriately. to picked in understand

know, year were in year. you we and started of ahead tracking targets a Climate Solutions with we what in financial as expectations our place So last right Performance New put the York in they're Technologies with that line deliberately,

line Moore with Our of from next question CJS Securities. comes Chris the

year Couple so aggressively at over least just up guys know on recently. prices past questions. raised you big of until or pricing. Maybe that the have picture I

You under-priced in talked areas. about many still being

still specific there there? case? areas you talk could that is that Is the Just wondering, to

our improve having our in this Chris. We're -- conversations with as the to Good marketplace we reassessing question. This of and evaluate but where increases well in positioned environment not price, and and chain you commodities. out often Yes, Hey, in as Neil. inflationary know, positions. and that supply continually metals those regularly go customers, we're terms and with only then other is

and So part we it's our operate. system, of part this cycle, business our is of business how

answer be question. would frequently, that So the to

Thank Got it. Helpful. you.

that have with is suppliers multiple OEMs like Modine. auto relationships So vendor my understanding

However, they often platform. sole-source a given

is the vendor situations assuming necessary though where to might reluctant get up to you significantly? even internal another specked resources see picking that So in, the do allocate engineering factor, OEM pricing your be

question, That's a Chris. good

different single is supply even or strategic output OEMs issue could to they price. That -- want supply balance triple. issue risk, maybe all think chain an it's chain, if with I have dual any, have there on factory strategies. the an with whether They logistics chains, supply that's production a or depends or how

you a they combustion I element on element conversion you we unique that EV. and to there to that and commercially provide have internal going going time opportunities are have consider or in find that maybe is adjustments as to effort look at to the that own anyway. suppliers engine of made, the an maybe there's their all platform and additional knowing end energy it's also just I convert But to the seen order not also side, think think there's whether product, EV and described strategy. worth And and that over it's we've to

Got one it. for me. maybe just Very last And helpful.

frame this understand that? sounds I'm $XXX what XX at trying kind are over or program it So just time looking like EV of wins million. you to

Yes. a rate. about significant compound that will we going to so It's was million at It's year be EV business. or $XX XX% grow that, XX% Last growth estimate to in ramp. And Mick.

feel when that be hitting for of extend out, think get a So you run we'll you you that if kind rate.

Riley Our Van with of Jeff next Sinderen line from question Securities. comes the B.

on kind just segment congratulations you have the and metrics back it could meet my add a how plan could strong of fast segment other much overall that grow? your to capacity if progress. wondering data expectations? If exceed internal of demand me ahead do how Let center happens look minute, words, In we the to to for

we're looking and we're redundancy, question. investments This our We're Neil. for at Jeff, Thanks making that. evaluating good there. is and capacity

ago, growth And an for for Virginia from out our data retooled to We've the Continental know, came North U.K. the a of most America. facilities to since facility manufacturing chillers in support and Europe. modified data of in facility you center we've produce years to as existing the output then, in We've facility. Spain X one U.K. center X primarily So revenue expanded

we're capacity and So additional there, added capacity we as in Mississippi well. adding

So have continue grow to different rates. And we're across to X we the the capacity footprints. with

actual stated of We more growth percentage capacity than year-over-year. have the

So the just factory, our of transition have products the we with I'm engineering terms position. The capacity. being of and capacity conversation able in we're a about and in the customers not concerned matter a good It's to that provide solutions.

Okay. Great to little indoor could you're And a bit if hear. update quality? there? bit then maybe little what in into seeing school for you of more delve air the market Just a

great for Yes, us. that's a business

We continue to gain share we can that. that. that there in that space. dedicating an We're facility working volume on facility a now dedicate the enough entire process of to actually to There's

into put they're infrastructure. pretty ourselves to schools, fulfill the positions well. we that they're next the with funding So and outlook to rate at continuing And see couple our growth the we're some ready positioned making as reps upgrading We for to through the flow and getting of is the distributors grow. of in years this the good this of The decisions, customers. needs

sort of And had then Great. P&L question. I a Okay.

we maybe expected, the maybe than we believe a I On that next during the not the and gross little level margin of Can substantially to the better phase came over you know whether that bit the you focus current transformation. in we progression revenues. you QX which to speak going is of is linear saw of few quarters in mentioned know sustainable? gross margin

how wondering gross about we margin over think of the Just the should remainder year?

estimate If probably next million, having were things question, at $XX plus $XX around ahead. of Matt's million we in about or it's least quarters few Hey, look we a about average pulled I that mentioned of an Mick. in at point to margin. minus, QX the Jeff. good It's

to through XX/XX about gross talked It the sure, We would elevated. but So the will driving it we is I an about expect we X profit remain say for forward, line. were gross and like that think so remain But margin wasn't SG&A QX point where come from QX. in going elevated, going is story below to or earnings. that probably the I at

part comments, think towards latter of my year. in the the ramping I Obviously,

early phases we're said, of still Neil As XX/XX.

super couple all the I'd got we've about to probably And the again quarters. at So X then repeat hard but benefits next in one-timers the in point for QX, later ramping year. lower say of

question. take for please keep And helpful. my fantastic work. taking the That' I will up rest Okay. Thanks the offline.

EF line Moore Our Instructions] comes the question next of with Hutton. [Operator from Tim

to Thanks. for what the to the maybe my speaking other the it, most on just more sales centers, I following on maybe was growth quarter. And [indiscernible] question reiterating very questions. centers, going impressive coming rates up But data you expected. Xx drill given guidance increased of to analysts data one and to the in

from also on there next a wins, to your you wondering, this how site incremental I'm Virginia projects, there? there's explained the is And lead Or the And you growth to that? back on plan that in growth that visit the pulls Are the capacity, little colocation time week Just do you need bit mean, of market do year, think? plant next the center given year? just sales rapid getting share work. of it this do for you you much enough labor think I

Tim. that Yes. Good question. Thanks for

work where fitters chillers. We've in secure have that of been produced there as to the a We broad us with Rockbridge that. assembly pipe pretty the good and amount know, able you the and facility BV, we labor help force workers

We have forth. miles also facility and and a in away labor that's XX that factory flex employs we can hundred people, a back several

you could that workforce were flex that down, county. since in So we in facilities as have in and if campus arguably multiple well volumes the heating Rockbridge

the us moment. labor at a for So concern isn't

from to relative typically, them to order with take start start to customers actually engagements conversation was the The to could so it initial months. an visibility, the get point XX yes, second move through we and our we -- And question we where anywhere our of pipeline. X

That's Great. helpful.

air up so given and But mean, probably strong been I I'll I've hit know and mild and all buyers air the that gears. orders the was pollution. already quality, you about smoke with quality talking schools. we switch just maybe You the have for

the other asking just Have acquisition sales they reasonable given few seen kind you've months that for the pretty that last your lofty you around by really prices acquisition sellers? over my But acquisitions, is pipeline, still goal. Climate given or are question of more the become Solutions

question. to No, and into It of users. they being good it's that's or the today that's is if consumed a have that offer what technology. the in specified technology at It the or depends depends level on the specked product of end terms by adoption rate what

there's inorganic hot team we markets pleased as I'll certainly, been our And able you, there. do I'm with some out So has tell to what really grow the pipeline.

and we're do cautious, to levels some As we've certainly, like into at it rates. as strategy. air you you the these elevated multiple described, some with business to quality see going the of got be starting different see we're right things do long where and different areas, opportunities the just But gates, as for we're aligns going to

comes the Davidson. line next with of Our question D.A. Matt Summerville from

to data one pretty I you seeing do both business are apologize growth you And the on touched are this. markets? the hyperscale doing And you if back to player? hyperscalers? But things, side with doors similar in be of some still think just colocation you side may just and the the center large on of opening hyperscale other

mix is opening to doors the other XXX% hyperscalers. sides. healthy be on both yes, business will And

why our and with and is growth targets hyperscalers colocation, centers. well. our So two data the seeing we're as in combination we're seeing objectives increasing the That of customers in growth the we're year-over-year

of it sounds latter I genset you accelerating. it guys of But data that which whereas it's I and European opportunities, heat remember of battery, some might be it out then others, you heard sounds growth the the right, bit, air, it's five like on thought may the pump. about be growth rate of talked it's decelerating the can't the lot EV a center, a indoor guys mentioned I And that like in one it.

-- on So pump And rate the of what's things? there? you've pace European with of the side that capacitation been driving pause the heat undertaking you some change of of the give does

machines the grow install to that with dedicate going going continue our to and targets facility to to we we're factory CapEx. and And expect. pump heat Serbia We're continue to lines growth

is us the what in a turmoil and build of that bit to on in thing we're going to relative facility. European priority pause the is continue regulation. invest market that to So little Serbia a the out The gives

a a from gas strong Europe. there As you behind followership lot there in movement away moving and of was know, was natural

Europe were you to deployed different And that's there got that we've the traction move of to use same regulations a at in were there But And a yet a refrigerant. And just do the heat reducing some rate. manufacturers aren't that. order around incentives lot priority different to do in to that, GWP. seen pump and recently, have

then GWP. we the brake almost deploy the it's at heat relative slammed we market to to move accelerator So same forward regulations and to hit pumps like the in European around time the

we that getting European sometime So recess, the know Commission after September. be summer together likely in will the

to out, we that work they for But And think the little as there there. adoption We're be back of agencies observing. predicted. this soon had get as we'll now conflict because and between pump that I to a key levels the two bit launching seems of

Powers turn to time. would this showing the Kathy now I am like for no remarks. further questions closing I back conference to at

thanks, joining everybody has we a X Thank And us everybody, hours. replay our available about will this you, website hope great day. be morning. through Thanks. in The and for

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