Q2 2023 SPX Technologies Inc Earnings Call
Good day, and thank you for standing by welcome to the Q 'twenty to 'twenty two 'twenty three X, Yes technologies, earning conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
Ask a question during the session you will need to press star one on your telephone you'll hear an automatic automated message advise your hand is right.
To withdraw your question. Please press star one again, please be advised today's conference call is being recorded I would now like to hand, the conference over to your speaker today, Paul Clegg, Vice President of Investor Relations Communications Paul. Please go ahead.
Thank you operator, and good afternoon, everyone.
Thanks for joining us with me on the call today are gene Lowe, President and Chief Executive Officer.
Mark Carano, our Chief Financial Officer.
A press release containing our second quarter 2023 results was issued today after market close.
You can find the release and our earnings slide presentation as well as a link to a live webcast of this call in the Investor Relations section of our website at SPX Dot com.
I encourage you to review our disclosure and discussion of GAAP results in the press release and to follow along with the slide presentation during our prepared remarks.
A replay of the webcast will be available on our website until August night.
As a reminder, portions of our presentation and comments are forward looking and subject to safe Harbor provisions.
He is also note the risk factors in our most recent SEC filings.
Our comments today will largely focus on adjusted financial results and comparisons will be to the results of continued operations only.
You can find detailed reconciliations of historical adjusted figures from their respective GAAP measures in the <unk>.
<unk> to today's presentation.
Our adjusted earnings per share exclude primarily acquisition and strategic transformation costs non service pension items, mark to market changes amortization expense and certain discrete tax items.
Finally, we will be conducting meetings with investors over the coming months, including at the Seaport Global Virtual conference in August and at the Jefferies Industrial Conference in New York in September .
And with that I'll turn the call over to Jim.
Thanks, Paul Good afternoon, everyone and thank you for joining us.
On the call today, we'll provide you with an update on our consolidated and segment results for the second quarter.
Also provide an update.
On a full year guidance for 2023.
Our Q2 results were outstanding.
This performance was driven by overall demand strength across our end markets and strong execution, particularly in our HVAC segment.
Considering our strong year to date performance and outlook.
Raising our full year 2023 guidance for adjusted EPS to a range of $4.15 to $4.30, reflecting year over year growth at the mid point of approximately 36%.
Our success this quarter is in part the result of hard work on our value creation initiatives, which have driven durable improvements.
<unk> and the new level of margin performance in our HVAC segment.
As we look ahead, we see significant opportunities to continue executing on these initiatives to drive further value for shareholders.
Turning to our high level results.
For the quarter, we grew revenue by approximately 15% organically with strong contributions from both HVAC and detection and measurement.
Adjusted operating income grew 64% year on year with 450 basis points of margin expansion, reflecting primarily the strong performance of our HVAC segment.
I'm very pleased with our Q2 and year to date performance and our positioning for the remainder of 2023.
Oriented that software, which helps drive significant efficiencies for customers when inspecting in assessing the condition of water and wastewater assets.
And continuous improvement are cooling facility in Olathe, Kansas, you're seeing benefits from the optimization of our plant laid out and investments in automation to reach new levels of operating margin performance.
The changes, we've been making a driving the durable improvements and our ability to supply more of our customers needs with greater efficiency, while providing higher returns for our shareholders.
Very pleased with the hard work of our team across the company and see numerous opportunities to continue our progress and.
And now I'll turn the call over to Mark to review, our financial results and guidance.
Thanks Jean.
There was another very strong quarter for SPX technologies, and Q2 are adjusted EPS grew 49% year on year to one dollar and six cents.
Judgment from GAAP results covered earlier by Paul are consistent with our historical practice.
Total company revenues increased 19.6 per cent year on year, including 14.6 organic growth.
With similar increases in both of our H back and detection and measurement seconds.
Acquisitions contributed 5.3 per cent growth and F X was a modest headwind.
Segment income grew by $28.3 million or 50% to $84.4 million, while margin increased 410 basis points driven by a strong operational performance and HVAC.
Price costs remained margin tailwind.
For the quarter and our Aidsvax segment revenues grew 23% year on year.
On an organic basis revenue grew 15% driven by cooling while heatings organic revenue was roughly flat.
Acquisitions contributed growth of 8.6%, which included a full quarter of <unk> in our cooling platform and one month of aspect and our heating platform.
F X was a modest headwind.
Segment income increased by $26 $9 million and segment margin increased 760 basis points.
The year on year increase in H back segment income and margin has a number of drivers.
And are cooling business, we continued to achieve strong plant throughput facilitated by our investments in plant automation and continuous improvement.
This favorable operational execution was aided by a high level of backlog in a more stable labor and supply chain conditions.
By comparison in the prior year quarter cooling experienced headwinds related supply chain labor and price cost that drove lower than typical margins.
For heating segment income margin improved notably year on year, due primarily to favorable price cost and channel mix.
In addition, our Timko an aspect acquisitions were both accretive to H Faq segment margin.
Bookings remained strong despite record Q2 sales HVAC segment backlog ended the quarter at $337 million, including $31 million from acquisitions on an organic basis backlog was up 13% sequentially.
For the quarter and our detection and measurement segment revenues grew 14% year on year with organic growth across all our platforms.
Strong project revenues from Comtech transportation anytime key drivers.
Segment income increased by $1.4 million, while margin declined 160 basis points due to less favorable sales mix.
As we have noted previously or 2000 twenty-three detection and measurement revenue include certain projects sales and our contact platform that contained pass through content, resulting in a lower than typical incremental margin.
In addition, and Q2, we began to experience a one off supply chain disruption that is constraining sales of a limited number of locator products.
We've implemented solution to address this issue and we are confident in the normalization of production during the second half.
Segment backlog at quarter end was $234 million down 4% sequentially due to the timing of project deliveries.
Overall, we continue to experience a strong environment for project sales.
Turning now to our financial position at the end of the quarter.
We ended the quarter with cash of $95 million in total debt of $676 million or balance sheet reflects the completion of two acquisitions during the quarter.
While we deployed more than $500 million in queue to acquire Tam Cohen aspect or net leverage remains at a modest level of 1.8 times or below the midpoint of our target range 1.5 to 2.5 times.
At this point, we anticipate a further decline and leverage to approximately 1.5 times or lower by year end as we typically generate the majority of our cash flow and the second half of the year positioning us to continue investing for growth.
Moving onto our guidance, we are increasing our 2023 guidance for adjusted EPS to arrange a $4.15 to $4.30.
The new mid point reflects a year on year growth of approximately 36%.
And our H back segment, we anticipate revenue growth of approximately 24% at the midpoint.
We are raising guidance for the HVAC segment income margin to approximately 20% <unk>.
Paired with a prior range of 18% to 19%.
Represents a year on your margin increase for H back up more than 500 basis points.
The anticipated strong revenue and margin performance in HVAC reflects a combination of continued solid demand trends hi backlog strong operational execution at the plan level and the benefit of easing labor and supply chain conditions.
In our detection and measurement segment, we anticipate revenue in a range of $590 million to $605 million for a year on year increase approximately 9% at the mid point.
Due to the supply chain <unk>.
Constraint mentioned earlier, we know anticipate a less favorable margin mix, resulting in segment income margin approximately 20% compared with our prior range of 25 to 21.5 per cent.
With respect to the cadence of second half guidance, we would expect segment income to rise sequentially in both Q3 and Q4.
However, we would expect adjusted EPS to be sequentially lower in Q3, then in queue to primarily due to higher interest costs associated with acquisitions and the timing of certain corporate expense items.
As is typical we expect Q for to be the highest adjusted EPS quarter of the year.
As always you'll find modeling considerations in the appendix to our presentation.
I will now turn the call back over to gene for review of our end markets and is closing comments.
Thanks Mark.
Current market conditions remain supportive of our outlook.
Across R. H fax segment supply chain and labor had been more stable overall, which is helping us to improve plant level of efficiency and throughput.
<unk>, calling we continue to see growing demand for our products in North America APAC region.
And our heating business bookings remains steady overall, driven by commercial and industrial demand and residential replacements.
And detection measurement, our run rate demand as steady overall some regional variations.
While the environment for project orders remains strong.
In summary, I'm pleased with our strong results for the quarter and performance year to date.
Focused execution on our key value creation initiatives.
Has helped drive durable gains and our margins and growth profile.
Looking forward I see significant opportunity for further improvements as we execute on a road map.
We also remained well positioned to continue investing for growth given are solid balance sheet strong cash generation and active M&A pipeline.
With a strong backlog position and good operational momentum I feel confident and are updated pull your guidance, which reflects approximately 76%.
Nine year growth mid point.
And would that alter.
I'll turn the call back to Paul.
Thanks, Jeanne operator, we are ready to go to questions.
Thank you we will know conduct our question and answer session.
As a reminder, please to ask a question. Please press start one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again, please stand by while we compile the roster.
Our first question comes from Brian Blair from Oppenheimer.
Thank you have a great color yes.
Thanks, Brian Thanks Bye thank you.
I was hoping you'd offered a little more detail on the continued step up and and ache that guidance. We know you know the high level drivers.
Curious, if you could parse out whether expectations for aspect, which.
For your deal call coming in 75 million or so and sales contribution high twenties margin whether that has increased again now that the asset it is in your portfolio.
Or if the incremental lift is on the side of legacy operations are tanker or some combination thereof.
Yeah, <unk> I'll run through that and let's start back at a high level and look at our segment income lower margins S.
T S. P. S level first because we've been applying our business system across the enterprise and we think it's made a positive impact. If you just step back 2020 or segment income margins for 15 for 2021, there is 16 for <unk>.
Last year, we had a lot of challenges with supply chain Labor P. P. V. There was 17, one we thought that 17, one was a little bit lower than what it should have been and where we sit today is 20 per cent at segment income Martin So.
<unk> steady increase basically 460 basis points in three years. So you know.
What that says to me is I I do believe in our business system I think it's working and I do believe our strategy is sound. So if we if we drill down into H Faq, specifically the way I think about the businesses historically, we've thought about that as a 15, 16% business.
Last year as we talked about.
We had a lot of headwinds and last year, we ended up at around 14.8% right under 15%.
But again, we think a lot of the improvements that we had made in lien.
And the plant lay out some of the investments and automation equipment was masked.
By some of these headwinds.
So if you look at where.
2022 ended to where we are in 2023, a couple of things have driven improvement one is operating leverage that we're having growth.
The second is the investments that I've talked about the investments and automation productivity lean are really making an impact and are very very positive for that business very sustainable.
I the third would just be the reduction of some of the issues. We had last year labor supply chain. Some some of those types of items and then we did add accretive acquisitions asked back in tanker, which we're very pleased about we think those have structurally brought up.
Our segment income targets, probably 100 basis points.
So you know when when when we looked at it before we thought 15% to 16% was the right target where are we said today, we think 18% to 20% is a very sustainable target for us going forward. The volumes that we see so we think we've significantly structurally improve the H five.
Business and you know we feel good about that so that that'd be how I break that I sat down.
That's very helpful color.
Uhm.
The.
You know 20 per cent for this year, so that that'll be the high end of Normalised range is at least for the time being I'm sure.
Should we see that.
Continue to expand going forward.
You as the platforms that comprise HVAC continued to scale fine tuning continues I suspect that you'll have.
No further accretive deal flow over time.
Just curious if any incremental color I can offer them.
And I think one of the things some of the things that I think we're a little bit of a headwind last year with P. P V being negative we we saw some positives this year and our in our numbers. This year. So you know when you look at the obvious question I think you're trying to get to you is what's the right jumping off point there.
There could be up to 100 basis points of of of those more one off types items in this year's resolved, but we feel very good that we have structurally improve the margins of this segment several hundred <unk> you know.
Mark anything you'd like to add yeah, I think you know to add onto James comment somebody from a from a kind of a price cost perspective, because that that often comes up we do believe we're at a more stable or normalized environment and we believe that is gonna be the case going forward. So as you look ahead really one of the key drivers in <unk>.
Painting, and maybe improving those marches is going to be around some of the capital that we're investing in the plant footprint. We're in the early stages of that will continue to do that if you'll see it in our you know our capex comments that we've made for the year and that's really gonna either should make a meaningful difference you know in the <unk>.
Fish and see that you see in those plants, whether that's reducing labor required or just driving increased throughput.
I could get very helpful. In the evidence some structural improvement is obviously they're already.
Uhm switching.
Switching to Dnm was.
Well I guess you could call that two factors in terms of some margin compression in the corner in the near term headwinds.
Could you quantify the impact of negative mixed from the contact pass through relative to the.
You know supply chain constraints within locators and how much both you are affecting the.
No relative moderation it.
It seems like some conservatism now being baked into the back half that one.
Yeah, Brian what what I would say on that is really a combination of both probably more heavily weighted to this kind of isolated supply chain issue that we called out with respect to the to the locator product line, but it was really a combination of both I mean <unk>.
<unk>.
The supply chain issue is temporary in nature I think we refer to it as one off you know that is not something that we expect it to recur in the project mix is a dynamic that has benefited us from our income standpoint. This year, obviously, but that those projects as we have to have called out in the pan.
<unk> R at slightly lower margins historical.
Dnm business margins.
Okay understood I'll leave it there.
That's fine.
And our next question comes from Lawrence D Maria from William Blair.
Hey, Thanks L. Larry here good afternoon, everybody.
A few questions here at first it seems to me have more pricing power maybe than we thought an HVAC, we get credit for in the last few years do you think you still have.
Room to go on price positive price in HVAC over the next coming years or is that more inflationary and with the 24% growth I think you're looking at how does that break down in price and volume.
Well why don't I start on pricing power like I think you know.
We've always had if you look at a portfolio businesses. We do believe we have pricing power in an R. H back in our detection and management to businesses that we did not feel we had pricing power, we divested and I really the transformer business some of your legacy businesses.
Having said that you know we are in competitive markets and and you know where we sit today. We think is is a balanced physician. We don't think our prices are too high and coming down. We we think we're Ah line value proposition.
On the I'll I'll answering the price volume question. So for the quarter. If you look at S. B as in total it was fairly balance between volume and price a little more heavily weighted in terms of price.
And that's with D N M D more volume weighted and each back being more price waited if you look at the full year and you look at our organic guide.
<unk> for the floor or organic growth implied in our guidance for the full year, it's probably gonna be something more like 60, 40 twice volume and that's what I was getting more price and on the front half of this year and congestion comparisons of the prior year.
Twice was still a little bit weaker and did you get into the later quarters, it's a little bit tighter in terms of the comparisons.
Okay. Thanks, very much for that I'm gonna ask about boilers. Some companies wishing weakness in boiler she doesn't seem to be the case for you guys. So what are you guys seeing in any kind of clues on why there's a divergence in the market.
Why you guys are not as may be seen the weakness and others are saying.
Yeah, I mean, I think we have a very strong position in boilers hydrops now <unk> very strong you know I think that what we have seen is over the past year or two there's been tremendous demand tremendous backlog and working through that backlog, but we see today is a pretty balanced.
Physician.
And this is one of the few areas you know most of our products are engineered to order.
You know it was so we go have less where we go through channels here is where we do have a channel for a rescue boilers and we do have pretty good information about whether their balance for the overstock Understock and what we see today is it's pretty balanced.
The other Polish so that's kind of on the <unk> side, it's been houses and I do believe R. N P I initiatives.
Has been taking share we talked about our share gains last year, we rolled out the eco attack, which was very successful one product of the your last year on the residential side.
On the non razvi or commercial side Patterson Kelly business have has expanded their footprint their tonnage and we believe we're taking some sure there as well so what I would say is when I look at the the boiler business. The hydraulic does this it feels like we're back to normal when I'm sitting.
Like in a cooling business, where we have a mountain the backlog, but it's like a normal business, where you're kind of booking and shipping and as you look towards Q4 and Q1, you know the weather will have a determining factor on that market size as as it usually does for the residential portion of that Mark.
So yeah, we actually feel comfortable with what we're seeing on on the boiler Sun.
That's a good color. Thank you if I could just take one more and then I'll hang up there <unk>.
Obviously, there's some weakness in the industrial world out there this summer seeing tends to be more on big more capital intensive stuff I suppose you know big projects in order to add an order to transfer the quarter anything troubling anything any signs of weakness or just you know any color as we can get more comfortable around somebody industrial economy that that's out there that you know you guys don't seem to be seen weakness.
Yet, but others are.
Yeah, you know Larry O. While we're feeling good I I would say I'll I'll break it down you know across the segments on the <unk> business is strong and we're seeing we are seeing a lot of projects. There are solutions are very well suited. We're also seeing some reassuring active.
<unk> going on but you know some particular areas of strength, there it'd be semiconductor data centers batteries.
You know if I look at R. E. A M business are engineered our movement, that's healthy that tends to be generally a diversified industrial one of the businesses is pretty heavy and medical institutional pharma. They have a substantial amount of backlog I believe going all the way into next year.
On the heating business, we talked about boilers actually the electric heating business, which probably has some of the best.
Mega trends in our business has been booking very solidly.
And then if I switch to the Dnm side, if I break it down we've talked about our projects projects are very strong this year, but they're also strong looking into next year, particularly transportation Contac, a ton and I run rate steady.
I would say on the infrastructure Bill.
We're seeing limited visibility receipt, hitting a transportation business, but not too much elsewhere I'm, mark anything you'd like to add a little more color on the numbers and data yeah, I think I mean, Larry when you look at sequential growth of orders you know a quarter over quarter, they've been they've been strong.
You know as as gene alluded to very strong and the HVAC segment, but really across the.
The entire platform, we're seeing positive order growth on a total company basis I'd put it kind of in the heights.
Fantastic. Thank you very much for color.
And good luck.
Thanks.
Our next question comes from Steve <unk> Zani from <unk>.
Evening Jean Mark.
Just wanted to follow up briefly on the on the last question, which is typically chewing you've sat in a slowing economic environment or in a recessionary environment. The one place, particularly M. T. N M. You would you might feel it is locators.
But it sounds like you're only locator issue right now is is supply chain.
Accurate and are you seeing any kind of demand change on locators.
No I'd say you know what we're seeing a locators is it's steady.
Wouldn't say, it's growing rapidly we're actually feeling optimistic about the back half of the year. Some recent wins that we've had.
But no I don't see any anything.
I think it's a good question cause locators C M b the Canary in the coal mine because.
Obviously, so much economic activity goes through their whether you're Lang.
You know fiber, whether you're putting gas lines of the building new houses or buildings or refurbishing. So it touches a lot, but it's it's been holding steady, but I'd say flattish I would say not not high this year.
Mark anything like that Yeah, I think I think that's right. I mean, you know it is a is one of our more global businesses, though and we haven't really seen any weakness around the world and all the markets that they participate in so.
Okay.
When you're dining for leverage and you noted stronger cash flow in the second half. So just when I run through the numbers. Your expectation is not to start paying down debt anytime soon is that accurate or not.
No Steve we we we are using free cash flow regenerate throughout the year to to pay down debt that we have outstanding all our debt is prepayable.
It's it's all bank debt. So we will continue to use free cash flow.
To drive down leverage so you'll you'll see leverage come down both from from the repayment of debt and of course, you know from the denominator perspective, an increase in EBITDA. So you've kind of got those elephant working.
Okay.
When I think about <unk> to pay down debt now does that provide us any kind of clue on what the pipelines looking like cause you wouldn't necessarily rush to pay down debt, if you're gonna be on the market for acquisitions in the near term is there any <unk>.
I wouldn't read through anything on that you know I think the the best use of our capital right now is to pay down debt, but you know I think of it through the context of our leverage capacity and our ability support a transaction in the market. So we've got we've got access to plenty of capital when the right transaction Matilda My revolver exam.
Luckily, which is $500 million exactly yeah. So we've got <unk> from a liquidity standpoint, we had a revolver that's $500 million in size.
When when we think about your 2025 target, which now you know maybe a coupla years ago seemed like far away now it seems one we're getting closer but on a P. S. You're getting a lot closer even this year.
<unk> to get to the $5 plus are you assuming you need additional acquisitions or can you get there with what you have.
Yeah, I mean and stupid <unk>. So I think if there's one more clearly above on a couple of different metrics here and we're looking at option.
Update or replace this construct our current thinking is that's gonna make the most sense to do that in the context of 2024 guidance in February .
J as we typically have talked about you know a model, where we grow it around been single digits on the top line.
And organically kind of double that at the bottom line and then then you have maybe another day.
Eight or 10% associated with acquisitions, if we do that so you know I think what I, what I think we're safe thing is that we feel like we're within striking distance of that one way or the other.
Perfect. Thanks, I think about the corporate expense guidance you have in in the appendix it seems like.
It would indicate corporate expense lower in the second half first his first half but in your third quarter guidance. You indicated three Q maybe hop can you just give us a sense of of trending on corporate expense, particularly giving you clearly had some integration costs in the first half, particularly was not very large deal the aspect.
Sure So wanted adjusted basis, Steve our corporate <unk>.
In the first half of the year.
You know I'm, just talking about the corporate expense line without the Stockbridge calm.
Was.
Five.
That's with 13 million in the first quarter of an 11 five in the second quarter. So actually in the second half, we're expecting it to be up a little bit.
Okay. It was a <unk>.
Rubbed between through two Q and Q3, where some of the costs that we were originally anticipating going into two Q will actually go into two three so that'll be a little bit higher and then typically for <unk>.
Yep, Okay, perfect alright, thanks, everybody.
No problem.
Alright next question comes from Walter Liptak from Sea Port Global.
Alright, Thanks, and congratulations for me too and May of.
2025, $5. So it did seem like it was far way away and you know so so congratulations on making all the progress.
I wanted you know one of the questions that's already been covered.
But I wanted to ask about.
With the the locator. So you have to beat a dead horse, but.
You know if if with a supply constraints was there a push into the third quarter from the second on sales I Wonder if you could set it up for us.
Yeah, well so that supply chain issue you know, it's largely been resolved at this point, but we will we will ship that product that was impacted by it you know in the back half of this year and some of it will will obviously go into next year as well so it's.
Sliding into a part of it will be sliding into 24.
Okay, and you were able to maintain it just just push it out there wasn't any loss chair or anything like that.
Related to that it was just purely a timing issue.
Okay, Great and then D. N M. You talk about project orders I, usually think of that as transportation I Wonder. If you. Just you know maybe provide a few more details of infrastructure related to this you know big city projects that are in the final.
Yeah, you know when when we talk about projects visa to areas that are the most prevalent one is transportation, which we have just seen very.
Very healthy demand for this year, but also you know looking ahead over the next couple of years I would say that's the one area in our business that we do believe the infrastructure Bill has made a a change in behavior. We are seen just a lot more activity. There. So I'd I'd say, that's a real positive.
The other projects are we typically see as in our contact business and those have been steady we've had a lot of wins in 22 23 looking into 24, we feel very good so yeah over all the project volume now I'd say these two or three years.
Have been among the strongest love scene in eight years and I do think we've expanded our portfolio of what we're offering and it's just nice to see.
Okay, great. Okay. Thanks much.
Okay.
Our next question comes from Damian Torres from U B S.
Hey, good evening, Jean Mark Paul.
Hey day, Ma'am Bye then.
Who would have thought in just a few quarter he would take us from.
Basically need in 150 basis point of margin expansion after that here they get to the 20 $25 to be in there today, so very well played.
Thank you I appreciate it.
Yeah, Yeah, So Jean I'm curious I mean.
Do you think with a backlog that you've got.
Today, plus the continued demand strength you sang would.
Would you say that you know it's lining upset that you've already got visibility into organic sales growth again in 2024.
Yeah, what I would say is you know we feel good about what we're singing and you know, it's probably premature to give 24 guidance, but what I would say in his his you know mark alluded to our orders are backlogs.
Project's.
You know you look at you know really HVAD cooling as the big portion of H back.
You know had a great <unk>, great shipping quote or two and backlogs went up again, I mean, and and there's even more opportunities. So what I would say is on the cooling side.
We feel good about the opportunity over the next couple of years it really.
We we feel like there's a very attractive opportunity there and on the heating side I think we're back to more normal uhm on the Hydronics on the boilers and then an electric heat I would expect growth. There you know due to all the the.
The growth drivers that that that are out there that are very attractive.
And then what I would say on the Dnm, we have like we've talked about over the past couple of quarters projects had been strong we still see that holding strong and we'll keep our eye on the run rate. If there were to be a recession. The first place we would see it would be in the run rate in our D. N M. In particular, if you talk to.
That radio detection. So we're not seeing that now, but you know where I <unk> today I feel.
I like what I'm seeing the end markets as we go into 2024.
Good to hear thanks for that color.
And I'm curious, how we should be thinking about the seasonal shaping for the H Faq.
Business going for that historically, you know the fourth quarter was always a strong margin corridor I think kind of do the <unk> the boiler seasonality, but as cooling more or less you know kind of is it at parity with eating at this point and just with some of the new acquisitions.
What's that what's that seasonality look like for a track.
Yeah, I think Damien will still be somewhat more seasonal towards the fourth quarter because will continue to have that an act of the heating demand in the fourth quarter. So for example, when you look at the the shaping of the quarters for this year, we would still expect fourth quarter to be the largest.
But you do bring up a good point that your your blend is a little bit different and I think you you guys have all seen the rough numbers on the acquisitions aspect was about on a run rate basis around $120 million. If you kind of run rate of Jasper or distributed evenly across quarters, it's probably not really.
At this point and Timko is more than $50 million and you want anything for the moment doing the same thing there would probably makes sense. So the you know you're gonna have puts and takes their with with respect to the margin performance those businesses quarter to quarter, but I think you're still looking at Ah the seasonally stronger for too.
And cooling typically highest in queue for as well that's been a lot of work it's scheduled.
Okay, great and.
And then maybe if I could just ask you about.
You know you're acquisitions this year.
How is the deal integration gone you know have you learned anything new that you didn't necessarily know kind of going into those.
Deals and how are how the business has been performing thus far in the current environment.
Yeah, Damon I would say, it's early but what I would say both are on track to their deal models <unk> you know the the Tampa co one is it.
<unk> I.
I would say an easier integration in the sense that that's being plugged right into our engineered air movement, we have.
It feels like that's already integrated and there's really.
A lot of progress being made there, whereas D. As pack as we've talked about were taking two electric heat business is too great businesses, and we're really putting those together and that's a little bit more complicated take some time, but what I would say is nothing's changed in our.
You were actually very very positive about both of them and frankly, if you think about the M&A side of where the opportunities at.
We really like the continued opportunities to continue to build out our electric heat business, which has now become quite scale very large very impactful for us as well as our engineered air movement, which also has become very impactful for us. So so yeah I think early days.
The results are positive, but still a lot of work ahead of us in a lot of wood shop.
Understood. Thanks, a lot guys best of luck.
<unk>.
I'm showing no further questions at this time I would like to turn the conference back to Paul quite for closing remarks.
Thank you all for joining us on the call today, and we look forward to updating you over the next <unk> did you.
Investor visits and a conferences take care.
This concludes today's conference call. Thank you for participating in May now disconnect.
Mmm Mmm mmm.
[music].