Q2 2023 Federal Signal Corporation Earnings Call
To the Federal Signal Corporation second quarter earnings Conference call.
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I would now like to turn the conference over it's Ian Hudson Chief Financial Officer. Please go ahead.
Good morning, and welcome to federal signals second quarter Conference call.
I mean Hudson the company's Chief Financial Officer also with me on the call today is Jennifer Sherman, President and Chief Executive Officer, we.
We were both of us and presentation slides today as well as the the onions news release, which we issued this morning. The slides can be followed online by going through our website federal signal dotcom clicking on the investor cool icon and signing into the webcast. We've also posted the slide presentation and the earnings release under the invest the tab on our website.
Before we begin I'd like to remind you that some of all comments made today may contain forward looking statements that are subject to the safe Harbor language found in today's news release and in federal signals filings with the Securities and Exchange Commission. These.
These documents are available on our website.
A presentation also contain some matches that are not in accordance with U S. Generally accepted accounting principles.
You know earnings release and filings we reconcile these non-GAAP measures to get measures.
In addition, we will file a Form 10-Q liked it today.
I'm going to begin today by providing some detail on our second quarter results before turning the call over to Jennifer to provide her perspective on our performance market conditions on an outlet for the for the remainder of 2023.
After I prepared comments, Jennifer and I will address your questions.
I'll consult they did second quarter financial results all provided in today's earnings release.
In summary, we delivered record financial results for the quarter with double digit year over year net sales and earnings growth gross margin expansion improved cashed generation. It 120 basis point improvement in EBITDA margin and New records in order backlog.
Consolidated net sales for the quarter with $442 million, a new quarterly record and an increase of $76 million or 21% compared to last year or.
Organic sales growth for the quarter was $54 million or 15%.
Consolidated operating income for the quarter was $59.4 million up $13.2 million or 29% compared to last year.
Consolidated adjusted EBITDA Dakota was $75.5 million up $17.3 million or 30% compared to last year.
That translates to a margin of 17.1% in Q2 this year up from 15.9% in Q2 last year.
Got P. P. S for the quarter was 66 cents per shot up 11 cents per share or 20% from last year.
On an adjusted basis E. P. S for the quarter was 67 cents, a shot up 14 cents to share or 26% from last year.
Order intake for the quarter was again outstanding setting a new record and surpassing the previous high which we set last quarter.
In total orders and Q2, this year with $480 million, an increase of $67 million or 16% compared to last year.
Backlog at the end of the quarter with $1 billion. Another all time high and an increase of $212 million or 27% compared to Q2 last year.
In terms of about group results E. S. G net sales for the quarter with $373 million up $67 million or 22% compared to last year.
E. S. G S operating income for the quarter was $56.2 million up $17.1 million or 40 per cent compared to last year.
E S. Jeeze adjusted EBITDA for the quarter was $70.7 million up $19.1 million or 37% compared to last year.
That translates to an adjusted EBITDA margin for the quarter of 19% and improvement of 220 basis points compared to last year.
Higher chassis revenue, which represented a year every a headwind of approximately 90 basis points.
E S jeeze orders for the quarter with $409 million, an improvement of $57 million or 16% compared to last year.
S. S. G net sales for the quarter was $69 million this year up $9 million or 15%.
S. S. Jeeze operating income for the quarter was $14.1 million up $3.8 million or 37% compared to last year.
S. S Jeeze adjusted EBITDA for the quarter was $15.2 million up $3.8 million or 33 per cent.
That translates to an adjusted EBITDA margin for the quarter of 21.9% of 300 basis points compared to last year.
S. S Jeeze orders were $72 million up $10 million or 16% compared to last year.
Corporate operating expenses for the quarter were $10.9 million compared to $3.2 million last year with the majority of the increase resulting from unfavorable changes in fair value adjustments have posted time members us and the non recurrence of an acquisition related benefit of approximately $2 million relating to Ah.
Post closing adjustment that was received during Q2 of last year.
Turning now to the consolidated income statement, where the increase in sales contributed to a 27.5 million dollar improvement in gross profit <unk>.
Consolidated gross margin for the quarter was 26.5% a 200 basis point increase over last year.
As a percentage of sales are selling engineering general and administrative expenses for the quarter were up 60 basis points from Q2 last year other.
Other items affecting the quarterly results include a 700000 dollar increase and amortization expense a 2.3 million dollar increase in acquisition related expenses, a 1.4 million dollar increase in other expense at 3.7 million dollar increase in interest expense.
Tax expense for the quarter was $12.4 million up $1.3 million from the prior year or.
Effective tax rate for the quarter was 23.5% compared to 24.9% last year with the reduction primarily due to a 700000 dollar increase in excess tax benefits associated with the stock based compensation activity.
At this time, we expect a full year effective tax rate to be approximately 24%, excluding any additional discrete tax benefits.
And overall GAAP basis, we therefore around 66 cents per share in Q2, this year compared with 55 cents per share and Q2 last year.
To facilitate earnings comparisons, we typically adjust our gas earnings per share for unusual items recorded in the current or prior quarters in.
In the current year course, so we made adjustments to gather earnings to chat to exclude acquisition relate to expenses and environmental remediation costs of a discontinued operation.
On this basis are adjusted earnings for the quarter was 67 cents a share compared with 53 cents per share last year.
Looking now at Cashflow, we generated $36 million of cash from operations during the quarter, which was up $21 million from Q2 last year.
We ended the quarter with $360 million of net deaths and availability under a credit facility of $381 million.
Ah current net debt leverage ratio remains low even after funding the acquisition of trackless that we completed in April for an initial payment of approximately $43 million.
Without financial position remaining strong we have significant flexibility to invest in organic growth initiatives pursue strategic acquisitions and return cash to stockholders through dividends and opportunistic share repurchases.
On that note, we pay dividends of $6.1 million during the quarter, reflecting an increased dividend of 10 cents a shot and we recently announced a similar dividend for the third quarter.
That concludes my comments and I would now like to turn the call over to Jennifer.
Thank you me an impressive execution by both of our groups contributed to a record setting quarter I had many matrix within our environmental solutions group and improving supply chain supported higher production levels and with increased sales volumes contributions from recent acquisitions robust aftermarket demand.
And strong price realisation, we were able to deliver a 22% year over year that sales increased and a <unk> 220 basis point improvement and adjusted EBITDA margin. During Q too we were again able to increase production level at our largest manufacturing facility achieving them.
Third successive quarter production growth is the overall supply chain environment continues to improve.
This strong execution contributed to a 35% year over year increase in sewer Klinger Sam.
And what is typically a seasonally strong quarter are aftermarkets revenues were also up 18% over last year with particular strength in part sale.
In addition to strong organic growers are recent acquisitions also contributed with trackless. Our most recent acquisition completed early in the quarter off to a strong start <unk>.
Collectively the acquisitions added approximately 22 million to our top line during the quarter.
We are encouraged by the improving supply chain environment, we are still not out of the woods and there continue to be pockets of supply related disruptions for certain components like hydraulics and pumps.
Given that we are not yet maximizing our production capacity and continue to experience some inefficiencies chat.
Chassis availability also continues to be constraining factor within our dump body businesses, particularly for our businesses that build on classify chassis.
Our safety and security systems group again delivered impressive results during the quarter with record net sales and adjusted EBITDA Ssg's second quarter results included 15% top line growth and then adjusted EBITDA margin of 21.9%, a 300 basis point improvement compared to last year and it.
Poverty target range, which we increased earlier this year over.
Over the last few years, we've made several investments and organic growth within SSG, including purchasing the University Park facility and in sourcing production of several key components.
These investments include the addition of a third printed circuit board lying to increase production volumes of public safety equipment achieve cost savings and reduce reliance on suppliers. The new production line is expected to be operational in the third quarter.
We expect that the brought actions we have taken to mitigate component shortages, including investments in towards production and bring additional suppliers online will provide meaningful long term benefits to federal signal.
Other highlights of the quarter include the publication of our latest sustainability report demonstrating our ongoing commitment to environmental social and governance initiatives. The report highlights the progress we've made against our sustainability calls that were established in 2018, including achieving are targeted 10% reduction.
And water and electricity intensity early.
In the report we highlight the ways in which we make a difference to our customers our communities and our environment. We know that it's a global manufacturer critical infrastructure and safety products. We have the responsibility to do the right thing operate sustainably and with a longterm fact based you on issues regarding the.
<unk> Society, and corporate governance, and positively impact our employees customers partners and stakeholders at large.
These efforts also position as well and the communities in which we operate in service of differentiating factor in our ability to attract labor at most of our facilities.
Demand for our products and our aftermarket offerings remains at unprecedented levels with both our orders and backlog this quarter again setting New company Records.
As we've talked about previously there are several macroeconomic tailwinds contributing to the strong demand we are currently experience.
Within our municipal markets, we are continuing to see the benefits from the American rescue plan, which in 2021 earmarked 350 billion for state local and territorial governments for a variety of purposes, including the maintenance of essential infrastructure, such as sewer systems and streets in the second quarter.
Four orders were up 13% compared to last year, primarily driven by significant increase in demand for sewer cleaner.
As a reminder, approximately 75 per cent of our sewer cleaner orders include a hydro excavation are safe digging package, allowing you to to be utilized in a variety of applications.
We also continue to pack meaningful multiyear tailwinds arising from the 1.2 trillion infrastructure Act, which has $550 billion earmarked for new investments in roads bridges power water and broadband infrastructure public transportation in airports.
To date, nearly 35000 projects have been awarded funding from the bipartisan infrastructure law. They range from Repaving roads and water system upgrades funded through formula grants to state to competitive funding for massive bridge in transit projects.
Our teams are working with our customers and the designated area as they evaluate their equipment needs to support these large multi year scale project.
With the funding available to support broadband infrastructure development, we have seen additional interest in our broad range of safe digging product offerings, they can vacuum excavate and or convey materials in a safe and efficient manner with that orders are safe, taking trucks were up 20% compared to the prior year.
As another example of the potential application for the use of our safe digging products.
There's a significant effort in California to mitigate the risk associated with wildfires with a major utility company recently announcing that it is seeking $8 billion in funding to Bury power lines underground.
We're also continuing to see benefits from the infrastructure Bill with an S. S. G in particular with higher demand for warning systems.
The infrastructure Act earmarked 6.8 billion for the Federal Emergency management agency or FEMA to invest in disaster mitigation programs. This includes 500 million over five years to provide hazard mitigation assistance to local governments through the storm Act to date, we have received over for me.
<unk> in warning system orders supported by theme of funding and are currently working with several counties that had been awarded grants totaling several million dollars to expand our tornado warning systems.
We have received <unk>.
<unk> proposals from communities across the country that are seeking government grants from this funding source to update or expand warning systems as.
As part of our warning system offerings were also provide ongoing maintenance and subscription alerting services, which following the initial sale the warning equipment provide for a longterm recurring revenue stream.
S. S. G has recently introduced a couple of new features key to advancing the safety and security of communities and workplaces.
The first is lightning detection, alerting, which are additions to our flagship commander, one outdoor warning siren activation and monitoring system. This features ideal to alert industrial chemical plants outdoor recreational areas parks and campuses, where lightning as a threat to employees and communities. The second is a new option.
For siren communication with R. I O T family of products.
Devices allow for quick upgrades from legacy radio technology to cure to secure cellular communication.
With higher frequencies of Nashville, natural disasters, such as wildfires Hurricanes tornadoes and floods. We are proud that our products play a role in helping to keep community state.
During the second quarter. The U S Department of Energy also released a notice of intent to invest 2 billion from the inflation reduction act to accelerate domestic manufacturing electric.
Vehicle. These investments are expected to be made available in the coming months electrification remains a key area of investment for the company and we expect this public funding source to support future growth related both to R. E V product lines as well as our platform, especially vehicles that support battle extraction.
During the second quarter, despite increased production levels that contributed to record quarterly sale or orders once again exceeded shipment in fact, the second quarter represented the 10th successive quarter that our orders about pay fail.
With its unprecedented demand contributing to record backlogs lead times for certain products have become extended and consequently, we may see some lumpiness in E. S. G order trends as we move forward, which may impact comparability from quarter to quarter.
In addition, while orders within SSG in the front half of the year were outstanding including benefits from certain large fleet orders, we may see some moderation in SSG orders in the second half of the year with Ford scheduling a police vehicle model year changeover in Q4.
We remain focused on increasing production levels to build more trucks as we aim to reduce current backlog in lead times, while continuing to maintain healthy order intake.
I know I want to take a few minutes to provide an update on a couple of our organic growth initiatives. Our focus on 80 20 improvement is deeply ingrained in our culture and it's played and will continue to play a key role in driving or organic growth and industry leading merge it.
As discussed in the last earnings call, we hired a dedicated resource tact tasked with driving additional throughput projects across many of our businesses as we seek to reduce currently times at several of our businesses. This resource is already conducted a series of 80 20 in lean manufacturing sessions at our.
<unk> Street sweeper facility lean initiatives have initially focused on synchronizing fabrication and paint processes within assembly demand. This improved floor was expected to increase throughput by eliminating double handling of materials maximizing paint line capacity and assembly productivity.
At our Travis spotty and trailer facility the management team initiated a product lines simplification initiative similar to the successful ox bodies dumped body S. K U reduction that we talked about it and her last earnings call. The.
Travis team identified over 9500 current combinations of trailer offerings in the first round of it's 80 20 analysis achieved a 30% reduction in variations with continued standard duration underway.
Moving onto aftermarkets, which represented approximately 28% it's cheesy revenues during the quarter, mainly due to the strength apart sales that I noted earlier.
Aftermarkets remains a key strategic initiative ours, and we see additional opportunities to grow that business by expanding into new geography.
In addition, we made meaningful investments in the first half twenty-three to replenish our rental fleet and support the anticipated <unk> continuation of high demand for rentals and used equipment. We also continuing to invest in new product development and I wanted to touch on a few recent product innovation.
During the first quarter SSG introduced the high literally a new design of our popular many light bar with improved optical performance and is sleeker more attractive appearance.
The wide variety of mounting options colors and slash patterns ensure there is a suitable model for on road or off road utility telling in construction vehicles.
In addition reduced availability of class three to five chassis continues to be constrained for a dump body business. As a result, our teams have launched products that utilized chatz's that currently have more availability as an example, we recently introduced an aluminum dump body product offering designed for the widely available Ford after.
150 pickup chassis that it's been well received in the market.
On the M&A front, we were pleased to announce the closing of the track was acquisition April and are encouraged with its financial performance in the quarter trackless as a leading Canadian manufacturer of multipurpose off road municipal tractors and a variety of attachments would provide year round value to its customers. The trackless integration is well under way.
And we are excited about the opportunities to leverage our existing distribution channel in the U S to expand the geographic reach a trackless products and accelerate the growth trajectory of this business.
Our continued grow through discipline M&A differentiates federal signal as an accumulator of leading brand of specialty vehicles and supporting aftermarket offerings are deal pipeline remains very active and we continue to expect M&A to be an important part of our future.
Turning now to our outlook for the rest of the year demand for our products and our aftermarket offerings remains at unprecedented levels with both our orders and backlog this quarter again, setting new company record.
With our second quarter performance, a record backlog and improving supply chain conditions, we are raising our pull your adjusted EPS outlook to a new range of $2.30 to $2.46 from the prior range of $2.21 to $2.43.
There are also increasing the low end of our full year net sales outlook range by 30 million, establishing a new range of 1.65 billion to 1.72 billion.
At this time I think we're ready for questions operator.
Thank you.
<unk> became a question and answer session.
Question Press Star one on your Touchtone phone.
Using a speaker phone please pick up your.
<unk> for pressing the keys.
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Our first question comes from his Cheeseburger Keybanc capital markets. Please go ahead.
Warning steep steep.
Especially Christians I long for C. A burger, but just making my questions.
Morning.
Good morning. My first question is on E. S. G. Just took the average of her two best quarters in history I got about $350 million quarterly sales is it reasonable to thank you guys can run at that rate or even above for an extended period of time as long as you can get chassis and other components with minimal disruptions.
Yeah, I know you mentioned, you're still not maximum maximizing your production capabilities, but what needs to happen in the supply chain to get you to a point and when do you think that happens.
First answer to your questions Yeah.
The second part is a couple of things one is we need consistency.
So what we're seeing now is episodic type issues it is improving supply chain.
But you know we'll have we talked about it I'm prepared remarks.
We'll have a problem with a particular component and then we'll have to pull a product off the line until that component becomes available.
You know the good news is now where typically talking about weeks not months.
So we're able to solve the problem that contributes inefficiencies because we often have to retest the vehicles.
And we're not running them down the line, but instead were bay building them.
The area that we need to see improvement is chassis availability for our T. B E I businesses.
They're still constraints in that particularly in that class five chances would impact a couple more businesses. We have the chance. He we need for a non T b I businesses for 2023.
We're continuing to look at opportunities to.
Increase production in our T B I businesses and that's contingent upon chassis available at a particularly classify.
Right. Thank you my second question I know deals are kind of far and few between right now, but what types of businesses are you guys interested in and is your priority stool to enhance amongst those underperforming dealers and maybe bring them in from your conversations or higher rates, causing more family owned.
Switch to maybe consider monetizing at a faster pace suddenly colorful commentary on that landscape. Thank you.
Sure you know as we talked about and the call. We continue to evaluate opportunities are pipeline is full.
We're looking at a number of different types of opportunities at a number of different sizes.
So we continue to look at specialty vehicle type opportunities were looking as you referenced opportunities to continue to grow our aftermarkets and we work very closely with our dealer partners.
Particularly when they might be interested as you referenced in some type of liquidity event.
So we're pretty encouraged by the opportunities, we're seeing and we've seen multiple to come down.
So I mean.
They will continue to play a meaningful part of the growth story of federal signal.
Great and if I could just squeezed one last one for could you just compare and contrast, your visibility for your municipal versus industrial customers. What is the visibility look like for each and with in regards to your growing an elevated historic backlogs cause you're kind of.
Parse out does that skew more one way or another kind of split in terms of tobacco and orders out there like so much.
It's fairly evenly split per cent of its you know the we've seen the growth that we've seen in order is it's it's been almost across the board both municipal and industrial on the one hand on the minutes. Besides we've seen some benefits from the American rescue plan that is Jennifer mentioned and then on the industrial side, you know that that's where the infrastructure.
Bill would would we would typically see some benefits. So when we look at the backlog, it's really a nice mix of municipal and then a variety of industrial applications. You know we talked about the the variety of applications for us safe digging products. So it's not necessarily any one.
Particular, industrial and market, it's really a variety of them, but there's a nice but there's also some international business and with the growth that we've seen within S. S. G on that side of the business too so yeah, a nice healthy mix.
Great. Thank you so much.
Thank you.
Our next question comes from cruise more.
Securities. Please go ahead.
Good morning, Good morning, guys. Good mornings congrats on another.
Incredible corner.
[laughter] that's right.
You know recognizing that.
You know much of the infrastructure funding has as long tails.
Yeah, I'm, just trying to figure out a way to to get a sense of how much. These bills. He American rescue plan restructure job back to how much have they.
Provided to this point in time versus you know what you think is gonna happen over the next few years. It's have you have you gotten.
20 per cent of what you think you kinda get or is there a is there any way to to kind of guesstimate that.
Yeah, that's pretty good data on the White House web site. So I would refer you to that today, we really haven't seen a lot of orders from the infrastructure Bill.
And you know according to the website really they're kind of a stop it free of the process, where they have decided the type they have awarded the particular programs and right now the recipient agencies are kind of a green to the conditions of the award and then after that.
Put those out forbid.
And our customers are contractors will start to respond to those bids we're getting a lot of inquiries about look you know a particular customer I'm aware of a project in their area that's been announced.
And they know that they're gonna bid on that project, they're starting to line up their equipment asking us about availability equipment, but it is something we believe that you know we haven't seen a lot of the orders and it's yet to come. So that's one of the reasons were very encouraging but pretty good data on the White House web site.
About where they are in the process and according to that data, they're still in the negotiation of the awards.
Got it very helpful.
When you look at the backlog today, a little farther than a billion maybe just talk in terms of of you know kind of how you're viewing the the the pricing of tobacco today versus you know six months ago nine months ago.
Yeah I think.
It's we're in a good position with other various pricing actions that we've taken we've also seen you know some some motivation I would say and some of them. It's the inflation. So I I think we are in a good position as we move forward from a kind of a year over year comparison, you know we start.
To see some benefits from the pricing actions, we took in the second half of the year, so kind of the year over year impact might not be as significant as it wasn't in the first half.
We saw very good strong price realisation of the quarter.
Got it and that makes sense, alright, I will leave it there thanks guys.
Thanks, Chris.
Our next question comes from <unk> David Please.
Please go ahead.
Good morning, and thanks for taking my question.
You kind of <unk>, Yeah, Hi are you kind of beat me to it on the California comments about wanting to very lovely parallels other infrastructure, maybe I'll turn to.
Lead pipes that appears looks like a starting out very early but what's gonna be the nurse, especially with all those buried lead pipes around the country, reaching into the soil. So starting to hit the news headlines the last couple of months or so.
I just used it goes to a plane.
The <unk> the <unk>.
Call us in helping to.
To dig up all those blood types safely get them replaced or it might have been some mucus a long ways to help them out to remediate all but sudden the flu.
When I saw the Wall Street Journal article I circulated it to our teams there's a it's a great perfect application for our safe taking trucks.
And we think we're in a good position to assist those contractors with those.
Multiyear project.
Outstanding.
I also wanted to just a quick question, especially when you're Rebetol range I mean.
You didn't.
You just pull up to put the the kinds reach up a little higher a few months ago at this point and you're already.
<unk> I'm curious if you feel like maybe you may have undershot things already out of the gate here, maybe actually it's a little bit harder than you thought just a few months back on a more long term basis.
Or what do I temporary items here this particular quarter of that.
Unusual supportive of <unk>, all depressed cost or unusual contract for the kind of one time in nature.
<unk>.
Yeah, we we had a I think we mentioned it on on the law School, we had a pretty significant fleet fleet order from a customer in in Mexico in the first quarter and some of that spilled over into Q2 in terms of the shipments. So that was kind of a an unusually large contract I would say that that was in the first half of the year that.
You know it would not necessarily expecting that to repeat in the second half.
We also are aware of I think Jennifer mentioned, it and it prepared comments that Ford is planning to do a moderately a changeover. So police vehicle production will be down in queue for to allow for that change over so that will be a factor in the second half of the year in terms of the older trends within S. S. G. So.
You know I I think we're we're obviously.
<unk> with the performance of S. S. G. You know since we raised the targets and I think you know longterm, we still believe the the those targets are are you know.
Appropriate it can vary quarter to quarter, and and I think the other thing I'd mentioned in queue for we typically see historically, we have seen some you know.
An unexpected orders as municipalities get towards the end of the year round, mainly on the system side, we contend to see some largest systems orders in queue for so that that might be something that causes some variability in the margin profile.
But longer terms I talked about earlier, you know, we're making a number of investments and that's S. G.
With respect to automation in sourcing and we are very excited about the long term impact that those investments will have on the margin performance of the business.
Okay.
And just to follow up there go into the <unk>.
Segment, it sounds like cause there's still facing some some pleasure Susan not ready to change that outlook yeah. It's.
What I'm curious.
There are still some challenges and supply chain for that group is probably never been perfect. You've been pre pandemic has always been there's always something how far off are you from pre pandemic mono challenges.
As opposed to anything major currently.
That'd be really blot, we need to see improvement in chassis availability for our T V I.
And we need to see consistency on supply chain not perfection, but we need we we can't be in positions, where we're pullin multiple truck softlines for weeks.
But the encouraging news.
As with respect to supply chain issues.
We're getting better.
And it's improving.
I would say.
We're also.
Looking at waiting for the chassis allocations for 2024.
And that's critical as our teams are very focused on building more trucks.
M B M T and increasing production levels.
[noise] courage by the progress made today.
But.
Those are the those factors that I cited are the factors that we're monitoring.
I'll conclude with we are committed to raising those ESG margin targets and the overall margin targets of the company.
Alright, I'll <unk> I'll deal with that thank you.
Right.
Our next question comes from last leaf cheque, which she park research. Please go ahead.
Hi, good morning, guys and congratulations recorder.
Thank you Uhm morning walk.
Want to ask you a couple of follow ups here.
S. S. G. You know I think some of the comments.
<unk> positive and then some moderation at the same time, but then I mean.
You've got the third production line coming on and you just mentioned that that's gonna have some profit benefits.
But then I think when Ian was was talking about fleet orders. He was he was talking about international fleet orders and that something might not <unk> repeat.
So I wonder and you talked about the orders coming down in essence G. So I guess the question is.
Are we gonna expect S. A few orders to come down can you give us some more details about that.
And you know what do you think profitability in essence, she looks like.
In the third quarter with the production ramp <unk> or at least profit level sustainable.
Yeah, I I think was the the order of reference to flee order that was what are we talking back to you on that was about an 11 million dollar or to from Mexico. So that was.
No.
It it it was basically they ordered enough for the full year, so that won't necessarily repeat again in queue and Q X items in the second half of the year. So you know that would be.
Consideration and then on top of that is is the change over within the police business in queue for so the second half of orders within S. As she probably won't be at the same level as they were in the first half, but we're still expecting you know healthy order intake has as we've made some great strides with some of our new products on.
On the margin profile, you know I I think we we still believed to 17% to 21% range that we gave at the beginning of the year, we still think nuts appropriate and and you know we would expect to be within that range in the second half of the.
Okay great.
I'll add more longer term you know our teams are very active in international markets. So longer term you know there's several major orders that they are working on right now that over time, you know will continue to see.
And then you know after the Ford model changeover.
Which is something that's been planned for awhile.
You know, we would you know there'll be some catch up work to as we move through 24.
Okay, Great and I wanted to ask about the the upcoming project <unk>, how are things going in essence for the.
Upgrading is that is that a profitable business.
Absolutely I've been at I was in Spain during Q too and the teams we have two facilities now they're focused on upsetting.
And what's really exciting is we've been able to secure orders that we wouldn't have otherwise received as a result of that strategic initiative.
So our teams have gone to an excellent job in Europe .
In the states where earlier on that journey.
But they've had some wins.
And we're encouraged by what we're saying.
Okay, Great and then maybe just the last four of them. It's nice to see the same digging orders I Wonder if you could provide some insight into.
You know what kind of customer orders are these are you starting to see some of the larger utility fleed orders.
Or any of the service providers are these mostly municipal order.
Yeah <unk> well.
Well the municipal orders would come through as as we talked about and call.
That you know seven approximately 75 per cent of our sewer cleaner orders include a safe digging package.
On the.
The other the orders we were talking about being up year over year really on the industrial side of things.
And we haven't seen yeah, the large kind of fleet orders that were expecting from utility contractors in industrial contractors.
Uhm, resulting from the infrastructure funds so that is more good to come.
Okay great.
Thank you.
Mmm.
Our next question comes from Frank Burns.
Please go ahead.
Good morning morning, Craig.
I just wanted to touch on maybe some of the the.
The cross selling opportunities you have with some of the new acquisitions more recent acquisitions you're done. Thank you mentioned.
Some opportunities with trackless to to.
Bring that use your distribution to bring that to the U S. But what were maybe some of the <unk>.
The opportunities to maybe accelerate growth of some of these brands.
That you've bought across your your footprint. Thanks.
Sure a great question, so let's start with our ground force acquisition we.
We last year acquired <unk>.
The integration is going very well and the teams are both sales teams are working closely in terms of cross selling opportunities. We have really strong leadership team out there and we're encouraged by some of those opportunities to date.
With respect to trackless because of the transaction this quarter. The integration is going well, we're very focused on they do an excellent job with respect to winter attachments, they've got a number of great summer attachments. So we're looking at working with our dealer partners to grow.
That particular business.
But they're off to a strong start.
And then you know in terms of purchasing send.
Synergies.
You know Ah purchasing teams E. S. G I work closely with our new acquisitions and or identifying opportunities there.
And then I'd be remiss, if I didn't talk about our efforts in Colorado, and Montana and Wyoming.
And we're approaching that as it carries our factor are Allison are true back.
Uhm brands ultimately will have T. B I brands are jetstream brand will join that group in September so there'll be a number of cross selling opportunities.
And then finally, our doctors acquisition.
The teams are working very closely with our Amaral group and our jet stream teams in those integrations are going Wow.
Yet another opportunity to pursue cross selling.
Okay, great. Thank you.
Our next question comes from Steve storms, which stone Caged. Please go ahead.
Oh come on them.
Okay. Good morning.
<unk> just a quick question around pacing I know there was a lot of optimism last quarter around two three.
Was there any of the strength seen in the second quarter of pull forward from <unk> should we think about them separately.
Separately.
Oh, probably think about them separately, Dave I, you know I I think we had a strong finish to the course of.
But I I still think we're expecting Q3 to be a strong culture again, it's seasonally strong period from enough market standpoint, and with with the the levels that we're seeing you know demand for rental demand for used equipment demand for parts still so pretty strong we'd expect he's ready to be a be a strong culture as well.
That's very helpful. Thank you.
That concludes our question and answer session for today.
And I was like just trying to call for a spec over just changed for Sherman Chief Executive Officer for any closing remarks.
[noise] [noise]. Thank you very much and closing I would like to reiterate that we are confident in the long term prospects for our businesses and our markets are foundation is strong and we are focused on delivering profitable longterm growth through the execution of our strategic initiatives. Our employees are working hard to do.
Liver.
We would like to express our thanks to our stockholders our employees distributors dealers and customers for their continued support. Thank you for joining us today and we'll talk to you soon.
The conference has now concluded. Thank you for obtaining today's presentation due may now disconnect.
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