Q1 2024 Quanta Services Inc Earnings Call
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It is now my pleasure to introduce your host Kip Rupp.
Vice President Investor Relations. Thank you you may begin.
Thank you and welcome everyone to the Quanta services first quarter 2024 earnings Conference call. This morning, we issued a press release announcing our first quarter of 2024 results, which can be found in the Investor Relations section of our website at Quanta services Dot com.
As highlighted in our earnings release. This morning, we've recently updated our earnings call format and supplemental materials. Shortly after the release of our financial results. This morning, we posted our first quarter 2020 for operational and financial commentary and our 2024 outlook expectation summary on Qantas Investor Relations website.
Management will make brief introductory remarks during this morning's call the operational and financial commentaries intended to largely replace management's prepared remarks, allowing additional time for questions from the institutional investment community.
Additionally, we no longer have a slide presentation to accompany this call is the information that has historically been included in the presentation.
That would be found in our operational and financial commentary.
Please remember that information reported on this call speaks only as of today May <unk> 2024, and therefore, you're advised that any time sensitive information may no longer be accurate as of any replay of this call.
This call will include forward looking statements intended to qualify under the safe Harbor from liability established by the private Securities Litigation Reform Act of 1995.
Including all statements, reflecting expectations intentions assumptions or beliefs about future events or performance or that do not solely relate to historical or current facts.
You should not place undue reliance on these statements as they involve certain risks uncertainties and assumptions that are difficult to predict or beyond clients control and actual results may differ materially from those expressed or implied.
We will also present certain historical and forecasted non-GAAP financial measures reconciliations of these financial measures to their most directly comparable GAAP financial measures are included in our earnings release and operational and financial commentary. Please refer to these documents for additional information regarding our forward looking statements and non-GAAP financial measure.
Yeah.
Lastly, if you would like to be notified when quanta publishes news releases and other information. Please sign up for email alerts through the Investor Relations section of Quanta Services' Dot com.
Also encourage investors and others interested in our company to follow Quanta, IR and Quanta services on the social media channels.
It on our website.
With that I'd like to now turn the call over to Mr. Duke Austin, Qantas, President and CEO Duke.
Thanks, Good morning, everyone and welcome to the Quanta services first quarter of 'twenty 'twenty four earnings Conference call. This morning, we reported our first quarter 2024 results, which included double digit growth in revenue adjusted EBITDA and adjusted earnings per share and strong cash flows demonstrating an overall good start to the year.
Total backlog at quarter end was $29 9 billion, which was which we believe reflects the value of our collaborative client relationships and evidences the momentum we see for 'twenty 'twenty four.
Utilities across United States are experiencing in forecasting meaningful increases in power demand for the first time in many years driven by the adoption of new technologies and related infrastructure, including artificial intelligence and data centers as well as federal and state policies.
Designed to accelerate the energy transition and policies intended to strategically reinforce domestic manufacturing and supply chain resources.
With the complexities of the power grid and the significant upgrades and enhancements required to facilitate low group a collaborative solution based approach is valued by our clients more than ever.
We continue to look forward to the realization of our multi year strategic initiatives.
And the goals, we expect to achieve in this in the coming years.
We are positioning quanta for decades of expected necessary infrastructure investments.
And believe our service line diversity creates platforms for growth, but expand our total addressable market.
Our portfolio approach and focus on cross skill labor is strategic.
<unk> advantage that we believe provides us the ability to manage risk and ship resources across service lines and geographies.
This is increasingly important as the energy transition accelerates.
We believe our diversity and portfolio approach has also improved our cash flow profile and positions us well to allocate resources to the opportunities we see.
Find most economically attractive and to achieve operating efficiencies and consistent financial results.
I will now turn the call over to Jason who decide on our CFO to provide a few remarks about our results and 2024 guidance and then we will take questions. Thanks fishery.
Thanks, Dave and good morning, everyone. This morning, we reported first quarter revenues of $5 billion net income attributable to common stock of $118 $4 million for 79 cents per diluted share and adjusted diluted earnings per share of $1 41.
Adjusted EBITDA was $387 $3 million or seven 7% of revenue.
Of note, we generated healthy cash flows in the first quarter with cash flow from operations of $238 million and free cash flow of 181 $2 million, So setting first quarter records.
This earnings and cash flow performance allowed us to end the first quarter with ample liquidity and a balance sheet that supports both our organic growth expectation and the opportunistic deployment of capital to generate incremental returns for our stockholders.
To that end year to date, we've acquired four companies for aggregate consideration of approximately $500 million.
This morning, we also provided an update to our full year 2020 financial expectation, which calls for another year of profitable growth with record revenue and opportunity for double digit claim that they can trust EBITDA adjusted earnings per share and free cash flow.
We believe our expectations demonstrate the strength of our portfolio purchases or isn't it.
Fitment to our long term strategy favorable end market trends and our competitive position in the marketplace.
Additional details and commentary about our 2024 financial guidance can be found in our operational and financial commentary and outlook expectation summary, both of which are posted on our IR website with that we're happy to answer your questions operator.
Yeah.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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In the interest of time, we ask that you. Please limit to one question and one follow up and re queue as time allows.
One moment, please while we poll for questions.
Thank you. Our first question comes from the line of Jamie Cook with Credit Suisse. Please proceed with your question Hi.
Hi, good morning, and congrats on the quarter I guess, just two questions one shorter term one longer term.
Could you just talk a little bit about.
The renewable margins I think they fell a little short relative to expectations and how you know any color I guess behind that and then I guess the second question would be.
For Duke.
Just a longer term question, obviously lots of.
Talk throughout the past couple of months on AI data centers et cetera.
Just talk to you just because you're so close with and how that impacts I guess grid load growth. If you could just talk to what youre hearing from your customers in terms of how they're going to approach. This how you think about capex trends.
Accelerating just just any color on how quanta would be positioned there. Thank you.
Thanks, Jamie welcome back.
I'll take that margin question.
I think from our standpoint, when we look at the segment the renewable segment.
We had some series of projects there that.
Series of work call it 5% of the portfolio on the on the solar wind side that just didn't perform didn't execute where we should have executed that and what we expect from ourselves and what our customers expect so.
Yes.
A small piece, where we believe the big things that can make tons of excuses or not we own it.
We didn't execute like we should in the rest of the portfolio.
It really is the majority the vast majority of the job. The project. So if everything were doing there is exceeding expectations, we expect that to continue.
Growth growth creates some inefficiencies and we showed up so we've got to fix it and it's not something that its later stage in the projects and so I am not concerned it's just part of the first quarter.
Seasonality and everything else a little bit of noise shows up but all in all I think the segments performing nicely, what we see in the future looks great.
Backlog is certainly excel.
Accelerating in the renewable segment. So we're excited about what we see going forward we are executing.
For how many people we put in the field and what we've added to this segment I feel real good about it do you invest in growth.
Some inefficiencies as you move forward and showed up.
I think all in all we like what we see as far as data centers I think the macro demand.
Electricity is obviously moving up anytime you have demand.
It's great for the business is great for our customers.
If you go back you roll it back call. It nine months ago, maybe some data center demand, but nothing like we saw show up in January February March.
The court caught me off guard, a little bit to see the amount.
You are talking one customers talking 100 gigs so when you start talking about one.
Customer with 100 gigs.
It's just it's mind blowing in my mind to think about the amount of electricity necessary.
Primarily wanting renewables so both sides of the business, both DMD and our renewable business stand to gain quite a bit and our customers as well, but it's not easy from a rate base, it's not easy to deal with those kinds of things showing up at your doorstep.
When you're trying to plan for 30 years.
No doubt a huge power plant and its gone in one day.
So I think from the planning piece of the business is difficult.
It is certainly showing up it certainly pressing us our customers.
Everyone to plan better and cheaper.
Longer term, we're trying to put a four decade, three decade type build and 90 day windows It doesn't work.
It's a very long term build here I think the company set right in the middle of it I like where we sit from the ancillary piece of data centers like we were talking to.
<unk>, we're talking to all of them about how we can help benefit and collaborate with our clients and.
To get the power sources.
Certainly in demand and it's a unique time.
It's exciting we are excited about it we're excited to work with their clients and they expect a lot of us, we just need to deliver and execute.
It.
If you go back you roll it back call. It nine months ago, We gave some data center demand, but nothing like we saw show up in January February March.
Okay. Thank you I'll get back in queue.
They got caught me off guard, a little bit to see the amount youre.
Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed with your question Hey, Good morning, everyone.
Talking one customers talking 100 gigs so when you start talking about one customer with one <unk>.
Alright.
<unk> history can you give us a little more color into electric power and what happened in the quarter and going forward revenue was down just a little bit the margin was quite a bit higher than your forecasts and I think quite good for a seasonally weak Q1, you didn't change your expectation for the second for the year, but maybe you could talk about your confidence that distribution focus revenue does improve and the SEC.
<unk> gigs.
Speaker Change: It's mind blowing in my mind to think about the amount of electricity necessary and primarily wanting renewables. So both sides of the business both T&D in our renewable business.
Speaker Change: Stand to gain quite a bit and our customers as well, but it's not easy from a rate base, it's not easy to deal with those kind of things showing up at your doorstep.
Half and does the higher margin Q1 signaled potential for margin upside in the segment.
Sure. So a little bit I think this is something we've talked about the portfolio and combined electric power and renewables together and so I wanted to go through that a little bit.
Speaker Change: When you are trying to plan for 30 years and build out to do.
Speaker Change: <unk> power plant and its gone in one day.
Speaker Change: So I think from the planning piece of the business is difficult. It is certainly showing up it certainly pressing us our customers.
If you look at the electric business, which is transmission substation and distribution.
And you look across the segments. So the segments are delineated today, which is causing some.
Speaker Change: Everyone to plan better and to think longer term, we're trying to put a four decade, three decade type build and 90 day windows It doesn't work.
When you print the numbers it doesn't look like what the business is from those three things so and electric work type.
Speaker Change: It's a very long term bill here I think the company set right in the middle of it I like where we sit from the ancillary piece of data centers. Unlike we're talking to hyper scaler, we're talking to all of them about how we can help benefit and collaborate with our clients and noon.
It's up over 5% in the quarter.
That's because.
Pieces of the business is over and renewable segment pieces of it are in the electric segment, but the business itself together is up five 3%.
So it's just the way the segments <unk> got to combine them. It's got it looks like a portfolio of the delineations are causing some number of print it doesn't look.
Speaker Change: And to get power sources.
Speaker Change: Certainly in demand, it's a unique time.
Speaker Change: It's exciting and we're excited about it we're excited to work with their clients and they expect a lot of us, we just need to deliver and execute.
Like with where the business is that so I wanted to explain work type, which is electric substation distribution.
Speaker Change: Okay. Thank you I'll get back in queue.
And transmission are up five 3% in the quarter and our backlog is almost flat.
Speaker Change: Our next question comes from the line of Andy Kaplowitz with Citi. Please proceed with your question Hey, Good morning, everyone.
Yes.
I think the backlog of the business and what we see.
Speaker Change: Alright.
This timing is MSA timing as early as the first quarter, we fully expect to be a record record levels.
Andrew Alec Kaplowitz: Duke can you give us a little more color into electric power and this is what happened in the quarter and going forward revenue was as you can.
The bigger projects of renewable products are complicated can take a long time to negotiate the amount that we're not going to press negotiations against.
Andrew Alec Kaplowitz: Down just a little bit the margin was quite a bit higher than your forecasts and I think quite good for seasonally weak Q1, you didn't change your expectation for the segment for the year, but maybe you could talk about your confidence that distribution focus revenue does improve in the second half and as the higher margin Q1, similar potential for margin upside in this segment.
A 90 day print this doesn't make sense for us we'll be patient we're not concern. We see now we were just talking about load growth anytime you got more load you've got more business. It's simple.
Speaker Change: Sure. So a little bit I think this is something we've talked about the portfolio and combined electric power and renewables together and so I wanted to go through that a little bit.
When you think about it so more demand more business.
Do you see more demand than we've ever seen and so I just I feel good about it as far as margins.
Speaker Change: If you look at the electric business, which is transmission substation and distribution and.
The electric plant, we operated great even in the down. So we've always said that you can operate in double digits. It doesn't matter what the revenue is that's what we're really trying to drive that EPS in those margins.
Speaker Change: And you look across the segments. So the segments are delineated.
Speaker Change: <unk>, which is causing some.
In that segment, but we had a nice nice performed well in this segment and we will go and I think there is opportunity.
Speaker Change: When you print the numbers it doesn't look like what the business is from those three things so electric work type.
Speaker Change: It's up over 5% in the quarter.
We it's early we're not going to change guidance 90 days so.
Speaker Change: That's because.
Speaker Change: Pieces of the business is over and renewable segment and a pieces of it are in the electric segment, but the business itself together is up five 3%.
It looks good.
We have lots of opportunities I would say, we have more upside than we do downside.
<unk>.
That's very helpful and maybe just a follow up on your commentary last quarter, you mentioned sort of the better visibility around the large transmission projects you just talked about Msas and answering my question. So just the conviction level in sort of the backlog increase again I know it doesn't happen in the quarter happens over the year, but is it more base business, you think that grows or larger project.
Speaker Change: So it just the way the segments look you've got to combine that Scott it looks like the portfolio. The delineations are causing some number of print that doesn't look.
Speaker Change: Like with where the business is that so what I wanted to explain work tight which is electric substation distribution.
Speaker Change: And transmission.
Business.
Speaker Change: Our up five 3% in the quarter and our backlog is almost flat.
And 24 is it both.
I think the back half of 'twenty, four or your distribution business starts to starts to become increasingly well I.
Scott: Yes, I think the backlog of the business and what we see.
Scott: This timing Theres MSA timing as early as the first quarter, we fully expect to be at record record levels.
I would say you'd start booking more where it can start to see your msas your crew counts move up again.
There is some.
Speaker Change: The bigger projects of renewable or complicated it takes a long time to negotiate the amount that we're not going to press negotiations against.
Shifts in the transmission versus.
<unk> distribution in certain areas the south east.
Places where.
Speaker Change: A 90 day print it just doesn't make sense for us. So we'll be patient we're not concern. We see now we were just talking about load growth anytime you've got more load you've got more business. It's simple.
What's happening is you're seeing that doesn't show up you're seeing the demand show up on the transmission side and you you've already got your capital out.
If your utility customers. So you have to build the transmission youre going to pull capital off the distribution systems, a bit and move it into the transmission systems.
Speaker Change: When you think about it so more demand more business.
Speaker Change: When you see more demand than we've ever seen and so I just I feel good about it as far as margins.
It's fine.
That's why we're diversified that's why the company sits where it says we're able to be nimble and move it is not an issue.
Speaker Change: The electric.
Speaker Change: Operator, great even in the down so we've always said that you can operate in double digits. It doesn't matter what the revenue is that's what we're really trying to drive is that EPS and those margins. So in that segment, probably had a nice nice performed well in this segment and by quarter will go and I think there is opportunity.
It does show up in your in your MSA work on the distribution side and.
Softer than normal.
And that's we talked about that in the fourth quarter, where were marking 40 50 hours versus 70, I think that's still the case I do believe as you move into the later part of the year.
Speaker Change: We it's early we're not going to change guidance 90 days so.
Youre going to start seeing us.
We're more inclined to say more 60 70 hour weeks in our head count is still almost 54000, which is up 4000 year over year.
Speaker Change: It looks good.
Speaker Change: We have lots of opportunity and I would say, we have more upside than we do downside on a go forward basis.
Speaker Change: It's very helpful and maybe just a follow up on your commentary last quarter, you mentioned sort of the better visibility around large transmission projects you just talked about msas and answering my question. So just the conviction level in sort of the backlog increase again I know it doesn't happen in a quarter happens over the year, but is it more base business do you think that gorilla or larger project.
So highly confident that.
As <unk> starts to penetrate to the Wes that's moving up already and the E b kind of moves across this.
We've got to build infrastructure and certainly we see it showing up in certain areas.
Helpful color. Thanks chip.
Speaker Change: Business.
Speaker Change: And 24 is it both.
And our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.
Speaker Change: I think the back half of 'twenty for your distribution business starts to starts to become increasingly well.
Yes, good morning.
Speaker Change: I'd say you'd start booking more where it can start to see your msas your crew counts move up again.
Morning, Duke and team I wanted to take a few moments to talk about some of the M&A activity in the quarter. Both there was an active quarter from.
Speaker Change: You know there is some shift in the transmission.
Bolt on acquisitions.
Acquisitions and also some divestitures so talk to us a little bit about what excites you about what you added to your portfolio and how does this all fit into the strategy.
Speaker Change: Versus distribution in certain areas of South east.
Speaker Change: Places where.
Speaker Change: What's happening is you're seeing data center show up you're seeing the demand show up on the transmission side and you've already got your capital out.
We acquired stream in Raleigh, which ones.
Blocks and coolers.
Speaker Change: If your utility customers do you have to build the transmission youre going to pull capital off the distribution system, a bit and move it into the transmission systems.
If you are in the business and the crops grew up with chairman row as part of that ecosystem.
Slide 27.
It's something that I think from our standpoint, all of our people in the field.
Speaker Change: It's fine.
Speaker Change: Why were diversify that's why the company sits where it sits we're able to be nimble and move it is not an issue, but it does show up in your in your MSA work on the distribution side, it's softer than normal.
They deserve the product safe the training that they have what they do with the pillars and pensioners in the things that they have the R&D as they put it into a coupled with what we're trying to accomplish it was compelling for us there's a lot of wire talked about being cool new things.
Speaker Change: And that's we talked about that in the fourth quarter, where were working 40 50 hours versus 70, I think that's still the case I do believe as you move into the later part of the year.
Doctors out Theres lots of technology that we believe we can bring to market here.
Speaker Change: Youre going to start seeing us we're more inclined to say more 60 70 hour weeks in our head count is still almost 54000, which is up 4000 year over year I feel highly confident that.
And lastly, our.
Concern with your capacity.
As concerns on supply chain capacity.
It was.
It's something that I believe is very specialized.
Speaker Change: S E V starts to penetrate to the Wes that's moving up already and the EV kind of moves across there as well.
Needs to be safe, we need to protect our people a bit and make sure. It's in good hands and a lot of our clients use the pillars as well in their internal resources.
Speaker Change: We've got to build infrastructure and certainly we see it showing up in certain areas.
It's certainly something that we value and real proud to have that piece of business as far as the divestiture.
Speaker Change: Helpful color. Thanks chip.
Speaker Change: Okay.
The divestiture was basically Oh.
Speaker Change: And our next question comes from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.
Oil and gas legacy business that we've had some.
Probably 2015 or before.
Neil Singhvi Mehta: Yes, good morning.
Neil Singhvi Mehta: Duke and team I wanted to just take a few moments to talk about some of the M&A activity in the quarter, both as an active quarter from them.
And certainly something that we've looked at it for a long time to say this is not something that we're going to investment is better off in other people's hands.
Neil Singhvi Mehta: Bolt on.
Neil Singhvi Mehta: Acquisitions and also some of the divestitures, so talk to us a little bit about what excites you about what you added to your portfolio and how does this all fit into the strategy.
International companies.
The company made the decision not to go into international not to go international at this point so.
That need to be divested in someone's it'll be great management teams capacity.
Neil Singhvi Mehta: We reacquired chairman Raleigh, which was.
We'll be happy with them.
Neil Singhvi Mehta: Blocks and pillars.
Neil Singhvi Mehta: You're in the business and the crops you grew up with turnaround as part of the ecosystem.
Thanks, Duke and as a follow up is just on the Sun via project, obviously, it's a very important.
Neil Singhvi Mehta: Business is 19 to 27.
Project for the company just give us the latest temperature.
Neil Singhvi Mehta: Something that I think from our standpoint, all of our people in the field.
Our latest progress report, there and anything we should be watching out for whether it's.
Neil Singhvi Mehta: They deserve the product the safe the training that they have what they do with the pillars and pensioners in the things that they have the R&D as they put in and Intuit coupled with what we're trying to accomplish it was compelling for us there's a lot of wire talked about being pulled theirs.
Some of the litigation stuff or just in terms of managing through.
Execution challenges inevitably happen with big projects.
Somebody is doing great.
Doing well.
I had a great plan, we put it together.
Neil Singhvi Mehta: Conductors out Theres lots of technology that we believe we can bring to market here.
Oh, I see good things coming out of that we're progressing nicely.
No issues on permanent I don't think there would be but there's no issues there.
Neil Singhvi Mehta: And lastly, I concerned with your capacity.
Big long line.
Neil Singhvi Mehta: These concerns on supply chain capacity.
It could be noisy here or there but.
Speaker Change: It was.
Im not seeing anything on that but really good production and safety is great.
Speaker Change: It's something that I believe is very specialized.
Speaker Change: Needs to be safe, we need to protect our people a bit and make sure. It's in good hands and a lot of our clients use the pillars as well in our internal resources.
And in hand, with the clients. So I continue to like that project, where we're early in.
Opportunities too.
These contingencies as we go through it so I really believe that it's going to be nice absolutely wish I was running so slow months.
Speaker Change: It's certainly something that we value and real proud to have that piece of business as far as the divestiture.
Speaker Change: This divesture was basically.
Thank you Sir.
Speaker Change: Oil and gas legacy business that we've had some.
Speaker Change: Probably 2015 or before.
And our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.
Speaker Change: And certainly something that we've looked at it for a long time to say this is not something that we're going to invest and it's better off in other people's hands.
Yes. Thanks, good morning, just continuing the conversation on the load growth to some discussion around data centers.
Speaker Change: International.
Speaker Change: The company has made the decision not to go into international not to go international at this point so.
We've seen some pretty eye popping estimates in terms of what that May mean, you alluded to some of that earlier in your comments just curious how youre thinking about the industry's capacity to meet some of these demands and what that might mean ultimately for your pricing and margins.
Speaker Change: That need to be divested and someone will do great management teams fantastic good.
Speaker Change: We'll be happy with them.
Speaker Change: Thanks, Duke and then follow up is just on the Sun via project, obviously, it's a very important.
Again, its more utilization returns us when you start looking at our pricing when.
Speaker Change: Project for the company just give us the latest temperature.
Speaker Change: Our latest progress report, there and anything we should be watching out for whether it's.
When we think about it we need to execute execute and double digit platforms that we've talked about over time.
Speaker Change: Some of the litigation stuff or just in terms of managing through.
I think it's more of that than it is.
Speaker Change: Execution challenges inevitably happen with big projects.
You know some kind of pricing pressure.
But I do think.
Speaker Change: Somebody is doing great.
What we see is it's so unique.
Speaker Change: Doing well.
Speaker Change: <unk> had a great plan, we put it together.
In fact really really wanted to know they've got money they want to pay for it. It just regulatory the how do you set rates that are fair for everyone else.
Speaker Change: Oh, I see good things coming out of that we're progressing nicely.
Speaker Change: No issues on permanent I don't think there would be but there's no issues there.
Speaker Change: Big long line.
It's starting to get you can see it starting to get figure it out across the country of how to accommodate loads loads that we're seeing but it's not going to happen overnight.
Speaker Change: It could be noisy here or there but.
Speaker Change: Not seeing anything on that but really good production and safety is great.
Speaker Change: And in hand, with the client so I continue to like that project.
If you want renewable resources as well as another complication when you started to talk about it.
Speaker Change: Opportunities too.
Speaker Change: At least contingencies as we go through it so I really believe that it's going to be nicer actually was always running it. So it's a fun one.
We were already fuel switching our fuel switching and doubling mode in 90 days.
It seems like but in general I would say that load is real it's coming and people are paying for it.
Speaker Change: Thank you Sir.
Speaker Change: And our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.
Creates demand across renewables and.
Electric segment, where you need a robust grid.
Brian Daniel Brophy: Yes. Thanks, good morning, just continuing the conversation on the load growth to some discussion around data centers.
The cheapest one of generations transmission noise will be so I like where we sit in we can help it.
Brian Daniel Brophy: We've seen some pretty eye popping estimates in terms of what that May mean, you alluded to some of that earlier in your comments just curious how youre thinking about the industry's capacity to meet some of these demands and what that might mean ultimately for your pricing and margins.
Certainly we talk about our solution based approach, but theres ever been a solution based approach.
Where it will be within.
This because it's it's complicated on how to get it.
Renewables to load sources.
Are you seeing.
Power plant nuclear power plants get bought really what the whole powertrain going towards Donaldson. So.
Brian Daniel Brophy: Again, its more utilization returns us when you start looking at our pricing when.
Brian Daniel Brophy: When we think about it we need to execute execute and double digit platforms that we've talked about over time and I think it's more of that than it is.
I never thought we would see that in my lifetime and now we're seeing it show up in.
It's creating some unique.
Circumstances across the country and it's not only in Virginia. It's across every single customer we have that the three megs or Meg show up.
Brian Daniel Brophy: Some kind of pricing pressure.
Speaker Change: But I do think.
Speaker Change: What we see is it's so unique.
Speaker Change: <unk> really really wants it now they've got money they want to pay for it.
It's tomorrow, they want tomorrow and they wanted to renewable state.
Speaker Change: It's just regulatory the how do you set rates that are fair for everyone else in that.
So I like it I like where we sit we can certainly help we can certainly sit on both sides of that.
Speaker Change: It's starting to get you can see it starting to get figured it out across the country of how to accommodate loads loads that we're seeing but it's not going to happen overnight.
I like what we can accomplish just got to plan more planning better both on distribution and transmission.
Collaborate with the client the better we serve the customer in a better or something else.
Speaker Change: If you want renewable resources as well, it's another complication when you start to talk about it.
That's great. Thanks, and I guess, one other one I think the Doe announced some permitting reform.
Speaker Change: We were already fuel switch in our fuel switching in Dublin load.
Some grid capacity transmission lines streamlining some of the environmental reviews here a few days ago curious how impactful you think that might be.
Speaker Change: In 90 days.
Speaker Change: It seems like but in general I would say that load is real it's coming and people are paying for it it creates demand across renewables and.
This incrementally helpful.
Especially out west, but still states state policies state regulations Puc's commissions.
Speaker Change: Our electric segment, where you need a robust grid.
Speaker Change: The cheapest form of generation transmission noise.
Speaker Change: It always will be so I like where we sit and we can help we certainly we talk about our solution based approach if there's ever been a solution based approach that it's going to work it will be within.
We've got to get our head around the fact that load is significantly higher and we've got an investment grade.
We're late already or behind I believe and so we need to catch up and we need to make sure that this.
Speaker Change: This because it's it's complicated on how to get.
Transition doesn't.
Speaker Change: Renewables to load sources and Youre seeing.
Okay sitting on a chocolate and trying to imagine.
Got to invest in infrastructure, but more modern infrastructure is rates go down on an NPV basis. When you look on a go forward.
Speaker Change: Power plant nuclear power plants get bought really what the whole power plant going towards data centers. So.
Go forward so.
Speaker Change:
Speaker Change: We never thought we would see that in my lifetime and now we're seeing it show up in.
Investment now pays off for the next.
Generation. So if you do sub debt investment.
Speaker Change: This is creating some unique.
That's that's the case today and when you would be doing.
Speaker Change: Circumstances across the country and it's not only in Virginia. It's across every single customer we have that the three megs or Meg show up.
That's great. Thanks, I'll pass it on.
Our next question comes from the line of Marc Bianchi with <unk>.
Speaker Change: It's tomorrow, they want tomorrow and they wanted to renewable state.
TD Cowen. Please proceed with your question.
Hi, Thanks.
Speaker Change: I like it I like where we sit we can certainly help we can certainly sit on both sides of that.
First one I wanted to ask was on.
Related to this load growth outlook with the data center stuff that everybody has been talking about.
Speaker Change: Yes.
Speaker Change: I like what we can accomplish he's got to plan more planned butter.
What role do you see for for gas fired generation.
Speaker Change: On distribution and on transmission.
Speaker Change: Collaborate with the client the better we serve the customer in a better or something else with it.
And how is your business exposed to that if perhaps some of that occurs behind the meter at the customer site.
Speaker Change: That's great. Thanks, and I guess, one other one I think the Doe announced some permitting reform.
I mean, I do think gas generation is going to play a role and to some degree you're in this transition.
Speaker Change: Some grid capacity transmission lines streamlining some of the environmental reviews here a few days ago curious how impactful do you think that might be.
They still want renewables.
Renewables, you're going to have to balance load batteries aren't coming fast enough. So youre going to have to balance load natural gas.
Speaker Change: It's incrementally helpful.
Speaker Change: Especially out west.
The problem I see.
Speaker Change: Still.
Speaker Change: Dates state policy state regulations Puc's commissions.
While the gas fired is coming on in the play.
If you talk about a gig two gigs three gigs or gigs.
Speaker Change: We've got to get our head around the fact that load is.
Gas fired generation is still off 96 gigs.
Speaker Change: Higher and we've got an investment grade.
Speaker Change: We're late already or behind I believe and so we need to catch up and we need to make sure that this transition doesn't.
So you.
You can't build enough generation.
The generation for what we see but we see comments. So I do believe that you need to balance the load and it'll help batteries are coming along.
Speaker Change: But.
Speaker Change: Sitting on a chocolate trained can imagine you've got to invest in infrastructure. The more modern infrastructure is rates go down on an NPV basis. When you look on a go forward.
But I still if.
If you try to build a piece of pipe in this country.
To feed the natural gas system therein lies the problem.
Speaker Change: Go forward so.
Speaker Change: Investment now pays off for next Gen.
I hear I mean, I see it as well.
Speaker Change: Generation. So you just have to invest in it and I think that's that's the case today and we need to be done.
Gas fired generation plants being proposed I still don't know, how we're going to get the piece of pie to beat them.
Speaker Change: That's great. Thanks, I'll pass it on.
Yep Yep.
Okay. Thanks for that.
Speaker Change: Our next question comes from the line of Marc Bianchi with.
Sorry go ahead.
Marc Gregory Bianchi: TD Cowen. Please proceed with your question.
Right.
Marc Gregory Bianchi: Hey, thanks.
Okay. Thanks. The other question I had was on on the renewable margin progression. So if I look at where the second quarter as is discussed to be maybe just below 8% and then youre going to be double digits in the back half can you talk about what's driving the conviction in that that improvement and then also I.
Marc Gregory Bianchi: The first one I wanted to ask was on.
Marc Gregory Bianchi: Related to this load growth outlook with the data center stuff that everybody has been talking about what role do you see for for gas fired generation.
Marc Gregory Bianchi: And how is your business exposed to that if perhaps some of that occurs behind the meter at the customer site.
In the past you talked about some contingency release that wood.
Marc Gregory Bianchi: I mean, I do think gas generation is going to play a role and to some degree here in this transition.
Would come later on in the in the project timeline, I'm curious, where where you are with that in the back half of this year.
Marc Gregory Bianchi: They still want renewables.
Yeah. Thanks for the question, Yes, we are seeing that progression, we do believe that as these projects progress across.
Marc Gregory Bianchi: Renewables, you're going to have to balance load batteries aren't coming fast enough. So you're going to have to balance low natural gas.
Various risks contingencies will be able to release some of that in the back half.
Marc Gregory Bianchi: The problem I see it.
Marc Gregory Bianchi: While the gas fired is coming on in the play.
You got it.
Segment is more than just so when there's a lot of transmission substation work all of that is going to see a big acceleration. We believe in the back half and so that will fall in the margins and better cost absorption and contingency releases can be obtained.
Marc Gregory Bianchi:
Marc Gregory Bianchi: If you talk about a gig two gigs three gigs or gigs.
Marc Gregory Bianchi: Gas fired generation.
Marc Gregory Bianchi: Still off 96 gigs.
Marc Gregory Bianchi: So I cant build enough generation renewable generation for what we see but we see come in so I do believe that you need to balance the load and it'll help batteries are coming along.
And I do think the conviction.
As history and the history of both companies both segments, we operate in double digits well below that.
Marc Gregory Bianchi: But I still if you try to build a piece of pipe in this country.
The growth is pressing a bit.
We went through the jobs most of them when you talk about where we are.
Marc Gregory Bianchi: Feed the natural gas system therein lies the problem.
Some degradation of margins the degradation.
Marc Gregory Bianchi: I hear it I mean I see it at <unk>.
People in new roles and so some of that shows up and we've got to do a better job, making sure that we educate and train.
Marc Gregory Bianchi: Gas fired generation plants being proposed I still don't know, how we're going to get the pizza pie to beat them.
Our field leadership at times and so.
Speaker Change: Yep Yep, Okay. Thanks for that one.
That said, we went through the projects we feel good about 50 60.
Speaker Change: Yeah.
Speaker Change: Sorry go ahead.
Hi.
Renewable type jobs that are out there today and.
Speaker Change: Got it.
Speaker Change: Okay. Thanks. The other question I had was on on the renewable margin progression. So if I look at where the second quarter is as <unk> discussed to be maybe just below 8% and then youre going to be double digits in the back half can you talk about what's driving the conviction in that that improvement and then also I think in.
The bread and butter.
For us we're looking at it we're looking at backlog.
We see a nice runway decade runway here, so I really feel comfortable that we can invest in the right spots and at yours intact back with opportunities still in it and yes, we're not pleased with the quarter on a by any measures and I can promise you the leadership in the field not pleased.
Speaker Change: The past you talked about some contingency release that would.
Speaker Change: Would come later on in the in the project timeline, I'm curious, where where you are with that in the back half of this year.
So we expect a lot out of ourselves our customers expect of loans.
Even in the good times or running a pretty hard so we've made the necessary.
Speaker Change: Yeah. Thanks for the question Yeah, we are seeing that progression, we do believe that as these projects progress across.
Changes to make sure that not only that we perform at the double digit type level, but also the we don't we don't let it drag on or we don't it doesn't catch us by surprise or anything like that we see it and we saw this early and we've made some adjustments we won't be the operator.
Speaker Change: Various risks contingencies will be able to release some of that in the back half.
Speaker Change: You got it.
Speaker Change: Segment is more than just sell it when there's a lot of transmission substation work all of that is going to see a big acceleration. We believe in the back half and so that will fall in the margin does better cost absorption and contingency releases can be obtained.
Is it on a few projects.
We're talking 5% out of the whole thing and probably like I don't know that.
It was like $15 million or something like that and maybe.
Speaker Change: I do think the conviction.
Within the within the operations so.
Speaker Change: His history and the history of both companies both segments, we operate in double digits well below that.
And have opportunities to do operate through at a very very high level on the rest of them. So I feel really good about it I feel good about the year.
Speaker Change: The growth is pressing a bit weak.
Speaker Change: We went through the jobs most of when we talk about.
Next year, and the next and on and on.
Yes.
Speaker Change: You know some degradation of margins the degradation.
Great. Thanks, so much.
Yeah.
Speaker Change: People in new roles and so some of that shows up and we've got to do a better job, making sure that we educate and train.
Our next question comes from the line of Justin Hauke with Baird. Please proceed with your question.
Yeah. Thanks for the renewables margin progression is what I was going to ask about too and I think we've covered some of the thematic.
Speaker Change: Our field leadership at times and so.
Speaker Change: That said, we went through the projects we feel good about 50 60.
<unk> here, so I had a couple of numeric ones I guess first.
Speaker Change: Hi.
Speaker Change: Renewable type jobs that are out there today and.
On the M&A given that you know, there's a lot of moving pieces here.
Speaker Change: The bread and butter.
Speaker Change: So for US we're looking at it we're looking at backlog.
New additions and divestitures can you.
Speaker Change: We see a nice runway decade runway here, so I really feel comfortable that we can invest in the right spots and that yours intact in fact with opportunities still in it and yes, we're not pleased with the quarter on by any measures and I can promise you the leadership in the field not pleased.
Give us some context of what the net kind of revenue contribution from that is for the year in terms of your guidance and then also as the $500 million that you talked about is that inclusive of the proceeds from the divestitures you announced.
Yes, Hey, Duffy, so I'd say the revenue inorganic revenue contribution.
Speaker Change: So we expect a lot out of ourselves our customers expect a lot of unknowns.
From the deals we did in the second half of last year as well.
This year.
Speaker Change: Even in the good times or running a pretty hard so that we've.
It's around $500 million to $600 million I'd tell you the two recent acquisitions.
Speaker Change: We've made the necessary.
Speaker Change: Changes to make sure that not only that we perform at the double digit type level, but also that we don't we don't let it drag on or we don't it doesn't catch us by surprise or anything like that we see it and we saw this early and we made some adjustments we won't be the operator.
<unk> contribution there pretty much is offset by the divestiture of the oil and gas business. So we're still around 500, 600, and an EPS contribution of around 15 to 20 cents.
Okay great.
And net versus what you had before.
Speaker Change: He is on a few projects in.
Speaker Change: We're talking 5% out of the whole thing and probably like it.
Okay, and I guess, the second question again, sorry, its numeric one but we've covered some of the other grounds just.
Speaker Change: It was like $15 million or something like that is maybe.
Just on the other income line.
Speaker Change: Within the within the operations so.
25.
It seemed a little high.
Speaker Change: Have opportunities to do operate through at a very very high level on the rest of them. So I feel really good about it I feel good about the year.
Yes, what was that.
So that is.
The sale of an investment in a pipeline on the gain on that which we did adjust out of EBITDA and adjusted EPS. So that's the biggest factor in that $25 million. You also had some gains on our deferred comp that gets offset in SG&A. So the real impact is around that gain around the pipeline.
Speaker Change: Next year, and the next and on and on.
Speaker Change: Great. Thanks, so much.
Speaker Change: Our next question comes from the line of Justin Hauke with Baird. Please proceed with your question.
Justin P. Hauke: Yeah. Thanks for that the renewables margin progression is what I was going to ask about too and I think we've covered some of the thematic questions. Here. So I had a couple of numeric ones I guess first just on the M&A given that you know there's a lot of moving pieces here.
And if we backed out.
Yeah.
Great. Okay. That's helpful. Thank you very much.
Our next question comes from the line of Gus Richard with Northland Capital. Please proceed with your question.
Justin P. Hauke: New additions and divestitures can you.
Yes, thanks for taking my question.
Justin P. Hauke: Give us some context of what the net kind of revenue contribution from from that is for the year in terms of your guidance and then also as the $500 million that you talked about is that inclusive of the proceeds from the divestitures you announced.
Okay.
When I think about the data centers.
Typically chip companies.
On their roadmap until they hit a wall typically it's.
Scale of infrastructure or a power constrained in the chip.
Speaker Change: Yes, Hey, Jesse so I'd say the revenue inorganic revenue contribution.
And AI is about to have a huge shift from training, which is very power intensive to influence, which basically reduces the power consumption by 10% I've seen this over the last 30 years, where these guys change their minds like they changed their socks and I'm just.
Jesse: From the deals we did in the second half of last year as well as our announcements this year.
Jesse: Could you, maybe it's around $500 million to $600 million I'd tell you the two recent acquisitions.
Jesse: The revenue contribution there pretty much is offset by the divestiture of the oil and gas business. So we're still around 506 hundred and an EPS contribution of around 15 to 20.
Kind of wondering maybe I'm wrong, but if all of a sudden the low demand from AI.
Jesse: Yes.
Dropped significantly in these guys changed your plans what happens.
Speaker Change: Okay, great. So that's not changed.
Jesse: And net versus what you had before okay.
Speaker Change: Okay, and I guess, the second question again, sorry, its numeric one but we've covered some of the other grounds.
Hi, Matt.
We had a great business prior to the AI.
Hi, coming in.
Jesse: Just on the other income line it was 25 years.
We see fuel switching to CEB penetration, we see renewables.
Jesse: It seemed a little high.
Fuel switching from coal.
Speaker Change: Yeah, what was that.
This is additive.
Speaker Change: So that is you had we had the sale of an investment in our pipeline and the gain on that which we did adjust out of EBITDA and adjusted EPS. So that's the biggest factor in that $25 million. You also had some gains on our deferred comp that gets offset.
<unk>.
Look you can't you know 24 months out 36 months out today, if you say go.
So no one's going to go and that's why you're seeing exactly what you are seeing everyone, saying why are we going to build this infrastructure why are we going to build a generation.
Speaker Change: SG&A so the real impact is around that gain around the pipeline investment and if we backed out them.
Someone guarantees the loan.
So, yes, I agree with you.
Jesse: Yeah.
Speaker Change: Great. Okay. That's helpful. Thank you very much.
That's why every utility every customer we have is making sure that the other side is the party on the other side is signing up for load growth that's sustainable.
Jesse: Our next question comes from the line of Gus Richard with Northland Capital. Please proceed with your question.
Auguste Philip Richard: Yes, thanks for taking the question.
The investment.
You are if not the ratepayer pages.
Auguste Philip Richard: And when I think about the data centers.
That's sort of dilemma.
Auguste Philip Richard: Typically chip companies.
I agree with you that's why you're stalling again instead of going forward as fast as you can because everyone's got to get that right including tech.
Auguste Philip Richard: Run their roadmap until they hit a wall typically it's the scale of the infrastructure or a power constrained in the chip.
Okay got it thanks for that I appreciate it and then the second question I've got I've been reading about re conduction of.
Auguste Philip Richard: And AI is about to have a huge shift from training, which is very power intensive to influence, which basically reduces the power consumption by 10% I've seen this over the last 30 years, where these guys changed their minds like they changed their socks and I'm just kind of one.
Transmission lines is particularly in Europe, and I was wondering.
Is that a way to at least mitigate some of the construction on the grid and reduce the need for new routes is that something people are considering and sort of how would that impact your business.
Speaker Change: Wondering maybe I'm wrong, but if all of a sudden the low demand from AI.
Speaker Change: <unk> significantly and these guys changed your plans what happens.
Yes.
<unk>.
My career in the new high density wires. They run they run hard at work in certain areas its helpful.
Speaker Change: We had a great business prior to the AI coming in.
Speaker Change: We see fuel switching with EV penetration, we see renewables.
But what I would say is what makes it easier better youre still it's still a rebuild basically youre just in the corridor that.
Speaker Change: Fuel switching from coal.
Speaker Change: This is additive and.
Speaker Change: Look you can't you know 24 months out 36 months out today, if you say go.
Exist today. So yes, we can we can even do it in an energized state we're doing 250 miles.
Speaker Change: So no one's going to go.
<unk>.
While the one Todd and re conducting which is where specialized training. So it's certainly an advantage to the company in terms of R&D here.
Speaker Change: And that's why you're seeing exactly what you are seeing everyone's saying why are we going to build this infrastructure why are we going to build a generation.
Like the conductor, we certainly are installed plenty.
Speaker Change: Unless someone guarantees to load.
The other the high density conductor.
Speaker Change: So, yes, I agree with you.
Speaker Change: That's why every utility every customer we have is making sure that the other side is the party on the other side is signing up for load growth that's sustainable.
And we like it so I think in general yes. It makes sense technology will be a piece of this it will and when you look at.
<unk> and you look at everything we see from a power demand.
Speaker Change: The investment.
A piece of it but the onshoring of chips.
Speaker Change: Or if not the rate payer pages, I mean, that's sort of dilemma.
Amazon centers that are portfolio electric you can imagine all of the things that are drawn load right now and it's.
Speaker Change: I agree with you that's why you're stalling again instead of going forward as fast as you can because everyone's got to get that right including tech.
Come on we talked about data centers I don't know four years ago, instead of it would be a big push.
Speaker Change: Okay got it thanks for that I appreciate it.
Speaker Change: The second question I've got I've been reading about pre conduction of of transmission lines is particularly in Europe and I was wondering.
But we had no idea that AI would come in as well and I just think as you move forward.
If you haven't used auto pilot or it's at GBT try it that Didnt go anywhere that's fantastic all of it.
Speaker Change: Is that a way to at least mitigate some of the construction on the grid and reduce the need for new route is that something people are considering and sort of how would that impact your business.
It's great.
The country.
<unk> is moving that direction, it's certainly demands there.
And everything else, we do on any given day, even if you reduce power, it's kind of like appliances, where we're going to get.
Speaker Change: Yes.
Speaker Change: We've reconfigured.
Speaker Change: My career in the new high density wires. They run they run hard at work in certain areas its helpful.
Great things out of appliances, where we did for about 345 years and it helped us with logos negative load growth for a long time.
Speaker Change:
Speaker Change: But.
Speaker Change: What I would say is well it makes it easier better youre still still a rebuild basically youre just in the core doors that.
You had positive load growth throughout the country for the most part and.
Just in general and so now in Dallas shows up.
Speaker Change: <unk> exist today. So yes, we can we can even do it in an energized state we're doing 250 miles now energized.
It's more significant than anyone thought myself included.
Got it okay. Thanks, so much I appreciate it.
Speaker Change: While the one Todd and re conducting which is for specialized newly trained in it. So it's certainly an advantage to the company.
Uh huh.
Our next question comes from the line of Alex Rygiel with B Riley Securities. Please proceed with your question.
Speaker Change: Tons of R&D here, we'd like to conduct or we certainly are installed plenty.
Speaker Change: The high density conductor.
Thank you very nice quarter first question here cash flow in the quarter was very strong yet I don't believe you changed your full year guide are you incrementally more confident with the high end of your range now and has your views on how is your view on uses of free cash flow changed at all and I have a follow up.
Speaker Change: We like it so I think in general yes. It makes sense technology will be a piece of this it will and I look.
Speaker Change: Look it.
Speaker Change: Scenes and you look at everything we see from a power demand.
Speaker Change: A piece of it but the onshoring that sits.
Yeah, So free cash flow and I think just sitting here in the quarter. We did have a good free cash flow quarter pleased with that but it's early we think are trading given that our typical profile like the first half of the year tends to be cash flow neutral or slightly negative with notes and a free cash flow coming in in the fourth quarter, We still think that's where we need to sit.
Speaker Change: Yes.
Speaker Change: You know Amazon centers that are portfolio electric.
Speaker Change: Can't imagine all of the things that are drawing load right now and it's in my mind, we talked about data centers I don't know four years ago instead, it would be a big push.
Speaker Change: But we had no idea that AI would come in as well.
Right now there is opportunity to be at the high end of that range, but I think the range, where we are today.
Speaker Change: I think as you move forward.
Where we see it.
Speaker Change: If you haven't used auto pilot or it's at GBT try it that Didnt go anywhere that's been Tastic all of it.
Alex to I would say the business so.
Set out to change some of the cash flow profiles of the business they've done a nice job.
Speaker Change: It's great and I think the country.
Return on invested capital when you look at our returns.
Speaker Change: It is moving that direction, it's certainly demands there and the jets and everything else. We do on any given day, even if you reduce power, it's kind of like appliances, we were going to get.
Way, we calculate them.
Certainly moving up.
In the business, even when the margins are a little softer the returns are fantastic.
Speaker Change: Great things out of appliances, where we did for about 345 years.
It's certainly generated in the first quarter typically we would be talking about was from test.
Speaker Change: Helped us with logos you had negative load growth for a long time, you have positive load growth throughout the country for the most part.
And we had growth in the business, we had growth in head count and free cash generation.
Speaker Change: Just in general and so now in Dallas shows up its.
I really like where we sit I know everyone's hesitant to say that the businesses fundamentally changed dsos fundamentally change I think they have.
Speaker Change: It's more significant than anyone thought and myself included.
Speaker Change: Got it okay. Thanks, so much I appreciate it.
No I think it gives us more flexibility we've always talked about.
Speaker Change: Uh huh.
Speaker Change: Our next question comes from the line of Alex Fragile with B Riley Securities. Please proceed with your question.
The free cash and how we deploy it.
Is something that.
We as the team have to make sure that we continue to deploy capital in a proper way that we have in the past degrade the outcomes that we have.
Alexander John Rygiel: Thank you very nice quarter first question here cash flow in the quarter was very strong yet I don't believe you changed your full year guide are you incrementally more confident with the high end of your range now and has your views on how is your view on uses of free cash flow changed at all and I have a follow up.
So I think our ability to look at M&A to look at buybacks, we'll look at everything that we do and be opportunistic certainly the free cash generation gives us more opportunity.
Speaker Change: Yeah, So free cash flow I think just sitting here in the quarter. We did have a good free cash flow quarter pleased with that but it's early we think are trading given that our typical profile at the first half of the year tends to be cash flow neutral or slightly negative with notes and a free cash flow coming in in the fourth quarter, We still think that's where we need to sit.
And then secondly, I don't think we've touched on telecom or industrial on the call here.
Notable movements there either in the quarter for the remainder of the year.
Remember north of environmental solutions provider sitting in really nicely, we like the synergies are picking up there on the industrial side. So like the business is performing well.
Speaker Change: Right now there is opportunity to be at the high end of that range, but I think the range, where we are today is where we should be.
We had a nice quarter of at parity to the electric segment, a little better and then we also added some backlog there are like the business long term certainly the data centers. The other part of the data center.
Speaker Change: Alex to I would say the business itself.
Speaker Change: We set out to change some of the cash flow profiles of the business they've done a nice job.
You're still going to have with fiber.
C fiber fiber data center to data center and they can't really say I want to go to this other that hub at this point because they are everywhere. So you can start building on our fiber to feed it at some point.
Speaker Change: Permanent turn on invested capital when you look at the returns.
Speaker Change: The way we calculate them.
Speaker Change: Certainly moving up.
Speaker Change: And the business, even when the margins are a little softer the returns are fantastic.
Thank you.
Sure.
Speaker Change: It's certainly generated in the first quarter typically we were talking about was free cash.
Our next question comes from the line of Sangeeta Jain with <unk>.
Speaker Change: And we had growth in the business, we had growth in head count and free cash generation.
Keybanc capital markets. Please proceed with your question.
Yes. Thanks, so much for taking my question I know, we've discussed datacenter dynamics a lot on this call, but I was just wondering do you. If there is a way for you to engage directly with data center companies, whether it's for substation build something behind the meter solutions something aside from your leverage to the grid.
Speaker Change: I really like where we sit I know everyone's hesitant to say that the businesses fundamentally changed the DSO has fundamentally changed I think they have.
Speaker Change: No I think it gives us more flexibility we've always talked about.
Speaker Change: Free cash and how we deploy it.
Speaker Change: Is something that.
Speaker Change: We as the team have to make sure that we continue to deploy capital in a proper way that we have in the past to create the outcomes that we have.
I mean, we talk to them all the time I do think there's opportunities to help them collaborate with them.
Okay.
We support our clients and our clients are talking to them as well so.
Speaker Change: So I think our ability to look at M&A to look at buybacks, we'll look at everything that we do and be opportunistic certainly the free cash generation gives us more opportunity.
It's something that we balance between.
The grid, what their demands are and try to help on both sides of that I do believe that as we move forward as you see the company move forward demand of tack on grid, and how they deploy where they deploy where they where they build what they build.
Speaker Change: And then secondly, I don't think we've touched on telecom or industrial on the call here any notable movements there either in the quarter for the remainder of the year.
Speaker Change:
Speaker Change: But without the environmental solutions provider sitting in really nicely, we realize the synergies we are picking up there on the industrial side. So like the business is performing well.
Certainly we wanted to be right in the middle of it and we wanted to sit with them and understand what they are trying to accomplish it allows us to facilitate it so.
Speaker Change: Tom I had a nice quarter about parity to the electric segment are a little better.
You know look it's something that the company.
We've talked to them a lot our PTT business. The transformer business is certainly something that.
Speaker Change: We also added some backlog there I like the business long term certainly the data centers. The other part of the data centers is still going to have to put fiber and.
They value a lot they want the transformer is they want to they want them.
Speaker Change: Fiber fiber data center to data center, and they can't really say I want to go to this other that hub at this point because they are everywhere, so you're going to start building on our fiber to feed it at some point.
And then one of them now so I think those things are.
Bode well for us and our ability to communicate and talk about power consumption with that is something that we can help our clients with.
Speaker Change: Thank you.
And yourselves.
Speaker Change: Sure.
Great and if I can follow up with one on Msas is there anything particularly different this time around on MSA timing than in past years, that's causing this exceptionally slow start to the year.
Speaker Change: Our next question comes from the line of Sangeeta Jain with.
Sangita Jain: Keybanc capital markets. Please proceed with your question.
Sangita Jain: Yes. Thanks, so much for taking my question I know, we've discussed datacenter dynamics a lot on this call, but I was just wondering if if there is a way for you to engage directly with data center companies, whether it's for substation build out or something.
Oh, no I don't feel like it's slow I feel like we're doing great still bouncing on distribution system as we said in the past like I said were up five 3% on.
Sangita Jain: And the meter solutions something aside from your leverage to the grid.
Transmission distribution Substations, if you look at don't look at the delineation of the segments.
Speaker Change: I mean, we talk to them all the time I do think there's opportunities to help them collaborate with them.
As a whole so I feel like were.
We're starting nicely.
Backlogs down and UI Big Pie, which is fine with me.
Speaker Change: Look our job, we support our clients and our clients are talking to them as well. So it's just a it's something that we balance between the.
If you take out big pipe.
<unk> and you add a likelihood gear up your backlog is up.
Speaker Change: Grid, what their demands are tried to help on both sides of that I do believe that as we move forward as you see the company move forward demand attack on the grid and how they deploy where they deploy where they where they build what they build.
So yes, there is a lot of opportunities.
Negotiations are taking longer.
In some cases msas youre looking at Youre trying to see how many people you have on the system today in <unk>.
Hey, we calculated but I.
Speaker Change: Certainly we want to be right in the middle of it and we wanted to sit with them and understand what they're trying to accomplish it allows us to facilitate it so.
I continue to see our Msas get renew there is some timing there always will be there five years three years two years.
Cycle in and out and you could be in year four of our $2 billion.
Speaker Change: You know look it's something that the company.
Speaker Change: We've talked to them a lot our PT business the transformer business, it's certainly something that.
MSA, that's going to renew for five years, when it renews or $2 billion in the backlog. So it just takes this it gets a little lumpy in some of the MSA work and it's going to continue that way, but the overarching business.
Speaker Change: They value a lot they want the transformer is they wanted to they wanted.
Speaker Change: And they want them now so I think those things are are bode well for us and our ability to communicate and talk about power consumption with tech is something that we can help our clients with.
And the way that we stack on the larger projects programs.
Build then that stack starts.
Speaker Change: And ourselves.
It continues to move on to the industry stall a bit trying to make sure that the demand for data centers and the demand for what we're talking about is real and so it did stall a bit on some of these larger projects because they're not big enough.
Speaker Change: Great and if I can follow up with one on Msas is there anything particularly different this time around on MSA timing than in past years, that's causing this exceptionally slow start to the year.
Speaker Change: Oh, no I don't feel like it's slow I feel like we're doing great. So it'll bounce around distribution system, which we said in the past like I said were up five 3%.
So what youre doing is good.
I was going to build this now I'm going to double the size of what we're trying to accomplish and so yes, it's taken a little bit longer and I do think.
The industry is going to have to think a little bigger and a little faster.
Speaker Change: On <unk>.
Speaker Change: Transmission distribution Substations, if you look at still look at the delineation of the segments.
Great. Thank you so much.
Speaker Change: That's a whole so I feel like we're there.
Speaker Change: They started nicely.
Our next question comes from the line of Michael Dudas with vertical Research partners. Please proceed with your question.
Speaker Change: Backlogs down and UI Big Pie, which is fine with me.
Speaker Change: If you take out the pipe.
Yes, good morning, Kipp just redo.
Speaker Change: Renewables and you add electric gear up your backlog is up.
Good morning.
Yeah.
Speaker Change: So yes, there is a lot of opportunity.
So you mentioned in your comments during the call and then from a mark in your prepared remarks about the importance of investing in.
Speaker Change: Negotiations are taking longer.
Speaker Change: In some cases msas youre looking at Youre trying to see how many people you have on the system today and in the way, we calculated but I continue to see our msas get renew there is some timing there always will be there five years three years, two years and they they cycle in and out and you could be in year four of our $2 billion.
The business I just wanted to.
<unk> relative to the growth Youre seeing we've been talked about so much demand growth here in this call, but over the next three to five years and where you are today on staffing.
Are there what are the challenges to kind of get the bodies and get the capacity to meet the seems like a sustainable extraordinary growth over the next several years, where do you are you in fairly good shape or is there a lot more work to do.
Speaker Change: MSA, that's gonna renewed for five years, when it renews or $2 billion in the backlog. So it just takes this it gets a little lumpy in some of the MSA work and it's going to continue that way, but the overarching business and the way that we stack on the larger projects programs.
Yes, Mike I think the company has done a nice job of investing in craft, certainly which is what we're known for and are core to us.
Thank you.
We saw some of that show up in the solar business in the quarter, where we had some growth in significant growth and so it does at times.
Speaker Change: Builds when that stock starts.
Speaker Change: It continues to move on to the industry install a bit trying to make sure that the demand for data centers and the demand for what we're talking about is real.
That growth through investing in growth and make sure that we can maintain productivity and if you move geographies that you can maintain the type of productivity that we expect and we expect high levels and we got to make sure. We're looking back and the operations and helping the young ones in young people that are in the <unk>.
Speaker Change: So it did stall a bit on some of these larger projects because they're not big enough.
Speaker Change: So what youre doing is good.
Speaker Change: I was going to build this now I've got to double the size of what we're trying to accomplish and so yes, it's taken a little bit longer and I do think.
Business go forward as far as and when we are in we have great programs and we get into the field and there is not.
Speaker Change: The industry is going to have to think a little bigger and a little faster.
Speaker Change: Great. Thank you so much.
Replacing your footprints in the field with something on a piece of paper.
Policy it doesn't work so that footprint in the field people that mentor, our management teams are Paramount and so we work hard on that we work hard on that execution continues to get better and better so as far as getting people in the business.
Speaker Change: Our next question comes from the line of Michael Dudas with vertical Research partners. Please proceed with your question.
Michael Stephan Dudas: Yes, good morning, Kipp just redo.
Michael Stephan Dudas: Good morning.
Michael Stephan Dudas: Yeah.
Michael Stephan Dudas:
Michael Stephan Dudas: So you mentioned in your comments during the call and then from a mark in your prepared remarks about the importance of investing into the business. So I just wanted to check on relative to the growth Youre seeing we've been talking about so much demand growth here in this call, but over the next three to five years and where you are today on staffing.
We haven't had a problem yet.
Standpoint of craft and have done the job I think.
But you kind of a slowdown in distribution allows us to take a breath and.
Actually gained market share so I like it I like where we sit in sometimes.
What I call a hard hard.
Michael Stephan Dudas: Are there what are the challenges to kind of get the bodies and get the capacity to meet the it seems like a sustainable extraordinary growth over the next several years, where do you are you in fairly good shape or is there a lot more work to do.
12 months.
It makes our owners.
Your skills and.
It a little tough.
Separates us.
I think we've done whenever showing up today, we did 12 months ago or whatever shows up.
Speaker Change: Yes, Mike I think the company has done a nice job investing certainly in which is what we're known for and are core to us.
Next year, we did 12 months ago. So I think in general our ability to look forward and see.
Michael Stephan Dudas: Do you think.
Michael Stephan Dudas: We saw some of that show up in the solar business in the quarter, where we had some growth in significant growth and so it does at times.
The business allows us to really invest in craft long term and our people long term and we're doing that well.
We're hiring people for the future now.
Michael Stephan Dudas: That growth through investing aggressively to make sure that you can maintain that productivity is and if you move geographies that you can maintain the type of productivity that we expect and we expect high levels and we got to make sure. We're looking back and the operations and helping make the young ones in young people that are in the bid.
Where the puck is going I like it.
And so I think.
We have no issues in Kraft at this point being able to hire train maintain we just got to do it at the production levels, we expect.
Excellent. Thank you.
Michael Stephan Dudas: <unk> go forward as far as and when we are in we have great programs and get them to the field and there is not.
Our next question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.
Hi, good morning, everyone.
Michael Stephan Dudas: Placing your footprints in the field with something on a piece of paper.
Good morning.
Michael Stephan Dudas: It doesn't work so that footprint in the field people that mentor, our management teams are Paramount and so we work hard on that we work hard on that execution continues to get better and better so as far as getting people in the business without we haven't had.
So you were talking about how you're telling me is are shifting capex from distribution to transmission.
Just trying to get a better sense for how that impacts the quantity of business that they had talked about.
Better market share on transmission, but any sense on like how to think about it from a margin standpoint from a utilization standpoint.
Michael Stephan Dudas: The problem yet from.
Michael Stephan Dudas: From a standpoint of craft and we've done that.
And then secondly.
Michael Stephan Dudas: I think.
Yeah.
Michael Stephan Dudas: But you kind of a slowdown in distribution allows us to take a breath and actually gained market share. So I like it I like where we sit in sometimes.
Based on your conversations with utilities.
In the case that like you know some of the work that was pushed out from 'twenty four that actually get like stack onto 25, because of a deal, but more being able to change your capex plan without further up.
Michael Stephan Dudas: You know what I call a hard hard 12 months.
Michael Stephan Dudas: It makes it.
Michael Stephan Dudas: Your skills and I like I like it a little tough it.
Yes.
I think we've heard most of our costs and I'll go backwards on that.
Michael Stephan Dudas: Suffer aces.
Michael Stephan Dudas: I think you've done whatever showing up today, we did 12 months ago whatever shows up next year. We did 12 months ago. So I think in general our ability to look forward and see.
Most of our customers maintain their capital guides and some increase.
I still you've got a backdrop of anything we're saying you can look at the capital spend and what was the question this way.
Michael Stephan Dudas: The business allows us to really invest in craft long term and our people long term and we're doing that well.
I think honestly youll start to see them raise capital again.
Rounded capital with whom went up not down.
Michael Stephan Dudas: We're hiring people for the future now.
Whenever they talk about their next five years, you can see capital plans go up past underneath the demand and so.
Michael Stephan Dudas: Where the puck is going I like it.
Michael Stephan Dudas: So I think.
Michael Stephan Dudas: No issues and Kraft at this point being able to hire train maintain we just got to do it at the production levels, we expect.
We're talking about getting more usage out of the grid.
Even if you get more usage is going up.
So.
I do think there's some things you can do some technology.
Speaker Change: Excellent. Thank you.
Dental as compared to what you'd see from a demand side. So both of those things are going to happen as far as distribution I mean, I think it's just.
Michael Stephan Dudas: Our next question comes from the line of Chad Dillard with Bernstein. Please proceed with your question.
What kind of status quo with we expected more growth out of it and not all customers own and be clear on that it's not all customers are going down on distribution center in the southeast a few here or there to shift capital over and transmission, so and some areas thats the case some areas.
Chad Dillard: Hi, good morning, everyone.
Chad Dillard: Good morning.
Chad Dillard: So you were talking about how utilities are shifting capex from distribution and transmission.
Chad Dillard: I'm, just trying to get a better sense for how that impacts our quantities does that type of thing.
<unk> the same or moving up you got storm hardening fire hardening all kinds of different things also going on in the everyday grid.
Chad Dillard: Can you talk about that.
Chad Dillard: Our market share on transmission, but any sense on like how to think about it from a commercial standpoint and utilization standpoint.
Appreciate every given day polls rod.
Speaker Change: And then secondly, Tom.
It's always been that way and that's still ongoing with everything else that's going on so the maintenance of the grade stays in place.
Chad Dillard: Yeah.
Chad Dillard: Based on your conversations with utilities.
Chad Dillard: In the case that like you know some of the work that was pushed out from 'twenty four is that actually get like stack onto 25, because of a little bit more stable.
But the capital required to maintain the capital required.
Tom: To change your Capex plan and looking further out.
Necessary infrastructure electric vehicles, I mean, I think so.
Pause in somewhat pause and delay a bit in electric vehicle penetration, although it's penetrating nicely.
Chad Dillard: Yeah.
Speaker Change: I think we've heard most of are accustomed and I'll go backwards on that.
Chad Dillard: Most of our customers maintain their capital guides and some increase.
It's certainly something that we're watching and I think that we've always said that we'd be in three.
Three or four decades type penetration versus overnight.
Chad Dillard: I still you've got a backdrop of anything we're saying you can look at the capital spend with the customers saying.
Not going to happen by 2030, we thought 2015 to 2040, and then I think that's the case and the distributions with a longer build but its much much bigger even in transmission just longer and so a lot of them both.
Chad Dillard: I think honestly, you'll start to see them raise capital again.
Chad Dillard: Around it I think capital is going up not down.
Chad Dillard: Over the next whenever they talk about their next five years, you can see capital plans go up past two underneath the demand and so I.
Going to show up over time and it just gives the company done it's technical because the company time to really think about those resources and how do we resource these things as they come about.
Chad Dillard: We're talking about getting more usage out of the grid.
Chad Dillard: Even if you get more usage I think there are a couple has gone up.
Chad Dillard: I do think there's some things you can do some technology, but it's incidental compared to what you'd see from a demand side.
Got it that's helpful and I wanted to go back to the two comments you made.
Chad Dillard: Those things are going to happen as far as distribution I mean, I think it's just we're kind of status quo, which we expected more growth out of it and not all customers own and be clear on that it's not all customers are going down on distribution. Some in the southeast a few here or there to shift capital over in transmission. So in some areas.
Earlier in the Q&A you talked about it seems like a really strong uptick.
Yes on the datacenter side in January through March and then you just talked about you know whatever you do today beyond 12 months ago.
So I'm just trying to think through like when we should start seeing a.
A lot of the work tied to data centers.
Walk through how that could look like are they expected.
Chad Dillard: The case some areas.
Chad Dillard: Distributions the same or moving up you got storm hardening fire hardening all kinds of different things also going on everyday grid.
The cadence on that.
I don't think we see a lot of plans today on large scale hyperscale data.
Chad Dillard: I appreciate every given day polls rod things.
That loads Gotta go to them and.
That planning process, we do a lot of system planning and that system planning process is probably robust today, that's ever been on the transmission load side of the business.
Chad Dillard: He has been that way and that's still ongoing with everything else that's going on so the maintenance of the grade stays in place.
Chad Dillard: But the capital required to maintain the capital required.
We've got to get the distribution business, a little better and we've got to talk to regulators and talk to them about what we're seeing is and making sure that the.
Chad Dillard: Necessary infrastructure electric vehicles, I mean, I think that the pause in somewhat pause and delay a bit in electric vehicle penetration, although it's penetrating nicely. It's certainly something that we're watching and I think that we've always said that would be.
Consumer is not paying for the data center demand. So I think that's the bigger thing the affordability of natural gas is down and just kind of flat. So it has helped.
The consumer at the build level.
Chad Dillard: Three or four decades type penetration versus overnight.
So that's a good thing if natural gas stays down and get some.
Chad Dillard: Not going to happen by 2030, we thought 2015 to 2040, and then I think that's the case and the distributions just a longer build but its much much bigger even in transmission just longer and so I like them both.
Interest.
Kind of where its at or even less.
Bodes well and I think you'll see the capital plans and everyone get their head around.
I'll now open up the calls as well I mean everyone's got equity plans now and if we didn't see that show up until this quarter or are you starting to see people issue equity and debt against the builds that are coming.
Chad Dillard: It's going to show up over time and it just gives the company done it's technical because the company time to really think about those resources and how do we resource these things as they come about.
Necessary.
We start to see that show up in the business you can see where the planning is coming into place and how quickly things move against equity and better utility level. So.
Speaker Change: Got it that's helpful and I wanted to go back to the two comments you made so early in the Q&A you talked about it seems like a really strong uptick.
We see a lot we're excited about and I do believe it's not just something that you can't go we're going to build this and they are going to not pay for it I think this is real I do I think the demand is real.
Chad Dillard: Yeah on the datacenter side in January through March and then you just talked about you know whatever it is.
Chad Dillard: You you do today, because on 12 months ago. So I'm just trying to think through like when we should start seeing.
Chad Dillard: A lot of the work tied to data centers, just kind of walk through how they provide us with like a second.
Even if it's half what everyone's safe.
It's more than we're talking about now.
Chad Dillard: The cadence on that.
Speaker Change: I don't think we see a lot of plans today on large scale hyperscale.
That's the beauty of it you had it down in it.
<unk> huge so.
Chad Dillard: That loads Gotta go to them and.
And I think we sit in a really good spot here and we're starting to see those investments show up.
Chad Dillard: That planning process, we do a lot of system planning and that system planning process is probably as robust today as its ever been on the transmission load side of the business.
It will be like what you see today, a little better, but the 24 month planning cycles ongoing and utilities today or planning for the future. So I think.
Chad Dillard: We got to get the distribution business, a little better and we've got to talk to regulators and talk to them about what we're seeing and then making sure that the consumer is not paying for the data center demand. So I think that's the bigger thing the affordability of natural gas is down and it was kind of flat so it's helping.
Every single quarter Youll see the progression.
The stacks.
Always thought of it.
These bigger programs these bigger things would stack on the business long term and your base is continuing to move up.
Chad Dillard: The consumer at the build level and so that's a good thing if natural gas stays down and get some.
And that's what we see.
Great. That's helpful. Thank you.
Chad Dillard: Interest.
Thank you.
Chad Dillard: Kind of where its at or even less.
In the interest of time, we ask that you. Please limit your questions to one question.
Chad Dillard: Well and I think you'll see the capital plans and everyone get their head around.
Our next question will come from the line of Brett Castelli with Morningstar. Please proceed with your question.
Speaker Change: I'll now open up the calls as well I mean everyone's got equity plans now and if we didn't see that show up until this quarter or are you starting to see people issue equity and debt against the builds that are coming.
Yes, hi, Thank you I just wanted to ask within renewables can you parse out your expectations for new orders between wind and solar.
Chad Dillard: <unk>, we start to see that show up and I think the business you can see where the planning is coming into place and how quickly things move against equity and debt.
Full year 'twenty, four any thoughts relative to 2023.
Between the technologies there. Thank you.
Chad Dillard: Level so I.
I mean, I would just say.
Chad Dillard: We see a lot we're excited about it and I do believe it's not just something that you can't go Oh, we're going to build this and they are going to not pay for it I think this is real I do I think the demand is real.
We've talked about growing double digits.
We're growing double digits, plus easy in wind and solar.
Well beyond that but I would say, we're comfortable with double digit type growth in those businesses.
Chad Dillard: Even if it's half what everyone's saying, it's more than we're talking about now so.
Thank you.
Chad Dillard: That's the beauty of it you hedge it down and it is still huge so I like it and I think we sit in a really good spot here and we're starting to see those investments show up.
Our next question comes from the line of Avi Jaras Lavage with UBS. Please proceed with your question.
Hey, good morning, guys. Thanks for taking the question.
Chad Dillard: It'll be like what you see today, a little better, but the 24 month planning cycles ongoing and utilities today or planning for the future. So I think.
Or stupid.
So recently, we've seen some more federal support coming out for permitting but also some lower capital intensity type of opportunities within transmission.
Chad Dillard: Every single order, you'll see the progression.
Just how are you guys thinking about which is going to be the bigger driver for that over the next one to two years.
Chad Dillard: The stacks and then we always thought that.
Chad Dillard: These bigger programs these bigger things would stack on the business long term and your base was continuing to move up.
And also what kind of visibility to bookings do you have within those transmission projects.
Chad Dillard: Double digits and that's what we see.
Hi, Matt.
Speaker Change: Great. That's helpful. Thank you.
Make sure I understand the question until starting on my side here.
Speaker Change: Thank you.
Far as permitting I mean I think.
Speaker Change: In the interest of time, we ask that you. Please limit your questions to one question.
State permitting.
But in general is fine it's more about the regulatory process.
Chad Dillard: Our next question will come from the line of Brett <unk> with Morningstar. Please proceed with your question.
Hermine and online.
I don't think I caught the rest of the question.
Brett: Yes, hi, Thank you I just want.
Brett: Want to ask within renewables can you parse out your expectations for new orders between wind and solar.
Hey, good afternoon.
Oh Wow.
Yeah.
Yes. It was just assumed like we've seen some innovation sorry about that.
Brett: For the full year by 24 any thoughts relative to 2023.
My apologies you're seeing some innovation.
Chad Dillard: Between the technologies there. Thank you.
Throughout the year I think youll continue to see.
Speaker Change: I mean, I would just say like.
There's things going on but.
Chad Dillard: We've talked about growing double digits and.
It's incidental really.
Good it'll help.
Chad Dillard: We're growing double digits, plus easy in wind and solar.
The demand is such that we're continuing to see.
Chad Dillard: Well beyond that but I would say, we're comfortable with double digit type growth in those businesses.
We always go back and look at Europe, and what's going on and there are a lot of innovation growth.
It is three times the corridor, we have here.
Speaker Change: Thank you.
And the cheapest form of generation transmission and you still need to be performed today and it will be tomorrow and the next day. So I do think the builds in the multiyear builds are there.
Speaker Change: Our next question comes from the line of RV Terrace Lavage with UBS. Please proceed with your question.
Speaker Change: Hey, good morning, guys. Thanks for taking the question.
You have to balance the load so youre seeing some equipment come in secret phase or things like that that are coming into the business that allow us some balance youre starting to see that show up from an equipment standpoint, and we'll install it.
Speaker Change: Steve.
Speaker Change: So recently, we've seen some more favorable support coming out for permitting but also some lower capital intensity type of opportunities within transmission.
Their software out there that's helping them.
Speaker Change: Just how are you guys thinking about which is going to be the bigger driver for that over the next one to two years.
Distribution level transmission low but.
I still think even with innovation, we got a long way to go in for sure.
Steve: And also what kind of visibility to bookings you have within those transmission projects.
Great I appreciate it thank you.
Speaker Change: I'm not.
Okay.
Speaker Change: I want to make sure I understand the question until its body mass out here as.
Our next question comes from the line, Kevin <unk> with Thompson Davis <unk> Company. Please proceed with your question.
Speaker Change: As far as permitting I mean, I think that's it.
Speaker Change: State permitting.
Speaker Change: So in general is fine it's more about the regulatory process is a permanent in my mind.
Good morning, everyone. Just wanted to maybe touch on the equity income at electric power in the guidance or is there how should we think about that what's driving that and then maybe the cadence throughout.
Speaker Change: I don't think I caught the rest of the question.
Speaker Change: Hey, good afternoon.
Speaker Change: Oh Wow.
Speaker Change: Yeah.
Throughout the year.
Speaker Change: Yeah. It was just that and you assume some innovation sorry about that.
Yes.
Chris There was primarily driven by I put them you can see our JV in China, and there was a favorable tax ruling.
Speaker Change: I apologize you were seeing some innovation.
Speaker Change: Throughout the year I think youll continue to see if there's other things going on but.
That allowed for us to be able to.
Speaker Change: It's incidental really I mean, it's good it'll help.
The tax rate has dropped significantly anything you're seeing around that $6 6 million improvement over the year as a result of that.
Speaker Change: <unk> is such that we're continuing to see.
Speaker Change: We always go back and look at Europe, and what's going on and there are a lot of innovation.
Not really.
Perfect. Thank you.
Speaker Change: Got.
Speaker Change: It is three times the corridor, we have here.
Speaker Change: And the cheapest form of movie generations transmission, you still need still the cheapest form today and it will be tomorrow and the next day. So I do think that the builds in the multiyear builds are there.
And our next question comes from the line of Jean Ramirez with D. A Davidson. Please proceed with your question.
Alright, John for Brent Thielman, I want to ask a question about the underground gas utility portion of the segment.
Speaker Change: You have to balance the load so youre seeing some equipment coming in and supervise or things like that that are coming into the business that allow us some balance youre starting to see that show up from an equipment standpoint, and we'll install it.
Hey are you guys seeing any I guess seeing any utilities.
Pullback on at all on network investments and reliability upgrades.
Speaker Change: Their software out there, that's helping them some distribution level transmission low, but as you know.
No I think to the contrary I mean, the investments necessary, there and methane releases things of that nature. When you start looking at natural gas systems are more valuable today because building as much.
Speaker Change: I still think even with innovation.
Speaker Change: Long way to go and infrastructure.
Speaker Change: Great appreciate it thank you.
Speaker Change: Hmm.
New system and there is considerable amount of new systems, and bill, but in certain areas where.
Speaker Change: Our next question comes from the line of Kevin <unk> with Thompson Davis <unk> Company. Please proceed with your question.
Youre, replacing cut.
<unk> and <unk>.
Kevin: Good morning, everyone I just wanted to maybe touch on the equity income at electric power in the guidance or is there how should we think about that what's driving that and then maybe the cadence as we go throughout the year.
Lines with polyethylene and more.
We're building a modern network that certainly there will continue to be there, we see uptick in the business not not a downturn.
Thank you.
Sure.
Kevin: Yeah. The increase there was primarily driven by them.
Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to management for any closing comments.
Speaker Change: Our Puerto Rican and E J D.
Speaker Change: And there was a favorable tax ruling.
Yes, I want to thank the 53800 people out in the field.
Speaker Change: That allowed for us to be able to.
Speaker Change: The tax rate has dropped significantly and say youre sitting around $66 million improvement over the year as a result of that and that really.
Jackson and do what they do every day and inclement weather, we can't say enough about their performance.
The safety and the things that they do on a daily basis, our field leadership as the best in the World.
Speaker Change: Perfect. Thank you.
Management team that we have here is certainly something that we're extremely proud of the proud of where the company is going thank you for participating in our call today.
Speaker Change: Yeah.
Speaker Change: And our next question comes from the line of Jean Ramirez with D. A Davidson. Please proceed with your question.
Jean Paul Ramirez: Hi, This is John for Brent Thielman.
This concludes today's teleconference. You may disconnect your lines at this time.
John: I want to ask a question about the underground gas utility portion of the segment.
Thank you for your participation.
John: Are you guys seeing any.
John: <unk> seen in the utilities.
John: Pull back on at all on network investments and reliability upgrades.
Speaker Change: No I think to the contrary I mean, the investments necessary, there and methane releases things of that nature. When you start looking at natural gas with some good more valuable today, because they're not building as much.
Speaker Change: New system and there is considerable amount of new systems, and bill, but in certain areas where you.
John: Youre, replacing.
John: Customer churn.
John: Lines with polyethylene and more.
John: You're building a modern network that certainly there will continue to be there, we see uptick in the business not not a down too.
Speaker Change: Thank you.
John: Sure.
Speaker Change: Thank you we have reached the end of our question and answer session I would now like to turn the floor back over to management for any closing comments.
Speaker Change: Now I want to thank the 53800 people out in the field.
Speaker Change: Jackson and do what they do every day and inclement weather, we can't say enough about their performance.
Speaker Change: Safety and the things that they do on a daily basis, our field leadership as the best in the World.
Speaker Change: The team that we have here is certainly something that we're extremely proud of.
John: Sort of where the company is going and thank you for participating in our call today.
John: Okay.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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