Q4 2024 Advanced Drainage Systems Inc Earnings Call

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Danica: Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' fourth quarter and fiscal year 2024 results conference call. My name is Danica, and I am your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the presentation over to your host for today's call, Allison Justice, Director of Investments. Ma'am, you may begin.

Good morning, ladies and gentlemen, and welcome to advanced drainage systems fourth quarter and fiscal year 2024 results conference call.

Ms Danica and I'm your operator for today's call.

At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you would like to ask a question during that time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

I would now like to turn the presentation over to your host for today's call Alison Justice director of Investor.

Speaker Change: Ma'am you may begin.

Allison Justice: Thank you and good morning. With me today is Scott Barbour, our President and CEO, and Scott Cottrill, our CFO. I would also like to remind you that we will discuss forward-looking statements. However, actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC. While we may update forward-looking statements in the future, we disclaim any obligation to do so.

Alison Justice: Thank you and good morning with me today, I have Scott Barbour, our president and CEO and Scott Cottrill, our CFO.

Alison Justice: I would also like to remind you that we will discuss forward looking statements actual results may differ materially from those forward looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC.

Alison Justice: While we may update forward looking statements in the future we disclaim any obligation to do so you should not place undue reliance on these forward looking statements all of which speak only as of today Lastly, the press release, we issued earlier. This morning is posted on the Investor Relations section of our website a copy of the release has also been in.

Allison Justice: You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8K submitted to the SEC. We will make a replay of this conference call available via webcast on the company's website. With that, I'll turn the call over to Scott Barbour. Thank you.

Speaker Change: Included in an 8-K submitted to the SEC, we will make a replay of this conference call available via webcast on the company's website with that I'll turn the call over to Scott Barbour. Thank.

Donald Scott Barbour: Thank you, Allison, and good morning, everyone. Thank you all for joining us on today's call. Mike Higgins, Vice President of Investor Relations and Corporate Strategy, is in New York this morning at RBC's Future of Water Conference. He's participating in a panel discussion on future-proofing water infrastructure, a very important topic given our position in this market. So we are dividing and conquering this morning with Mike in New York and Alison, excuse me, in charge of Scott C&I here in Ohio.

Donald Scott Barbour: Thank you Alison and good morning to everyone and thank.

Speaker Change: Thank you all for joining us on today's call, Mike Higgins, Vice President of Investor Relations and corporate strategy is in New York. This morning, It Rbc's future of water conference Mike's participating in a panel discussion on future proofing water infrastructure, a very important topic given our position in there.

Speaker Change: This market. So we are dividing and conquering this morning with Mike in New York.

Speaker Change: And Alison excuse me in charge of Scott C&I here in Ohio.

Donald Scott Barbour: We are pleased to present the fiscal 2024 results on today's call. Both revenue and adjusted EBITDA results came in above our guidance range, at $2.9 billion and $923 million, respectively, marking ADS's ninth consecutive year of record profitability. As you can see on slide four, end market demand improved significantly in the second half of fiscal 2024, resulting in a 3% increase in second half revenue, primarily due to the notable improvement in residential and infrastructure markets, which grew 8% and 14%, respectively.

Speaker Change: We are pleased to present, the physical 2024 results on today's call both revenue and adjusted EBITDA results came in above our guidance range at $2 9 billion and $923 million respectively.

Speaker Change: The avs its ninth consecutive year of record profitability.

Speaker Change: As you can see on slide four in market demand improved significantly in the second half of fiscal 2024, resulting in a 3% increase in second half revenue primarily due to the notable improvement in the residential and infrastructure end markets, which grew 8% and 14%.

Speaker Change: Respectively. The nonresidential agriculture and international end markets also improved in the second half of the year.

Donald Scott Barbour: The non-residential, agriculture, and international end markets also improved in the second half of the year. With the improvement in in-market demand, we were able to partially offset the weak start to the year, resulting in a full-year revenue decrease of just 6% overall. Most notably, fiscal 2024 adjusted EBITDA increased 2% to $923 million, and adjusted EBITDA margin increased 270 basis points to 32.1%, despite year-over-year revenue.

Speaker Change: With the improvement in end market demand, we were able to partially offset the weak start to the year, resulting in a full year revenue decrease of just 6% overall.

Speaker Change: Most notably physical 2024, adjusted EBITDA increased 2% to $923 million and adjusted EBITDA margin increased 270 basis points to 32, 1% despite a year over year revenue decline.

Donald Scott Barbour: These strong profitability results are due to better than expected performance from an infiltrator business and allied products portfolio, effective management of price costs, Solid Operational Execution, and the Benefit of Previous Capital Investments in the Business. Importantly, this year's financial results highlight the resiliency of the ADS business model, demonstrating our ability to achieve strong profitability levels in the challenging demand environment seen over the last 18 months. The strength of our market position and resiliency of the ADS business model give us confidence in the long-term business outlook as we benefit from the secular tailwinds of changing climate patterns which drive the need for resilient water management solutions. As a pure play water company, our products and solutions play a critical role in preventing floods. Recharging aquifers.

Speaker Change: These strong profitability results are due to better than expected performance from the infiltrator business and allied products portfolio effective management of price cost.

Speaker Change: Solid operational execution and the benefit of previous capital investments in the business.

Speaker Change: Partly this year's financial results highlight the resiliency of the Avs business model, demonstrating our ability to achieve strong profitability levels and the challenging demand environment seen over the last 18 months.

Speaker Change: The strength of our market position and resiliency of the Avs business model give us confidence in the long term business outlook as we benefit from the secular tailwind of changing climate patterns, which drive the need for resilience water management solutions.

Speaker Change: As a pure pay pure play water company, our products and solutions play a critical role in preventing floods reach.

Speaker Change: Recharging aquifer.

Donald Scott Barbour: Improving food security and mitigating the risk of water scarcity to ensure the quality of life in communities. On slide 5, you can see the upward trajectory and the frequency of these large-scale storm events over time as climate patterns change. In 2023, there were a record 27 of these events in the United States, resulting in a total cost of over $88 billion. These events, ranging from severe storms and hurricanes to floods and droughts, had devastating impacts on communities and highlighted how the existing stormwater infrastructure has not kept pace with increasing climate challenges.

Speaker Change: Improving food security and mitigating the risk of water scarcity to improve to ensure the quality of life and communities.

On slide five you can see the upward trajectory and the frequency of these large scale storm events over time as climate patterns change in 2023, there were a record 27 of these events in the United States, resulting in a total cost of over 88 billion.

Speaker Change: These events ranging from severe storms and hurricanes, two floods and droughts as devastating impacts on communities and highlight how the existing storm water infrastructure is not kept pace with increasing climate challenges.

Donald Scott Barbour: The products and solutions that we provide, along with the expertise and distribution we have at the local level across North America, are integral to solving these issues for communities, while also providing ADS, our distribution partners, and contractors, substantial growth opportunities. In addition, the company's leadership positions in both stormwater and on-site septic wastewater management give us a platform to further advance the industry. As demonstrated with this year's product introductions, such as the Ecopod NX Advanced On-Site Septic Treatment Product, and partnerships like Rainwater Management Solutions, we are committed to bringing highly engineered solutions to the market to solve communities' toughest water challenges.

Speaker Change: The products and solutions that we provide along with the expertise and distribution we have at the local level across North America are integral to solving these issues for communities, while also providing a D S.

Speaker Change: Our distribution partners and contractors substantial growth opportunities.

Speaker Change: In addition, the Companys leadership positions in both storm water and onsite septic wastewater management gives us a platform to further advance the industry.

Speaker Change: As demonstrated with this year's product introductions, such as the Eco pod index advanced onsite septic treatment product and partnerships like rainwater management solutions, we are committed to bringing highly engineered solutions to the market to solve communities toughest water challenges.

Donald Scott Barbour: Advanced on-site treatment products like the Ecopod NX increased nearly 40% in the fourth quarter as we ramp up our participation in this growing and attractive market. In addition, the Rainwater Management Solutions Partnership is off to a great start, and we continue to identify promising rainwater harvesting projects. We are also working hand-in-hand with David Crawford and his team at Rainwater Management Solutions to influence regulations at the national, state, and local levels to continue to protect water resources throughout the country and provide guidance on water reuse.

Advanced onsite treatment products like the eco pod index increased nearly 40% in the fourth quarter as we ramp up our participation in this growing and attractive market.

Speaker Change: In addition, the rainwater management solutions partnership is off to a great start and we continue to identify promising rainwater harvesting projects.

Speaker Change: We're also working hand in hand, with David Crawford and his team at rain water management solutions to influence regulations at the National State and local levels to continue to protect water resources throughout the country and provide guidance on water reuse.

Donald Scott Barbour: Construction is nearing completion on ADS's world-class Engineering and Technology Center, located near our corporate headquarters in Hilliard, Ohio, and expected to open this summer. This facility brings material science, product development, and manufacturing engineering under one roof and will enable us to accelerate innovation and the velocity of commercialization. We believe the combination of investments in the business, Strategic Partnerships, and the Engineering and Technology Center will further strengthen ADS's position as the leading water management solutions provider. Now, moving to the fourth quarter results.

Speaker Change: Construction is nearing completion on <unk> World Class Engineering, and Technology Center, located near our corporate headquarters in Hilliard, Ohio and expected to open this summer this.

Speaker Change: This facility brings material science product development and manufacturing engineering under one roof and will enable us to accelerate innovation and the velocity of commercialization.

Speaker Change: We believe the combination of investments in the business strategic partnerships and the engineering and technology Engineering and Technology Center will further strengthen <unk> position as the leading water management solutions provider.

Donald Scott Barbour: We closed out the year strong with the continuation of better than expected performance in the infiltrator business and allied products portfolio. Demand for the ADS pipe portfolio performed slightly better than expectations, and pricing came in as we thought it would. Importantly, this quarter, we saw volume growth across each of our markets, with particular demand strength in the residential, infrastructure, and agriculture end markets. Looking into fiscal 2025, the construction markets where we participate are well positioned for growth. The infrastructure market continues to benefit from the federal funds allocated under the IIJA, and we are seeing good activity at the local level in roads, highways, airports, and rail projects.

Now moving to the fourth quarter results, we closed out the year strong with the continuation of better than expected performance in the infiltrator business and allied products portfolio demand for the <unk> pipe for pipe portfolio performed slightly better than expectations and pricing came in as we thought it would.

Speaker Change: Good <unk>.

Speaker Change: Importantly, this quarter, we saw volume growth across each of our end markets with particular demand strength in the residential infrastructure and agriculture end markets.

Speaker Change: Looking into fiscal 2025, the construction markets, where we participate are well positioned for growth.

The infrastructure market continues to benefit from the federal funds allocated under the Iga and where youre seeing good activity at the local level and roads highways airports and rail projects for context, we have over 20 airport projects in the works as well as several large interstate projects.

Donald Scott Barbour: For context, we have over 20 airport projects in the works, as well as several large interstate projects. ADS has both a superior set of products and the best go-to-market model in the industry for these large and challenging projects. We expect the infrastructure market to grow at high single digits next year with the potential for further upsides. In the residential end market, activity was very strong in the quarter at both ADS and infiltrator, and we expect this to continue into fiscal 2025 with mid-single-digit market growth. We remain cautious on the impact of interest rates on single-family housing starts, though our long-term view on the residential market remains favorable.

Speaker Change: ABS is both a superior set of products and the best go to market model in the industry for these large and challenging projects, we expect the infrastructure market to grow at high single digits next year with the potential for further upside.

Speaker Change: In the residential end market activity was very strong in the quarter at both Acs and nipple trader and we expect this to continue into fiscal 2025 with mid single digit market growth. We remain cautious on the impact of interest rates on single family housing starts. So our long term view on the residential market remains.

Donald Scott Barbour: Not only is the market underbuilt by at least 4 million homes, but this also remains an important market share opportunity for both ADS and infiltrators. Over the last several years, we have dedicated resources to the residential market in order to establish relationships with large national and regional home builders, and these efforts continue to pay off as developers value the benefits of faster and safer installation, as well as the expertise and resources ADS provides to contractors at the local level.

Speaker Change: <unk> not only is the market under built by at least 4 million homes with this also remains an important market share opportunity for both <unk> and infiltrator.

Speaker Change: Over the last several years, we have dedicated resources to the residential market in order to establish relationships with large national and regional homebuilders and these efforts continue to pay off as dumb as developers value the benefits of faster and safer installation as well as the expertise and resources.

Speaker Change: <unk> provides two contractors at the local level.

Donald Scott Barbour: To remind you, the ADS residential business participates in the land development phases of residential building and is approximately 14% of the business. The infiltrator business participates closer to completion and is approximately 16% of the total. Finally, we expect the non-residential market to grow at low single digits, reflecting improving trends in commercial construction and good activity from large onshoring projects that we continue to track and pursue.

Speaker Change: To remind you the ABS residential business participates in the land development phases of residential building and is approximately 14% of the business.

Speaker Change: The infiltrator business participates closer to completion it is approximately 16% of the total business.

Speaker Change: Finally, we expect the nonresidential market to grow at low single digits, reflecting improving trends in commercial construction and good activity from large onshore projects that we continue to track and pursue.

Donald Scott Barbour: Similar to how we added resources to support the growth opportunities in the warehouse and residential markets, we have also dedicated business development and sales resources to support the opportunity on on-shore projects, which we believe is a long-term secular tailwind for years to come. From a margin perspective, adjusted EBITDA margin increased 140 basis points. 29.2% this quarter, a fourth-quarter record, once again demonstrating the resilience of the business model. Despite unfavorable price costs in the period, this marks the ninth quarter in a row of year-over-year margin expansion.

Speaker Change: Similar to how we added resources to support the growth opportunities in the warehouse and residential markets. We are also dedicated business development and sales resources to support the opportunity on onshore projects, which we believe is a long term secular tailwind for years to come.

From a margin perspective, adjusted EBITDA margin increased 140 basis points to 29, 2% this quarter a fourth quarter record once again, demonstrating the resilience of the business model.

Speaker Change: <unk> unfavorable price cost in the period. This marks the ninth quarter in a row of year over year margin expansion.

Donald Scott Barbour: The margin of performance this quarter benefited from volume and the Sales Mix of Infiltrator and Allied Products, as well as previous investments in the business, including automation, more efficient production lines, and tooling. Effective Management of Price Costs and Continuous Improvement Within Operations. As reflected in the guidance issued today, we expect the all-time record adjusted EBITDA margin performance to repeat in fiscal 2025, which I'll note is after a 770 basis point increase over the last two years. Importantly, we expect to achieve this without the benefit of favorable price costs, which has been a significant contributor to our embargo performance over the past couple of years.

Speaker Change: The margin performance this quarter benefited from volume sales.

Speaker Change: Sales mix of infiltrator, and allied products as well as previous investments in the business, including automation and more efficient production lines and tooling.

Speaker Change: <unk> management of price cost and continuous improvement within operations.

Speaker Change: As reflected in the guidance issued today, we expect the all time record adjusted EBITDA margin performance to repeat in fiscal 2025, which I'll note is after a 770 770 basis point increase over the last two years importantly, we expect to achieve this with.

Speaker Change: The benefit of favorable price cost, which has been a significant contributor to our margin performance over the past couple of years.

Donald Scott Barbour: In fiscal 2025, we will achieve our guidance through volume growth and fixed cost absorption, as well as operational efficiency, as we reap the benefit from capital investments we have made in manufacturing and transportation over the last several years. Since August of 2019, when we purchased Infiltrator, we have consistently invested in large capital projects, Supporting Engineering Talent to improve designs, processes, tooling, and machinery to reduce our costs. Today, we are seeing the benefits of these investments and are executing a very similar playbook for ADS.

Speaker Change: In fiscal 2025, we will achieve our guidance through volume growth and fixed cost absorption as well as operational efficiency as we reap the benefit from capital investments, we have made in manufacturing and transportation over the last several years.

Speaker Change: Since August of 2019, when we purchased infiltrator, we have consistently invested in large capital projects and supporting engineering talent to improve designs.

Speaker Change: <unk> tooling and machinery to reduce our cost today, we're seeing the benefit of benefits of these investments and are executing a very similar playbook for aes.

Donald Scott Barbour: As you will recall from previous quarters, we have talked about investing in our business to strengthen our competitive position when the market recovers, and that is exactly what we're doing today. Of course, we will continue to effectively manage price costs against market participation objectives.

As you will recall from previous quarters, we have talked about investing in our business to strengthen our competitive position when the market recovers and that is exactly what we're doing today of course, we will continue to effectively manage price cost against market participation objectives.

Scott A. Cottrill: We will stay competitive in the market while also continuing to deliver exceptional service to our customers and pursue profitable growth through attractive products, markets, and partnerships. With that, I will turn the call over to Scott Cottrill to further discuss our financial results. Thanks, Scott. The fourth quarter revenue results were strong. As Scott mentioned, we saw the return of volume and growth across all of our end markets. Infiltrator's revenue increased 22% in the quarter, with double-digit growth in both chamber and tank products. On the ADS side, we continue to see exceptional performance from our high-performance polypropylene pipe, which is really the tip of the spear in converting the market from traditional materials to ADS's lighter, more efficient product.

Speaker Change: We will stay competitive in the market, while also continuing to deliver exceptional service to our customers and pursue profitable growth through attractive products markets and partnerships with that I will turn the call over to Scott Cottrill to further discuss our financial results.

Speaker Change: Thanks, Scott in the fourth quarter revenue results were strong as Scott mentioned, we saw the return of volume across growth across all of our end markets.

Scott A. Cottrill: Infiltrators revenue increased 22% in the quarter with double digit growth in both chamber and tank products on the Ats side, we continued to see exceptional performance from our high performance polypropylene pipe, which is really the tip of the spear in converting the market from traditional materials to aes is lighter more efficient products.

Scott A. Cottrill: The price-cost performance during the quarter was in line with our expectations. Equally of note, this is the second consecutive quarter of favorable manufacturing costs on a year-over-year basis, as we are seeing the benefits of fixed-cost absorption with the increased volume, as well as improved operational efficiency from investments we've made in new equipment, automation, and tooling. As Scott noted, Infiltrator is operating very efficiently, benefiting from the newer, more efficient equipment we've invested in since the acquisition.

The price cost performance during the quarter was in line with our expectations equally of note. This is the second quarter in a row of favorable manufacturing costs on a year over year basis. As we are seeing the benefits of fixed cost absorption with the increased volume as well as improved operational efficiency from investments we've made in <unk>.

Scott A. Cottrill: New equipment automation and tooling.

Speaker Change: As Scott noted infiltrator is operating very efficiently benefiting from the newer more efficient equipment, we've invested in since the acquisition and.

Scott A. Cottrill: In addition, due to the strong results for fiscal 2024 and to reward the service and dedication of our employees, we paid a discretionary bonus to employees who are not part of our annual incentive compensation plans, resulting in approximately $4 million of additional compensation costs in the quarter. On slide 9, we present Free Cash Flow. We generated $534 million of free cash flow during fiscal 2024, compared to $541 million in the prior year.

Speaker Change: In addition, due to the strong results for fiscal 2024 and to reward the service and dedication of our employees, we paid a discretionary bonus to employees, who are not part of our annual incentive compensation plans, resulting in approximately $4 million of additional compensation costs in the quarter.

Speaker Change: On slide nine we present free cash flow.

Speaker Change: We generated $534 million of free cash flow during fiscal 2024 compared to $541 million in the prior year.

Scott A. Cottrill: Capital spending increased 10% to $184 million as we continue to make investments to increase automation, grow manufacturing and recycling capacity, and increase productivity, as well as to build the new world-class Engineering and Technology Center here in Hilliard, Ohio. In fiscal 2025, we expect to spend between $250 million and $300 million as we build the new manufacturing facility in Florida and continue to invest in areas that align with our long-term strategic objectives, including improving customer service through investments in technology and better order management processes.

Speaker Change: Capital spending increased 10% to $184 million as we continue to make investments to increase automation grow manufacturing and recycling capacity and increased productivity as well as to build a new world class Engineering and technology Center here in Hilliard, Ohio and.

Speaker Change: In fiscal 2025, we expect to spend between $250 million and $300 million as we build a new manufacturing facility in Florida and continue to invest in areas that align with our long term strategic objectives, including improving customer service through investments in technology and better order man.

Speaker Change: <unk> processes, accelerating innovation, and new products and new technologies that add to our storm water and wastewater solutions packages, increasing our production capacity in certain regions and in certain products that have superior demand profitability and growth characteristics.

Scott A. Cottrill: Accelerating innovation and new products and new technologies that add to our stormwater and wastewater solutions packages, increasing our production capacity in certain regions and for certain products that have superior demand, profitability, and growth characteristics, de-bottlenecking and expanding our recycling operations, as well as our material science and blending capabilities. Increasing the safety, productivity, and efficiency of our manufacturing network.

Speaker Change: <unk> and expanding our recycling operations as well as our material science and blending capabilities, increasing the safety productivity and efficiency of our manufacturing network.

Scott A. Cottrill: And finally, upgrading our transportation assets, including the use of the latest telematics and safety technology to provide superior delivery and customer service. Thoughtful allocation of shareholders' capital continues to be a key focus for the management team and the board, given the strong cash generation of the business. In fiscal 2025, we invested $184 million in capital expenditures and returned over $251 million to shareholders through dividends and share repurchase. In addition, today, we announced a 14% increase in our dividend to $0.64 per share per year, starting with the May 31, 2024 dividend.

Speaker Change: And finally, upgrading our transportation assets, including the use of the latest telematics and safety technology to provide superior delivery and customer service.

Thoughtful allocation of our shareholders' capital continues to be a key focus for the management team and the board given the strong cash generation of the business in fiscal 2025, we invested $184 million in capital expenditures and returned over $250 million 251 million.

Speaker Change: To shareholders through dividends and share repurchases in.

Speaker Change: In addition, today, we announced a 14% increase in our dividend to <unk> 64 per share per year, starting with the May 31 2024 dividend.

Scott A. Cottrill: We will continue to buy back shares under the current $1 billion share repurchase program, which has $216 million remaining. Since the inception of this share buyback program in 2022, we have repurchased approximately 7.8 million shares, or 9% of the shares outstanding when the program was announced. 1.8 million shares were repurchased just in fiscal 2024.

Speaker Change: We will continue to buy back shares under the current $1 billion share repurchase program, which has $216 million remaining.

Speaker Change: Since the inception of this share buyback program in 2022, we have repurchased approximately seven 8 million shares or 9% of the shares outstanding when the program was announced one 8 million shares were repurchased just in fiscal 2024.

Scott A. Cottrill: Moving on to slide 9, we present our fiscal 2025 guidance ranges. We expect revenue to be in the range of $2.9, $2,925,000,000, and $3,025,000,000, representing growth of 2-5%, and adjusted EBITDA to be in the range of $940,000,000 to $980,000,000. These ranges result in an adjusted EBITDA margin of 32.1% to 32.4%, repeating this year's record margin. Today's guidance reflects improved end market demand, continued success of our conversion strategy and market share model, positive sales mix contributions from the infiltrator business and our allied products portfolio, and improved manufacturing efficiency from fixed cost leverage as well as operating efficiency resulting from prior investments. From a margin perspective, we expect our full-year margin to be flat to slightly up on a year-over-year basis.

Speaker Change: Moving on to slide nine we present, our fiscal 2025 guidance ranges.

Speaker Change: We expect revenue to be in the range of $2 nine.

Speaker Change: $2 billion $925 million and $3 billion $25 million, representing growth of 2% to 5% and adjusted EBITDA to be in the range of $940 million to $980 million.

Speaker Change: These ranges result in an adjusted EBITDA margin of 32, 1% to 32, 4% repeating this year's record margin.

Speaker Change: Today's guidance reflects improved end market demand continued success of our conversion strategy and market share model.

Speaker Change: Positive sales mix contributions from the infiltrator business and our allied products portfolio and improved manufacturing efficiency from fixed cost leverage as well as operating efficiency, resulting from prior investments.

Speaker Change: From a margin perspective, we expect our full year margin to be flat to slightly up on a year over year basis that being said our fiscal first quarter margin will be our most challenging primarily as a result of the fixed cost comparison to the prior year the price cost side comparison to the prior year.

Scott A. Cottrill: That being said, our fiscal first quarter margin will be our most challenging, primarily as a result of the fixed cost comparison to the prior year and the price cost, sorry, comparison to the prior year. However, we will more than offset this through favorable volume and fixed cost absorption, segment mix, as well as manufacturing efficiencies and initiatives in the second quarter and beyond. April's results reflected a continuation of the trends we saw in the fiscal fourth quarter, as well as the normal seasonal ramp-up going into the construction season.

Speaker Change: We will more than offset this through favorable volume and fixed cost absorption.

Speaker Change: <unk> mix as well as manufacturing efficiencies and initiatives in the second quarter and beyond.

April's results reflected a continuation of the trends we saw in the fiscal fourth quarter as well as the normal seasonal ramp going into the construction season.

Scott A. Cottrill: April's results were obviously contemplated in the guidance issued today. We remain focused on executing on our long-term strategic plan to drive consistent long-term growth, margin expansion, and free cash flow generation. With that, I'll open the call for questions. Operator, please open the line.

Speaker Change: April's results were obviously contemplated in the guidance issued today we remain.

Speaker Change: <unk> focused on executing on our long term strategic plan to drive consistent long term growth margin expansion and free cash flow generation.

Speaker Change: With that I'll open the call for questions operator, please open the lines.

Danica: At this time, I'd like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Your first question comes from Mike Halloran on behalf of Baird. Please go ahead.

Speaker Change: At this time I'd like to remind everyone in order to ask a question Press Star then remember one on your telephone keypad.

Speaker Change: Your first question comes from Mike Halloran with Baird. Please go ahead.

Michael Patrick Halloran: Hey, good morning, everyone.

Speaker Change: Good morning.

Michael Patrick Halloran: So, so a couple things here. First, can we just say this?

Michael Patrick Halloran: So a couple of things here first can we just.

unknown: I have a conversation with you about how you're thinking the year plays out in terms of... Transcribed by https://otter.ai Yeah, Mike, Scott C here.

Michael Patrick Halloran: I have a conversation about how you're thinking the year plays out in terms of.

Michael Patrick Halloran: Keane and seeing both on the revenue and the margin line.

Michael Patrick Halloran: Front half back half weighting are we looking at relatively normal seasonality. We obviously just mentioned the tough <unk> margin comp.

Michael Patrick Halloran: Are we just expecting a little bit more balance and normal seasonality on both those categories as we work through the year any kind of help on that would be great.

Scott A. Cottrill: I would look at the revenue side of the house consistent with prior years, where 55 to 60% of our revenue is in the first half of the year. So, that's how I would think about the phasing. I think on the margin phasing, as I tried to indicate in my prepared remarks, we look at the first quarter as the most challenging. You'll remember last year was 36%, more than 36%.

Speaker Change: Yes, Mike Scott C. Here.

Speaker Change: I would look at the revenue side of the house consistent with prior years, where 55% to 60% of our revenue is in the first half of the year. So that's how I would think about the phasing I think on the margin phasing as I tried to indicate in my prepared remarks, we look at the first quarter as the most challenging you'll remember last year was <unk> <unk>.

Speaker Change: 36% over 36% EBITDA margins in the first quarter.

Scott A. Cottrill: Even the margins in the first quarter, a record quarter, not just the first quarter, but a record quarter for us. And again, based on the price-cost comparison we'll have on a year-of-year basis, we see that as by far the most challenging quarter from a margin expansion perspective. And then as we look at Q2 through Q4, we look at those as the best opportunities for margin expansion opportunities as we move through the year. So, that's the way I would think about it. So that makes sense.

Speaker Change: A record quarter and not just first quarter by a record quarter for us.

And again based on the price cost comparison will have on a year over year basis, we see that as by far the most challenging quarter from a margin expansion perspective.

Speaker Change: Then as we look at Q2 through Q4, we look at those as the best opportunity for margin expansion opportunities as we move through the year. So that's the way I would think about it.

Donald Scott Barbour: And then maybe just a few more thoughts on the non-res landscape as you sit here today. Obviously, return to growth this quarter, expectations for more, and some modest growth next year. Could you talk about two things here?

Speaker Change: So that makes sense and then maybe just a few more thoughts on the non res landscape as you sit here today I would tell you returned to growth this quarter expectations for more.

Speaker Change: Some modest growth next year could.

Speaker Change: Could you talk about two things here one what are the customers, saying what are your sales guys in the field sales engineers, saying.

Speaker Change: Secondly, how are you thinking about the internal rates of returns for the client base today, and where that stands as far as impacting investment decisions and if youre getting any more stability there.

Donald Scott Barbour: One, what are the customers saying? What are your sales guys in the field, the sales engineers, saying? And secondly, how are you thinking about the internal rates of return for the client base today and where that stands as far as impacting investment decisions? And if you're getting any more stability? So, Mike, Scott Barbour here.

Donald Scott Barbour: So Mike Scott Barbour here.

Donald Scott Barbour: I would say on the non res side is.

Speaker Change: It's much like we had been seeing over the last several months in terms of release of projects how clients customers feel about releasing projects in going forward with projects.

Donald Scott Barbour: You know, I'd say on the non-res side, it's much like we have been seeing over the last several months in terms of the release of projects, how clients and customers feel about releasing projects and going forward with projects. I think it's really more of the same. Those projects, like the big ones, the on-shoring, those that are, you know, owned buildings versus fully occupied, like our engineering center, those kinds of things move, and we see that around the country. So, I wouldn't say that's inflected up a lot, but just a steady pace, slightly up and to the right.

Speaker Change: I think it's really more of the same those projects like the big ones the onshoring.

Speaker Change: Those better.

Speaker Change: Owned buildings versus and fully occupied like our engineering center, those kind of things move move and we see that around around the country. So.

Speaker Change: I wouldn't say, that's inflected up a lot, but just a steady pace.

Speaker Change: Slightly up into the right.

Speaker Change: Our quote and order activity is good.

Donald Scott Barbour: Our quote and order activity is good. Probably slightly stronger than I just described is what we're seeing. And so our sales force, our engineering, and our business development resources that are focused on the on-shoring projects, the large projects, like I mentioned, these airports. I mean, there are a lot of airports going on. So that all is, you know, we feel pretty darn good about that. And, you know, non-res is obviously a big segment force.

Speaker Change: Probably slightly stronger than I. Just described is what we're seeing and so our engineered our sales force our engineering our business development resources that are focused on the onshore projects.

Speaker Change: The large projects like I mentioned these airports I mean, that's a lot of airports going on so that all of US we feel pretty darn good about that.

Speaker Change: And.

Speaker Change: <unk>.

Donald Scott Barbour: We're across a lot of different subsegments. We're pretty agile in the market, where we can, you know, move resources from one subsegment to another. And I think we're executing that pretty well on a day in and day out basis. And we're at the front end of the cycle. So that's why I kind of think we're in a progressively better state. That's why I say it kind of slightly up and to the right.

Speaker Change: Nonresident, obviously, a big segment for us were across a lot of different sub segments, we're pretty agile in the market, where we can move resources from one sub segment to another and I think we're we're executing that pretty well on a day in and day out basis.

Speaker Change: And we're at that front end of the cycle. So that's why I kind of think where we are in a progressively better better state. That's why I say kind of slightly up into the right.

Donald Scott Barbour: This guidance on non-res does not contemplate some massive interest rate move. Does that make sense? You know, we're not counting on, you know, you know, five interest rate cuts or something like that. I mean, we're kind of, you know, sailing the ship with the wind that we have. Would you say it's fair to characterize this as? You expect stability from current levels on the non-red side and some of the improved coating and order activity that you've just mentioned.

Speaker Change: This guidance on non res does not contemplate some massive interest rate move.

Speaker Change: That makes sense, we're not counting on.

Speaker Change: Sure.

Speaker Change: Five interest rate cuts or something like that I mean, we're we're kind of.

Speaker Change: Sailing to ship with the wind that we have.

Speaker Change: Would you say its fair to characterize this as.

Speaker Change: You expect stability from current levels on the non res side and some of the improved quoting and order activity that you've just mentioned.

Donald Scott Barbour: You know, is that contemplated in the guidance as we sit here today? Yes. Yeah, it's contemplated in the guidance, and if those things were favorable, it would nudge us towards the upper end of that.

Speaker Change: Is that contemplated in the guidance as we sit here today.

Yes, yes, yes, it contemplates contemplated in the guidance and if those things were favorable with nudges towards the upper end of that.

Speaker Change: Great.

Speaker Change: Got it.

Mike: I'm sorry go ahead, the reason I say it that way Mike is it's such a big segment for us that small moves in that small positive moves in that segment nudge us pretty hard.

Mike: Quickly.

Speaker Change: Thanks, gentlemen, I appreciate it.

Speaker Change: Thanks, Mike.

unknown: [inaudible]

Speaker Change: Your next question comes from Matthew Bouley with Barclays. Please go ahead.

Michael Patrick Halloran: A lot of fun. Thanks, gentlemen, I appreciate it.

Speaker Change: Good morning, everyone. Thank you for taking the questions.

Matthew Adrien Bouley: Wanted to ask around the guide.

Yes, I think in dollars, you're you're speaking to EBITDA.

Speaker Change: Nearly $40 million for the year.

Speaker Change: If I look at Q.

Speaker Change: Q4 of course.

Speaker Change: Both volumes in the manufacturing transportation line I think together got your $40 million just in the quarter and I know thats, an easier comp and that's kind of what my question is but as we think about a $40 million increase to earnings or to EBITDA over the next year.

Speaker Change: If you've got these kind of positive volumes coming through and it sounded like April trends are.

Speaker Change: <unk> with what you just saw.

Speaker Change: How should we think about that that breakout of the volume leverage and the level of fixed cost absorption that you think you can achieve and sort of how does that play in to that bridge. Thank you.

Matthew Adrien Bouley: Your next question comes from Matthew Bouley with Barclays. Please go ahead.

Speaker Change: Yeah, Matt Scott theory, yes, youre thinking about it the right way when you look at that EBITDA Bridge next year Youre going to see.

Speaker Change: Good good good volume growth, we talked about the end markets.

Speaker Change: Infrastructure non.

Matthew Adrien Bouley: Morning, everyone. Thank you for taking the questions. I wanted to ask you a few questions about the guide. Yeah, I think in dollars, you're speaking to EBITDA up, you know, nearly $40 million for the year. And if I look at Q4, of course, both volumes and the manufacturing transportation line, I think together got you $40 million just in the quarter. And I know that's on an easier comp.

Speaker Change: Non res so.

Scott A. Cottrill: And that's kind of what my question is. But as we think about a $40 million increase in earnings or to EBITDA over the next year, you know, if you've got these kind of positive volumes coming through and it sounds like April trends are, you know, continuing with what you just saw, how should we think about that, that breakout of volume leverage and the level of fixed cost absorption that you think you can achieve? And sort of how does that play into that bridge? Thank you.

There'll be nice growth year over year, there, we will get some nice fixed cost absorption out of that that will help that manufacturing bar as you look at that EBITDA bridge, but it's also the investments we've made in the new tooling, the new machinery and all of the other efficiency initiatives that will help out with that as well the headwinds on a year over year dollar basis when you.

Scott A. Cottrill: Yeah, Matt, Scott, see here. Yeah, you're thinking about it the right way. When you look at that EBITDA bridge next year, you're going to see good volume growth. We talked about the end markets, you know, infrastructure, Resi, and non-res. So, there'll be nice growth year over year there, and we'll get some nice fixed cost absorption out of that. That'll help that manufacturing bar as you look at that EBITDA bridge.

Scott A. Cottrill: But it's also the investments we've made in the new tooling, the new machinery, and all of the other efficiency initiatives that'll help out with that as well. The headwinds on a year-over-year dollar basis when you look at that EBITDA walk from the 923 to the midpoint at the 960 are going to be additional challenges on the price-cost side, which is fine. We deal with that every year.

Speaker Change: Look at that EBITDA walk from the 923 to the midpoint of the 960 theres going to be additional challenges on the price cost side, which is fine we deal with that every year, we got to deal with that as we move forward.

Scott A. Cottrill: We've got to deal with that as we move forward. It's a constant battle as to kind of market share versus continuing to move that as we move forward. And then on the SG&A side, think about this kind of a, you know, we were about 13% SG&A as a percent of revenue for this year. Think about that being flat next year.

Speaker Change: It's a constant battle as to kind of market share versus continuing to move that as we move forward and then on the SG&A side same kind of a we were about 13% SG&A as a percent of revenue for this year think about that being flat next year and.

Scott A. Cottrill: And when you've got 3% to 4% growth at the midpoint, then obviously that entails some dollar growth as SG&A. Again, when we talk about that, it's because we're making investments in systems and in technology and improving our customer service. We're also making investments in materials science and engineering and innovation to accelerate and get those things fully staffed with that engineering technology center beginning here in the next couple months. So a lot of investments. We're investing in the business, so there's some cost associated with that. So that's the way I would look at it. Investing in the business with a little bit of headwind year over year on a price-cost basis.

Speaker Change: And when you've got 3% to 4% growth at the midpoint.

Speaker Change: Then obviously that entail some dollar growth.

Speaker Change: SG&A now again, when we talk to that that's because we're making investments in and systems and in technology, improving our customer service, we're also making investments in.

Speaker Change: In materials science, and engineering and innovation to accelerate.

Speaker Change: And get those things fully staffed with that engineering technology Center beginning here in the next couple of months. So so a lot of investments we're investing in the business. There is some cost associated with that so that's the way I would I would look at it and investing in the business.

Speaker Change: With a little bit of headwind year over year on a price cost basis.

Matthew Adrien Bouley: Perfect. Okay, that's super helpful. Thank you for that, Scott.

Perfect. Okay. That's super helpful. Thank you for that Scott.

Speaker Change: I guess second one kind of maybe sticking on that theme I know it was asked around the revenue cadence earlier, but.

Speaker Change: So you've got the price cost headwind.

Speaker Change: At the beginning of the year as you mentioned on the tougher comp I guess number one it would be helpful. If you could.

Speaker Change: Quantify that to any degree you can.

Speaker Change: But.

Speaker Change: It also sounds like if you're entering the year with this type of volumes.

Matthew Adrien Bouley: I guess, second one, kind of, maybe sticking on that theme, I know it was asked around the revenue cadence earlier, but, you know, so you've got the price cost headwind at the beginning of the year, as you mentioned, on the tougher comp. I guess, number one, it'd be helpful if you could, you know, quantify that to any degree you can. But, you know, it also sounds like if you're entering the year with this type of volume, maybe the volume comps are in a better place to begin the year.

Speaker Change: Maybe the volume comps in a better place to begin the year. So.

Speaker Change: As I look from an EBITDA perspective is the implication that most of the EBITDA growth in your guidance is in the first half of the year and then you'd be sort of flatter in the second half of the year or would you expect that kind of.

Speaker Change: EBITDA dollar growth to be kind of spread more ratably through the year. Thank you.

Speaker Change: Yes, I would say much like we talked about the revenue being mostly 55% to 60% in the first half I think the EBITDA might be a little bit north of where we will see the revenue phasing come in but not significantly Matt as you look at it and you model it out.

Matthew Adrien Bouley: So, as I look from an EBITDA perspective, is the implication that most of the EBITDA growth in your guidance is in the first half of the year, and then you'd be sort of flat in the second half of the year? Or would you expect that kind of, you know, EBITDA dollar growth to be kind of spread more racially through the year?

Scott A. Cottrill: Thank you.

Matthew Adrien Bouley: Yeah, I would say much like we talked about the revenue being mostly 55 to 60% in the first half, I think the EBITDA might be a little bit north of where we'll see the revenue phasing come in, but not significantly, Matt, as you look at it and you model it out. It's just going to be an interesting discussion on EBITDA dollars versus EBITDA margin as you look at it. So that's the way I would model it out. All right.

Speaker Change: It's just going to be an interesting discussion on EBITDA dollars versus EBITDA margin.

Speaker Change: As you look at it so that's the way I would model it out.

Matthew Adrien Bouley: All right. Got it. Thanks. Good luck.

Speaker Change: Alright got it thanks and good luck.

Speaker Change: Okay.

Garik Simha Shmois: Our next question comes from Garik Shmois with Loop Capital. Please go ahead.

Speaker Change: Our next question comes from Garik <unk> with loop capital. Please go ahead.

Garik Simha Shmois: Oh, hi, thanks. Congratulations on the quarter. I wanted to ask first, just you applied a little bit more color just on segment margin expectations for 25, maybe more specifically just how sustainable these are.

Oh, hi, thanks, and congrats on the quarter I wanted to ask first just you probably get a little bit more color just on segment margin expectations.

Speaker Change: 25, maybe more specifically just pulse sustainable these margin levels are and maybe a path to even more margin expansion, particularly.

Garik Simha Shmois: may be a path to even more margin expansion.

Garik Simha Shmois: Margin Expansion, particularly in Allied and Infiltrator, just given how strong the breakout has been over the last year.

Speaker Change: In <unk>.

Speaker Change: Allied and infiltrator, just given how strong the breakout it's been over the last year.

Scott A. Cottrill: Yeah. Hey Garik.

Speaker Change: Yeah, Hey, Gary Scott here.

Speaker Change: Absolutely.

Speaker Change: There is such still a margin expansion opportunity in this business and that's why we continue to double down on investments. So we look forward to that if you look at those segment margins in the fourth quarter Youll note that the pipe segment was down 50 bps in the fourth quarter year over year, but if I.

Scott A. Cottrill: Scott T. here. Absolutely no. We're, you know, there is still such a margin expansion opportunity in this business, and that's why we continue to double down on investments. So, we look forward to that. If you look at those segment margins in the fourth quarter, you'll note that the pipe segment was down 50 bps in the fourth quarter year over year. But if, you know, I mentioned that discretionary bonus, we paid employees $4 million in compensation costs in the quarter. A lot of that got recorded in that pipe segment. You normalize for that, and it was up on a margin basis.

Speaker Change: I mentioned that discretionary bonus we paid employees a $4 million of compensation costs in the quarter a lot of that got recorded in that pipe segment, you normalize for that and then it was up on a margin basis. So again, we look at infiltrator, great opportunities to grow Scott mentioned, the new product that they've introduced.

Scott A. Cottrill: So, again, we look at Infiltrator, and there are great opportunities to grow. Scott mentioned the new product that they've introduced. Innovation is key to what these folks do and what they'll continue to do. On the allied side, wow, we talk a lot about StormTech, but Nylo, all of those areas, we're making big investments. We tend to talk a lot about the pipe side of the business and the investments we're making in machines and tooling, but we're doubling down on the allied side as well.

Innovation is key to what these folks do and what they will continue to do.

Speaker Change: On the Allied side, while we talk a lot about storm tech, but aiello fittings all of those areas, we're making big investments we tend to talk a lot about the pipe side of the business and the investments, we're making in machines and tooling, but we're doubling down on the allied side as well same with infiltrator on.

Scott A. Cottrill: Same with Infiltrator on a bunch of innovation and efficiency projects that we've got underway. So, again, we get really excited about the opportunities in front of us, and we start getting the volume coming back, not at a three to four percent clip, but kind of a return to that high single-digit eight percent clip for this business and the leverage that it gets. We get really excited. So, there are a lot of opportunities, a lot of initiatives, a lot of things that this management team and board are focused on.

Speaker Change: A bunch of innovation and efficiency projects that we've got underway.

Speaker Change: So again, we get really excited about the opportunities in front of us and we start getting the volume coming back not in a 3% to 4% clip, but kind of a return to that high single digit 8% clip for this business and the leverage that it gets we get really excited so a lot of opportunities a lot of initiatives a lot of <unk>.

Speaker Change: Things that this management team and board are focused on.

Scott A. Cottrill: And the best part of that is the cash and the capital allocation piece that gets generated from all those efforts and hard work that our employees do. And, again, I would look at that as being something that we'll optimize here over the next 12 months as well. Got it. And then I was wondering if you could speak to your share gains, you know, both in the quarter and what you're anticipating for fiscal 25, just given, you know, how nicely volumes would come back, particularly

Speaker Change: And the best part of that is the cash and the capital allocation piece that gets generated from all of those efforts and hard work that our employees do and again I would look at that as being something that we will optimize here over the next 12 months as well.

Speaker Change: Got it and then.

Speaker Change: Just wondering if you could speak to your share gains both in the quarter.

Speaker Change: And what you are anticipating for fiscal 'twenty five just given.

Speaker Change: How might see volumes come back, particularly in some of the residential end markets.

Garik Simha Shmois: in some of the residential areas and markets.

Donald Scott Barbour: I'm just curious, do you think that you're gaining share at an above-normal clip for the company at this point? Is that in your guidance, or how should we think about it?

Speaker Change: I'm just curious.

Speaker Change: I think that you are.

Speaker Change: Gaining share in above normal.

Normal clip from the company at this point.

Speaker Change: Is that in your guidance or how should we think about it.

Donald Scott Barbour: How should we think about your share of opportunities here?

Your your share opportunities here.

Speaker Change: Yeah.

Garik Simha Shmois: So, Garik, good morning. This is Scott, Scott B. I would say Infiltrator continues to be a steady share gainer with new tank products and the new Ecopod product in the active on-site treatment segment. Allied products continue to gain share. I think we gained a lot of share in Allied products over the last year, in our last FY24. You know, and I say that because it grew so nicely relative to the pipe.

Speaker Change: So Gary Good morning. This is Scott Scott B I.

Speaker Change: I would say infiltrator continues to be a steady share gain with new tank products and the new eco pod products in the active on site treatment segment Allied products continued to gain share.

Speaker Change: I think we gained a lot of share and allied products.

Speaker Change: Over the last year of our last FY 'twenty four.

Speaker Change: Say that because it grew so nicely versus relative to the pipe and the pipe is kind of the market, but across all of our categories and allied products I feel I feel like we gained share, particularly in water quality, which was up like 15% year over year.

Garik Simha Shmois: And the pipe is kind of the market. But across all of our categories in Allied products, I feel like we gained share, particularly in water quality, which was up like 15% year over year. In pipe, I think we're probably gaining some share at the normal rate, the normal conversion rate today. This is led by our HP product.

Speaker Change: And Pike.

Speaker Change: We are probably gaining some share at the normal rate the normal conversion rate. Today. This is led by our HP product that's the polypropylene product.

Donald Scott Barbour: That's the polypropylene product, the tip of the spear when we compete against reinforced concrete pipe. And I definitely think we're gaining share there versus concrete pipe. The black pipe, the N12, is a bit more of a regional battle, kind of a ground war, you know, region by region. But we're certainly holding our own versus our normal conversion and overall plastic pipe versus traditional materials market model. No, that sounds good.

Speaker Change: The tip of the spear when we compete against reinforced concrete pipe and I definitely think we're gaining share there.

Speaker Change: Versus the concrete pipe the black pipe in 12 is bit more of a regional battle kind of ground War.

Speaker Change: Region by region, but we are certainly holding our own versus our normal.

Speaker Change: Conversion and overall plastic pipe versus traditional materials.

Speaker Change: Market model.

Garik Simha Shmois: I appreciate the help. Best of luck. Thanks, Gary.

Speaker Change: No that sounds good I appreciate the help best of luck.

Speaker Change: Thanks, guys. Thanks.

Bryan Francis Blair: All right, our next question comes from Bryan Blair on behalf of Oppenheimer. Please go ahead.

Speaker Change: Alright. Our next question comes from Bryan Blair with Oppenheimer. Please go ahead.

Bryan Francis Blair: Thank you good morning, guys.

Bryan Francis Blair: Good morning.

Bryan Francis Blair: My last question actually offers a pretty good segue to one of mine. You know, share games and new product intros are, of course, linked for you guys and maybe offer a little more color on the influence of new product intros in terms of the outgrowth of infiltrator and allied products. You mentioned Ecopod growing 40% or so with an infiltrator. Curious if you're, I'm willing to quantify the total contribution of new product growth to 4G performance and then similarly.

Speaker Change: Our last question actually on for some pretty good segment.

Speaker Change: One of mine.

Speaker Change: Share gains and new product in terms there are of course linked for you guys.

Speaker Change: And maybe offer a little more color on the influence of new product introduced in terms of the outgrowth of infiltrator and allied products.

Speaker Change: Steve You mentioned eco part growing.

40% or so with an infill trainer curious if youre.

Speaker Change: Are you willing to quantify the total contribution of <unk>.

Speaker Change: New products growth to <unk> performance and then similarly.

Bryan Francis Blair: You mentioned the RWS partnership is tracking very well; any detail you can offer there in terms of top line impact in the quarter or fiscal 25 outlook, which I believe would entail both allied and individual.

Speaker Change: You had mentioned the <unk> partnership.

Speaker Change: Tracking very well.

Speaker Change: You can offer there in terms of top line impact in the quarter or fiscal 'twenty five clubs.

Speaker Change: And I believe.

Speaker Change: Until both sides allied and until today.

Donald Scott Barbour: All right, a lot to unpack there. This is Scott G. Yeah, so here's how I would answer that, you know, often a brand new product is working off of a small base. So you can get really good growth rates, and the overall top-line revenue impact isn't huge, but what you're establishing is leadership in those local markets. And that's what we're doing with the Infiltrator Ecopod product in Florida, in these sensitive regions that have these higher nitrogen removal standards.

Speaker Change: Alright time lots to unpack there.

Speaker Change: As Scott or is it both.

Speaker Change: So here's how I would answer that often a a brand new product is working off of a small base. So you can get really good growth rates in.

Speaker Change: The overall top line revenue.

Speaker Change: The impact isn't huge but what youre, establishing his leadership in those local markets and that's what we're doing with the infiltrator eco pod product in Florida in the sensitive regions.

Speaker Change: That had these higher nitrogen removal standards. So you work on the standards you get the right product in there you get your distribution all fired up and while.

Donald Scott Barbour: So you work on the standards. You get the right product in there. You get your distribution all fired up.

Donald Scott Barbour: And while it isn't big at the beginning, Bryan, it's building that market participation, which makes it more difficult for others to come in. And that's really what we're doing there. Now, I would say about the tanks with Infiltrator, and we designed two new tank models over the last year. That's part of that invested capital that we did. These tools aren't cheap. They're not cheap at all.

Brian: It is a big at the beginning Brian It's building that is building that market participation, which makes it more difficult for others to come in and Thats really what were doing there now we say on the tanks with ample trader and we tooled to new tank models over the last year, that's part of that invested capital that we did this.

Donald Scott Barbour: And by the way, they're technically very, very sophisticated, and to get them ramped up is quite an engineering effort. We have one of the two ramped up and going, and it's really taking off. So it's kind of meaningfully moving that tank that will meaningfully move the tank sales this year for Infiltrator. And we're excited to have that. The second one comes on, I think, later this summer, the 1250. So we're going to be in great shape on that, and then I think the other was on allied products and how those might be growing. We just introduced a new SC800 Storm Tech model, kind of better product performance in terms of cubic feet of storage, and better cost. [inaudible] On the pipe side, you know, we're grinding it out. It's the HP.

Brian: Tools aren't cheap [laughter] theyre not cheap at all and by the way, they're technically very very sophisticated and to get them ramped up is quite an engineering effort. We have one of the two ramped up and going and it's really taken off so it's kind of meaningfully moving that tank that they will meaningfully move the tank sales this year.

Brian: For infiltrator and we're excited to have that the second one comes on I think later this summer.

Brian: And the 250, so we're going to be in great shape on that.

Brian: <unk>.

Brian: And then I think the other was on that on the allied products and how those might be growing we just introduced a new.

Brian: 800 storm Tech model kind of better product performance in terms of cubic feet of storage better costs, a higher value proposition that ones coming along pretty darn quick again, another tool that we invested in over the last year.

Brian: We're getting that product into the market that will impact the topline and the bottomline.

Brian: Whereas the impact we're talking millions of dollars not hundreds of millions of dollars.

Brian: Tens of millions of dollars, if you will and that SB 800 is really replacing an older product.

Brian: So theres, a little bit of cannibalization, but there'll be a margin improvement in a more competitive.

Brian: <unk> in the field the infiltrator products the tank and the eco bottlenecks are truly incremental I think largely largely largely incremental on the pipe side.

Donald Scott Barbour: It's the geographies. You know, those are the share gains. The residential, in particular, is a good share gain market for us. I think Higgins would say when we started that program, we were like 10% share in the residential segment. We're over 20 now, so we'll continue to do that. And that's, you know, we've added tens and tens and tens of millions of dollars over that share gain period there in the last two or three years. So I hope that gives a little bit of color and magnitude to what we're doing with those particular products.

Brian: We are grinding it out it's the HP, it's the geographies.

Brian: Those are the share gains the residential in particular is a good share gain market for us I think hagens would say when we started that program. We were like 10% share in the residential segment were over 20 now. So we will continue to do that and that's we've added tens and tens and tens of millions of dollars over.

Brian: To that share gain period, there over the last two or three years. So hope that gives a little bit of color and magnitude.

Brian: What to what we're doing with those particular products.

Bryan Francis Blair: Yeah, absolutely. All very helpful, Colin. Also great to hear a bit more about infrastructure, your revenues still moving in the right direction. Sounds like your team's quite confident in the outlook for fiscal 25. And I'm sure that entails solid growth across here. Transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: Yes, absolutely very helpful color.

Speaker Change: I would also be great to hear a bit more of an infrastructure revenues still moving in the right direction and it sounds like your your teams quite confident in the <unk>.

Outlook for fiscal 'twenty, five and I'm sure that entails.

Speaker Change: Solid growth across here.

Speaker Change: Traditional.

Speaker Change: Rates and exposures.

Speaker Change: Curious in terms of the.

Speaker Change: High single digits, plus E plus prospects there.

Speaker Change: Influence, Texas has on that.

Speaker Change: How how momentum has built and that states and just kind of how the pipeline looks overall.

Donald Scott Barbour: So the pipeline looks good. No pun intended for infrastructure. I refer back to two plus years ago when we set up a sales team and market management around infrastructure. Texas was a piece of that, but also a lot of these other things we're doing, like the airport projects are a great example, and we sell a lot of pipe and a lot of storm tech on those airport projects, and we have a great value proposition for airports because of our transportation efficiencies and needing less trucks to get our products We've gained some share there. Texas order rates are good. It's a battle there. I mean, that's a competitive situation.

Speaker Change: So pipeline looks good.

Speaker Change: No pun intended.

Speaker Change: For infrastructure.

Speaker Change: Yes.

Speaker Change: I refer back to two plus years ago, when we stood up a sales team and market management around infrastructure and Texas was a piece of that but also a lot of these other things we're doing like the airport projects.

Speaker Change: Great example, and we sell a lot of pipe and a lot of storm Tech on those airport projects and we have a great value proposition for airports because of our transportation efficiencies and needing less trucks to get our products onto an airport site.

Speaker Change: So my point is we invested starting two plus years ago, and then infrastructure. We've gained some share there texture.

Speaker Change: Texas order rates are good.

Speaker Change: It's a battle there I mean, that's a competitive situation.

Donald Scott Barbour: Those are kind of long-term projects, but we're winning some projects, and we're getting stuff in the hands of contractors. We're working to influence the market. We were down there three weeks ago for a customer event, and we saw lots of really great customers at that event, many of them in the infrastructure. We have a really nice job going on at Houston Hobby Airport right now, which is a several million dollar project.

Speaker Change: Those are kind of long lead projects, but we're winning some projects and we're getting stuff in the hands of contractors, we're working to influence the market. We were down there three weeks ago for a customer event and we saw lots of lots of really great customers at that event many of them in the infrastructure, we have a really nice job.

Speaker Change: Going on at Houston Hobby Airport, right now, which is a several million dollar project.

Donald Scott Barbour: That kind of work is a result of our infrastructure team. We stood up doing it. So we'd like to get over the plus. Allison doesn't like double digits sometimes on these calls. I'm looking at her because, you know, we feel like we have a good, good spot in that infrastructure space right now. And, again, you know.

Speaker Change: That that kind of work as a result.

Our infrastructure team, we stood up doing it so.

Speaker Change: We'd like to get over the plus Allison doesn't like double digits, sometimes on these calls.

Speaker Change: Looking at her because we feel like we've got a good a good spot in that infrastructure space right now and.

Speaker Change: And again.

Donald Scott Barbour: I'm kind of expanding on this, Bryan, I apologize, but we are able to make those investments at ADS starting two plus years ago in salespeople, business development, the programs, the tooling, all that kind of stuff. It's that cash generation Scott talked about, which I think is... A really cool thing about our model is that it really allows us to make those kind of investments that we know take a little while to pay off. But the payoff, I mean, I think we're delivering on those investments that we've made over the years.

Speaker Change: <unk>.

Speaker Change: And then kind of expanding on this Brian I apologize, but.

Speaker Change: We are able to make those investments at Aes in starting two plus years ago in in salespeople business development. The programs. The tooling all of that kind of stuff is that cash generation, Scott talked about which I think is.

Bryan Francis Blair: All very encouraging. And if I can slip in one more, just giving you kind of teed it up.

Speaker Change: Really cool thing about our model is it really allows us to make those kind of investments that we know take a little while to pay off.

Speaker Change: But the payoffs I mean, I think we're delivering on those investments that we've made over the years.

Bryan Francis Blair: The airport projects you mentioned, you mentioned a lot. If we think about the path to the double digits that Ellison is currently pushing back on, maybe, you know, for the average content per airport project, like you said, 20 or 20 plus of those. That, you know, that are pending, I assume that's quite material.

Speaker Change: All very encouraging and if I can slip in one more just giving you kind of teed it up.

Speaker Change: The Airport project you mentioned <unk>.

Speaker Change: If we think about the path to the <unk>.

Speaker Change: Double digits. The analysis is currently pushing back on.

Speaker Change: Maybe <unk>.

Speaker Change: The average content per airport projects like you said.

Speaker Change: 1% or 20, plus a balance.

Speaker Change: That.

Speaker Change: You know that our pending asset that's yes quite material.

Donald Scott Barbour: Yeah, and those are kind of long-lead projects, you know, you don't get the orders for those like on Monday and you get the orders on Friday. I mean, they're long-lead projects. And there's a lot of competitive quoting in that and stuff.

Speaker Change: Yes, and those are kind of long lead projects.

Speaker Change: You don't get you don't start on those like on Monday, and you get the order Friday I mean, there are long lead projects and there's a lot of competitive quoting and that and stuff, but we're pretty good at that and.

Donald Scott Barbour: But we're pretty good at that. And you know, if all 27 of those hit, Allison might let me nudge it above. I don't know. But I don't think all 27 will hit this year. But those are the kinds of things that have to happen for us to nudge it over the line. We're not going to quit selling, I can tell you that.

Speaker Change: If all 27 of those hit Alison might let me nudged above I don't know, but I don't think a whole 27 will hit this year, but those are the kinds of things that have to happen for us to measure it over the line.

Speaker Change: We're not going to quit selling I can tell you that.

Bryan Francis Blair: Completely understood. All right. Thanks, Bryan.

Speaker Change: Completely understood alright, thanks, Brian.

Speaker Change: Yeah.

John Lovallo: Our next question comes from John Lovallo with UBS. Please go ahead.

Speaker Change: Our next question comes from John Lovallo with UBS. Please go ahead.

John Lovallo: Good morning, guys. Thank you for taking my questions as well. Maybe the first one just kind of focusing in on the residential side, where you expect a mid single-digit year over year increase in 2025. I think roughly a third of that residential business, if I remember correctly, is multifamily, which, you know, could be challenged here over the near term. So how are you sort of thinking about the multifamily component as we move forward?

Good morning, guys. Thank you for taking my questions as well maybe the first one just kind of focusing in on the resi side, where you expect mid single digit year over year increase in 2025, I think we're roughly a third of that resi business. If I remember correctly is multifamily which could be challenged European near term to a sort of thing.

Speaker Change: About the multifamily component as we move forward here.

Donald Scott Barbour: Good morning, John. Scott B. here.

Speaker Change: Good morning, John Scott be here and we anticipated this question.

Speaker Change: So if you if you look at the.

Donald Scott Barbour: We anticipated this question. So if you look at the The, we told you the ADS piece is 14% of sales. About a third of that 14%, you know, so let's call it 5% of our total sales are in the multifamily segment. And it's down.

Speaker Change: We told you the <unk> piece is 14% of sales about a third of that 14%.

Speaker Change: Let's call it 5% of our total sales are in the multifamily segment.

Speaker Change: And it's down.

Donald Scott Barbour: So in our guidance, we're contemplating that market being off double digits. You know, it's a good market for us. We participate well in it across a lot of different products. It hasn't been great for the last 12 months. We don't think it's going to get any better in the next 12.

Speaker Change: So in our guidance, we're contemplating that market being off double digits.

Speaker Change: It's a good market for us we participate well in that across a lot of different products that hasnt been great for the last 12 months, we don't think its going to get any better in the next 12, So we're kind of.

Donald Scott Barbour: So we're kind of, not really, we are using this highly agile sales force that we have to have them, you know, kind of point towards other segments that are growing. So we think the impact is relatively minimal, and we can overcome any kind of degradation at the top line or the bottom line from that market in these other opportunities. And that was factored into our guidance. Yeah, definitely in our guidance.

Speaker Change: That kind of we are using this highly agile salesforce that we have to have them kind of point towards other segments that are growing. So we think the impact is relatively minimal and we can overcome any any kind of degradation at the top line or the bottom line from that market in these other opportunities.

Speaker Change: Was factored into our guidance, yes definitely in our guidance.

Scott A. Cottrill: Okay, that's helpful. And then, you know, margins for the company have benefited in recent quarters, you guys have talked about this, from a little bit less pipe mix as opposed to, you know, Allied Products and Infiltrator, where the margins are a bit higher. So if we think about what's embedded in the 2025 outlook, how are you expecting that mix to kind of trend? I mean, is there going to be some normalization there? Or should we think about it?

Speaker Change: Okay. That's helpful and then margins.

Speaker Change: The company has benefited in recent quarters you guys have talked about this from a little bit less pipe mix as opposed to you know allied products infiltrator, where the margins are a bit higher. So if we think about what's embedded in the 2025 outlook how are you expecting that mix.

Speaker Change: It kind of trend I mean is there going to be some normalization, there or how should we think about it.

Donald Scott Barbour: I would think, mostly consistent with what we've seen historically with Allied, particularly growing above kind of the pipe business. Infiltrator, as well, will be, you know, part of that residential mid single-digit growth algorithm that we talked about earlier. So, again, largely consistent. Obviously, there's always a little bit of tweaking that goes on there based on year-on-year comps, but largely consistent. I think you'll see Allied be the outperformer this year, more so than it has been in the past. And if I could add something, John, you've been around us a while.

Speaker Change: I would think.

Speaker Change: Mostly consistent with what we've seen historically with allied, particularly growing above kind of the pipe business.

Speaker Change: Trader as well will be part of that residential mid single digit growth algorithm.

Speaker Change: Algorithm that we talked about earlier.

Speaker Change: So again, largely consistent obviously theres always a little bit of tweaking that goes on there based on year over year comps.

Speaker Change: But largely consistent I think youll see allied b the outperformer this year.

Speaker Change: More so than it has been in the past.

Speaker Change: And if I could add something John you've been around us a while.

Donald Scott Barbour: You know, our basic formula is, Grow pipe a little bit better than the market, you know, we'd like to target two points better than the market, really led by the HP grow allied products and infiltrator, you know, kind of those high single digits. And if we do that all correctly, you know, we kind of mix in, and we get into that, you know, to a well above mid single-digit type of growth. That's our long-term formula. And we're not going to; this guidance doesn't change that at all. It's plus or minus a little bit every year. But that's our basic, most fundamental strategy.

Our basic formula is growth pipe, a little bit better than the market, we'd like to we targeted two points better than the market really led by the HP grow allied products and infiltrator kind of that high single digits.

Speaker Change: And if we do that all correctly, we kind of mix up and we get into that.

Speaker Change: Well above mid single digit.

Speaker Change: <unk> growth, that's our long term formula and we're not going to work.

Speaker Change: This guidance doesn't change that at all it's plus or minus every year, a little bit, but thats, our basic most fundamental strategy.

John Lovallo: Make sense? Thank you guys.

Speaker Change #100: Makes sense. Thank you guys.

John Lovallo: Hey, John. Yep. Thank you.

John: Hey, John Yes. Thank you.

David Edmund Tarantino: Our next question comes from David Tarantino with KeyBank. Please go ahead.

Our next question comes from David Tarantino with Keybanc. Please go ahead.

David Edmund Tarantino: Hey, good morning, everyone. Maybe just start on the CapEx investments. Can we frame where we are in terms of the timeline here, relative to the elevated investments? How much more runway do we have to go? And how should we expect this to show through on margins over time? Like how much is kind of in the margins today? And what's in the guide?

David Edmund Tarantino: Hey, good morning, everyone.

David Edmund Tarantino: Hey, good morning.

Maybe just start on the Capex investments can we frame, where we are in terms of the timeline here relative to kind of the elevated investments how much more runway do we have to come in.

David Edmund Tarantino: How do we should we expect this to show through on margins over time or how much is kind of in the margins today and what's in the guide.

Speaker Change #103: Hi, David Scott Barbour here.

Donald Scott Barbour: David, Scott Barbour here, you know, look at the Ample Trigger Mark and what's happened with those over the last several years. There's a nice portion of that that is attributable to the investments we made in 2019, approved, literally approved, you know, two weeks after the acquisition. We knew we had to make these investments. Roy and I knew it, you know, as we closed, or well before we closed, those investments that we made were, I think, $65 million or something like that.

Speaker Change #104: Look at the ample trader margins.

Speaker Change #104: And what's happened with those over the last several years.

Speaker Change #104: There is a nice portion of that.

Speaker Change #104: That is attributed attributable to the investments we made in 2019.

Speaker Change #104: Approved literally literally proved.

Speaker Change #105: Two weeks after the acquisition, we knew we had to make these investments Roy and I as we closed or well before we closed those investments that we made I think were like $65 million or something like that I mean, those are paying off today and better designs better tooling.

Donald Scott Barbour: I mean, those are paying off today in better designs, better tooling, you know, more efficiency in manufacturing, lower head counts through the automation we've done. Now, not all of the improvement in the infiltrator is due to that, but a meaningful amount of it is.

Speaker Change #105: More efficiency in manufacturing lower head count through the automation, we've done now not all of the improvement infiltrators due to that but a meaningful amount of it is and so I think as we spin these elevated cap elevated capital.

Donald Scott Barbour: And so I think as we spend these elevated cap, elevated capital, and we're still investing in Infiltrator, but we're, you know, rebuilding machinery in the ADS network. We bought two new lines or several new lines, some of them still ramping, some of them producing pretty darn well. The CapEx that we're spending on new tooling in the ADS network, in our recycling activities, we're still early in that whole kind of rollout. And one difficulty of, you know, we have to spread those investments over many facilities in the ADS network because of the nature of the product line versus really one or two primary facilities there in Kentucky. So the nature of the payoff isn't maybe as dramatic, but again, it builds over time in that ADS network.

And we're still investing in infiltrator, but we're rebuilding machinery in the ABS network. We bought two new lines are several new lines some of them still ramping some of them producing pretty darn well.

Speaker Change #105: The capex that we're spending on new tooling and the Avs network and our recycling activities. We're still early in that whole kind of rollout and one difficulty.

Speaker Change #105: We got to spread those investments over many facilities in the network because of the nature of the product line versus in really one or two primary facilities. There in Kentucky. So the nature of the pay off is it may be as dramatic.

David Crawford: But again builds over time and that Avs network, David what I would add to that is the fact that when we do our capex and we do our modeling it's kind of a 20% IRR, 15% MLR threshold.

Scott A. Cottrill: David, what I would add to that is the fact that when we do our CapEx and we do our modeling, it's kind of a 20% IRR, 15% MIR threshold. You can also see where the team has effectively put this capital to work based on our return on invested capital metric as well, and how that's continuing to go north by northeast. As we go, it's not, you know, when we look at return on invested capital, it's important to understand profitability in that numerator for sure, but we want to also do that while we're investing heavily in the business through innovation, efficiency, and all the other areas we mentioned. And we've shown we can do that.

David Crawford: You can also see where the team is effectively put this capital to work based on our return on invested capital metric as well and how that's continuing to go north by northeast as we go its not yes. When we look at return on invested capital. It is important to understand profitability in that numerator for sure, but we want to also do that while we're investing heavily.

David Crawford: And the business through innovation efficiency and all the other areas, we mentioned and we've shown we can do that and that's what we're going to continue to do and we think that drives really good shareholder value.

Scott A. Cottrill: And that's what we're going to continue to do, and we think that drives really good shareholder value and total shareholder returns. So your question about elevated, sure.

David Crawford: And total shareholder return. So your question about elevated sure and our guide $2 50 to 300, it will be elevated again this year for all the right reasons, I mean doing a new facility in Florida with our HP product tip of the spear on conversion absolutely the right use of our capital Debottlenecking resin absolute.

Scott A. Cottrill: In our guide 250 to 300, it'll be elevated again this year for all the right reasons. Building a new facility in Florida with our HP product, the tip of the spear on conversion, absolutely the right use of our capital. De-bottlenecking resin is absolutely the right use of our capital. Investing in innovation, new products, and supporting our distribution partners is absolutely the right use of our capital. So as to how you model that from a margin expansion and EBITDA growth perspective, again, use those return metrics as a guide, but that's how we think about it.

Speaker Change #107: <unk> the right use of our capital investing in innovation, new products supporting our distribution partners absolutely the right use of our capital so as to how you model that from a margin expansion and EBITDA growth perspective, again use those return metrics as a guide, but that's how we think about it and again, it's a really good future Scott made a good point earlier.

Scott A. Cottrill: And again, it's a really good future. Scott made a good point earlier about how we can talk about this next year coming up, which is important. But when you look at the three years and our strategies and the investments we're making, again, we remain bullish and excited. Okay, great. That's super helpful. And then maybe just to put a finer point on some of the price cost commentary, could you just give us an update on what you're seeing from a pricing perspective and the channel, kind of both on your products and from competitors' products. I would say, we always mention it's a local.

Speaker Change #107: We can talk about this this next year coming up which is important but when you look at the three years in our strategy and the investments we're making again.

Speaker Change #107: We remain bullish and excited.

Speaker Change #108: Okay, Great. That's Super helpful. And then maybe just to put a finer point on some of that price cost commentary could you just give us an update on what you're seeing from a pricing perspective in the channel kind of both on your products and from <unk>.

Speaker Change #108: Competitive competitive competitors products.

Scott A. Cottrill: I would say we always mention it's a local business. It's kind of that hand-to-hand combat.

Speaker Change #109: I would say, we always mentioned, it's a local business thats kind of that hand to hand combat.

Scott A. Cottrill: Our sales team, again, the best I've ever worked with, they do a great job. And again, it's constantly measuring competition and market and share penetration. And we do that continually, constantly. We do it every year.

Speaker Change #109: Our sales team again, the best I've ever worked with they do a great job.

Speaker Change #109: And again, it's constantly measuring competition and market share penetration.

And we do that continually constantly we do it every year, we will continue to work it I would generally say that yes.

Scott A. Cottrill: We'll continue to work on it. I would generally say that when we look at that price-cost dynamic, resin cost has kind of flattened out as we go into this year on a year-to-year basis. We talked about the first quarter comps on a pricing or yield perspective, as we refer to it, being by far our most challenging. As you remember, this past year, fiscal 24, we held on to most of our pricing as we talked about it and didn't see any of that price-cost start going away on a year-to-year basis until Q2.

Speaker Change #109: When we look at that price cost dynamic.

Speaker Change #109: Resin cost has kind of flattened out.

Speaker Change #109: As we as we go into this year on a year over year basis.

Speaker Change #109: We talked about the first quarter comps on our pricing or yield perspective, as we referred to it being by far our most challenged as you remember this past year fiscal 'twenty four we held on to most of our pricing as we talked about it and didn't see any of that price cost start going away on a year over year basis till Q2. So.

Speaker Change #109: Now I would say that by and large when you adjust for mix and seasonality.

Scott A. Cottrill: So right now, I would say that, by and large, when you adjust for mix and seasonality, it's hanging in there. There aren't big moves off of where we were as we ended 24 as we turned the corner into 25.

Speaker Change #109: It's hanging in there there is not big moves off of where we've been as we've ended 24 as we turned the corner into 'twenty five.

Speaker Change #110: Okay, great. Thank you.

Noah Christopher Merkousko: Our last question comes from Noah Merkousko with Stevens Incorporated. Please go ahead.

Speaker Change #111: Our last question comes from Noah <unk> with Stephens incorporated please go ahead.

Noah Christopher Merkousko: Good morning. Congratulations on the strong results. And thanks for taking my question. So, first, it sounds like pricing is still performing as expected. What are you assuming for price in the guide as we look at fiscal 25?

Noah: Good morning.

Speaker Change #113: That's on the strong results and thanks for taking my questions.

Sure. So first it sounds like pricing is still performing as expected what are you assuming for price in the guide as we look at fiscal 'twenty five.

Scott A. Cottrill: So, as we talked about, the way we talk about pricing is price cost and material cost, and, again, the way to look at it, and, again, I like using a visualize the EBITDA bridge for the 25 versus 24, if you were to fast forward to the end of the year, and, again, price cost will be a headwind on a year-over-year basis, primarily from a first quarter, year-over-year comp perspective, and that's the way to think about it, and, again, we know that. It's in our forecast, it's in our guide, but, again, we'll overcome that with really, you know, we talked about the end market growth that we've got in our guide, we've talked about the manufacturing efficiencies and absorption, fixed cost absorption we plan on getting, and those are all in there that lead us to that 923 of EBITDA on fiscal 24 growing up to the 960 at the midpoint of our guidance range, so that's how I would think about it.

Speaker Change #114: So as we talked about it the way, we talk about pricing as price cost of material cost.

Speaker Change #114: And again the way to look at it and again I like using a visualize the EBITDA bridge for the <unk> 25 versus <unk> 24, if you were to fast forward to the end of the year and again price cost will be a headwind on a year over year basis, primarily from our first quarter year over year comp perspective.

Speaker Change #114: And that's the way to think about it and again, we know that it's in our forecast. It's in our guide, but again, we will overcome that with really we talked about the end market growth that.

Noah Christopher Merkousko: Got it. That makes sense.

Speaker Change #114: We've got in our guide we've talked about the manufacturing efficiencies and absorption of fixed cost absorption we plan on getting.

Speaker Change #114: And those are all in there that lead us to that 923 of EBITDA in fiscal 'twenty for growing up to the 960 at the midpoint of our guidance range. So that's how I would think about it.

Noah Christopher Merkousko: Switching gears here, you know, it sounds like infrastructure is clearly very strong growth as you look forward. I know Texas was a big win a few years ago. So maybe just kind of give us an update on your efforts to gain DOT approval for using your products. Should we expect maybe, you know, any more states to come on board here as we look forward?

Speaker Change #115: Got it that makes sense.

Speaker Change #116: Switching gears here it sounds like infrastructure, clearly very strong growth as you look forward.

Speaker Change #117: I know, Texas was a big win.

Speaker Change #118: Few years ago. So maybe just kind of give us an update on your efforts to gain approval.

Speaker Change #119: Approval for using our products should should we expect maybe any more states to kind of come on board here as we look forward.

Donald Scott Barbour: Scott, this is Scott and Barbour. Noah and I, you know, there's no big deal. I mean, Texas was so big because it's the biggest pipe market in the country and all that stuff. We've talked a lot about that, so there's no other really huge state. You know, what we, I would say we're really focused on is where we do have good approvals, and we feel like we're under-participated relative to the strength of our approvals. California is an example we use often.

Speaker Change #119: Okay.

Speaker Change #119: Scott This is Scott Barbour.

Speaker Change #119: Sure.

Speaker Change #119: Theres no big.

Speaker Change #119: Texas was so big because it's the biggest pipe market in the country and all that stuff, we've talked a lot about that so theres no other really huge state what we what I would say, we're really focused on is where we do have good approvals.

Speaker Change #119: And we feel like we're under participated relative to the strength of our approvals.

Speaker Change #119: California is the example, we use often.

Donald Scott Barbour: You know, we're really putting together as many initiatives as we can to kind of do that. The other thing that we're focused on from an approval standpoint is municipalities, you know, highly localized, where you might have a really big county, like even in a great state like Florida, you know, there are some big counties where we don't do as well as we think we should. There's some there; there are examples like that everywhere.

Speaker Change #119: We're really putting together as many initiatives as we as we can to kind of to do that the other thing that we're focused on from an approval standpoint is municipals.

Highly localized where you might have a really you might have a county I, even in a great state like Florida, Theres, Some big counties, where we don't do as well as we think we should.

Donald Scott Barbour: And so we'll we'll be focused on those. We have a good-sized team out there working on this every day. And so in any given year, there'll be tens of municipal and county approvals that will come our way. And in our model, that gives us kind of that approval, and then we have to go work on acceptance. And that's really, you know, I would say a big part of our focus is on getting that acceptance at the contractor at the engineer level so that we win the bid.

Speaker Change #119: There is some there is examples like that everywhere and so we will be focused on those that we have a good sized team out there working this every day and so on any given year there'll be tens of municipal and county approvals, They will come our way and in our model that gives us.

Speaker Change #119: That that approval and then we got to go work on acceptance and that's really I would say a big part of our focus is on getting that acceptance at the contractor in the engineered level. So that we win the bids.

Noah Christopher Merkousko: Got it. That all makes sense. Thanks for the time and good luck with the rest of the year.

Speaker Change #120: Got it that all makes sense. Thanks for the time and good luck with the rest of the year.

Speaker Change #121: Okay. Thank you thanks al.

Donald Scott Barbour: I will now turn the call over to Scott Barbour for his closing remarks.

Speaker Change #121: I will now turn the call over to Scott Barbour for closing remarks.

Donald Scott Barbour: All right. Thank you very much.

Donald Scott Barbour: Alright, Thank you very much.

Donald Scott Barbour: So we really appreciate everyone participating today.

Scott Barbour: And.

Donald Scott Barbour: We closed the year strong we're pretty proud of the results in FY 'twenty four.

Donald Scott Barbour: So, we really appreciate everyone participating today. And we closed out the year strong. You know, we're pretty proud of the results in FY24. Our organization executed well. Everything, not everything, but a lot of things went right for us as we particularly worked in the second half of the year. And it came in, you know, slightly better than our estimates.

Donald Scott Barbour: Our our organization executed well.

Donald Scott Barbour: Everything not everything but a lot of things went right for us as we particularly work that second half of the year and it came in slightly better than our guide.

Donald Scott Barbour: But I think we're kind of doing what we say we're going to do as.

Donald Scott Barbour: But I think we're, you know, kind of doing what we say we're going to do. As we look into the next year, I think you'll hear from Scott and me that we're pretty optimistic and confident about not only the long-term future but the short-term future for us. It remains our focus to execute well on capital, you know, in the field, in our factories, these things. We have got to do those things well every day.

Donald Scott Barbour: As we look into the next year.

Speaker Change #123: I think you hear from Scott nine, we're pretty optimistic and confident.

Speaker Change #123: About the not only the long term future, but the short term future for us it remains.

Speaker Change #123: Our focus to execute well on the capital.

Speaker Change #123: In the field in our factories. These things we got to do those well every day and that's what we're that's what we're all about so I think as we go through this year it'll unfold there'll be some twists and turns but but we'll manage those one of the things I've been tell them. The team is.

Donald Scott Barbour: And that's what we're, that's what we're all about. So, I think as we go through this year, it'll unfold. There'll be some twists and turns, but, but, you know, we'll manage those. One of the things I've been telling the team is, you know, we have to be agile. We gotta be agile because things happen during the year, and you're gonna have to adjust to those, keeping that plan and North Star in front of us. And that's what we will do. So thank you. We look forward to the calls later today and seeing you guys around. So we appreciate your time today.

Speaker Change #123: We got to be agile.

Speaker Change #123: We got to be agile because things happened during the year and youre going to have to adjust to those keeping the that plan and Northstar in front of us and that's what we'll do.

Speaker Change #123: So thank you we look forward to the calls later on today and seeing you guys around so we appreciate the time today.

Danica: And that concludes today's call. Thank you all for joining us. You may now disconnect.

Speaker Change #124: And that concludes today's call. Thank you all for joining you may now disconnect.

Speaker Change #124: Yeah.

Speaker Change #124: Okay.