Q1 2024 Hubbell Inc Earnings Call

Ladies and gentlemen, thank you for standing by.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the first quarter 2024 Hubbell Incorporated earnings conference call. At this time, all participants are in a listen-only mode; after the presentation, there will be a question-and-answer session. To ask a question during the session, you would need to press star 1 1 on your telephone. You would then hear an automated message advising your hand is raised.

First quarter 'twenty 'twenty four Hubbell incorporated earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you would need to press star one on your telephone you would.

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Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Dan Innamorato, Vice President of Investor Relations. Please go ahead.

Your question. Please press Star one again, please be advised that today's conference is being recorded I would like now to turn the conference over to your speaker today, Dan and I Morado, Vice President of Investor Relations. Please go ahead.

Dan Innamorato: Thanks, Michelle. Good morning, everyone. And thank you for joining us. Earlier this morning, we issued a press release announcing our results for the first quarter of 2024. The press release and slides are posted to the Investor section of our website at hubbell.com. I am joined today by our Chairman, President, and CEO, Gerben Bakker, and our Executive Vice President and CFO, Bill Smith.

Dan Innamorato: Thanks, Michele good morning, everyone and thank you for joining US earlier. This morning, we issued a press release announcing our results for the first quarter of 2024 press release and slides are posted to the investors section of our website at <unk> Dot com joined today by our chairman President and CEO Girvin Parker Executive Vice President and CFO Bill Sperry. Please note. Our comments. This morning may include statements related to the <unk>.

Dan Innamorato: Please note that our comments this morning may include statements related to the expected future results of our company and forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Please note the discussion of forward-looking statements in our press release and consider it incorporated by reference into this call. Additionally, comments may also include non-GAAP financial measures. Those measures are reconciled with the comparable gap measures and are included in the press release and slides. Now, let me turn the call over to you.

Dan Innamorato: <unk> future results of our company and are forward looking statements as defined in the private Securities Litigation Reform Act of 1995. Please note the discussion of forward looking statements in our press release and consider it incorporated by reference into this call.

William R. Sperry: <unk> <unk> comments May also include non-GAAP financial measures those measures are reconciled with the comparable GAAP measures and are included in the press release and slides now let me turn the call over to Garvin.

Garvin: Great. Good morning, and thank you for joining us to discuss <unk> first quarter 2024 results.

Gerben W. Bakker: Good morning, and thank you for joining us to discuss Hubbell's first quarter 2024 results. Hubbell is off to a solid start in 2024, and we are well on track to deliver on our full year outlook, which contemplates double-digit adjusted operating profit growth at the midpoint. Performance in the quarter was highlighted by strong organic growth and margin expansion in electrical solutions. Electrification and U.S. manufacturing activity are driving broad-based strength across our markets, most notably in Renewables and Data Centers, which continued to grow double digits in the quarter. Our connectors and grounding business, which is strategically positioned in these verticals, as well as in broader industrial markets, realized double-digit sales growth in the quarter.

Garvin: Mobile is off to a solid start to 24, and we are well on track to deliver on our full year outlook, which contemplates double digit adjusted operating profit growth at the midpoint.

Garvin: Performance in the quarter was highlighted by strong organic growth and margin expansion and electrical solutions.

Garvin: Electrification and U S manufacturing activity is driving broad based strength across our markets.

Garvin: Notably in renewables and data centers, which continues to grow double digits in the quarter.

Garvin: Our connectors and grounding business, which is strategically positioned in these verticals as well as in broader industrial markets realized double digit sales growth in the quarter.

Garvin: We also continued to make progress in our Ats segment unification strategy.

Gerben W. Bakker: We also continue to make progress in our HES segment unification strategy, with 80 basis points of adjusted operating margin expansion in the quarter despite increased restructuring investment in footprint optimization. With the completion of our residential lighting divestiture in February, we are confident that our electrical solution portfolio is aligned to structurally higher growth and margins going forward. In our utility solution segment, performance in our core utility T&D markets was solid, driven primarily by strength in our grid automation businesses and transmission markets. As anticipated, utility distribution markets continue to be impacted by channel inventory normalization.

Garvin: With 80 basis points adjusted operating margin expansion in the quarter, despite increased restructuring investment in footprint optimization.

Garvin: With the completion of our residential lighting divestiture in February we are confident that our electrical solutions portfolio is aligned to structurally higher growth and margins going forward.

Garvin: And our utility solutions segment performance in our core utility T&D markets was solid.

Garvin: Driven primarily by strength in our grid automation businesses and transmission markets.

Garvin: As anticipated.

Garvin: <unk> distribution markets continues to be impacted by channel inventory normalization.

Garvin: So end market demand remains solid.

Garvin: We're also pleased with the positive contributions from our acquisitions in the quarter.

Garvin: Systems control, it's off to a good start and the integration is running smoothly.

Garvin: Less stroke and AIG delivered strong results in the quarter.

Garvin: Cellcom markets were weak in the quarter driving significant sales and margin declines in our utility and closures business.

Garvin: While we continue to have a positive outlook on the long term growth prospect of fiber deployment and broadband access we expect this weakness to persist in the second quarter and are taken additional targeted actions in response.

Gerben W. Bakker: So end market demand remains solid. We're also pleased with the positive contributions from our acquisitions in the quarter. Systems control is off to a good start and the integration is running smoothly, while Balestro and EIG delivered strong results in the quarter. Telcom markets were weak in the quarter, driving significant sales and margin declines in our utility enclosures business.

Garvin: Bill will walk you through the details within the quarter in a few minutes, but overall, we are confident in the setup for utility solutions over the balance of 'twenty 'twenty four as our leadership in attractive utility T&D markets positions us well to meet the grid modernization and electrification needs of our customers.

Garvin: From an operational standpoint, we executed well in the quarter against a challenging prior year comparison.

Garvin: We're very pleased with our early traction on price realization, which continues to be supported by our strong position and leading service levels.

Gerben W. Bakker: While we continue to have a positive outlook on the long-term growth prospects of fiber deployment and broadband access, we expect this weakness to persist in the second quarter and are taking additional targeted actions in response. Bill will walk you through the details of the quarter in a few minutes, but overall, we are confident in the outlook for utility solutions over the balance of 2024 as our leadership in attractive utility T&D markets positions us well to meet the grid modernization and electrification needs of our customers.

Garvin: While the operating environment remains inflationary.

Garvin: To achieve positive price cost productivity in both segments in the quarter.

Garvin: As we highlighted throughout 2023, we accelerated our investment levels as the year progressed in areas such as innovation and engineering.

Garvin: <unk> as well as sourcing and procurement.

Garvin: These investments continued into first quarter and we are confident they will deliver attractive payback through higher long term growth and productivity levels.

Garvin: Before I turn it over to Bill I wanted to share some insights from our public utility connect customer conference a few weeks ago.

Garvin: We hosted over 400 utility customers to showcase our solutions across each of our brands product lines and end markets.

Garvin: This was the first time Hubbell held a customer event of this magnitude across the entire utility solutions franchise.

Gerben W. Bakker: From an operational standpoint, we executed well in the quarter against a challenging prior-year comparison. We're very pleased with our early traction on price realization, which continues to be supported by a strong position and leading service levels. While the operating environment remains inflationary, we achieved positive price-cost productivity in both segments in the quarter.

Speaker Change: Like to thank Greg gums, and his leadership team for creating a unique forum for us to engage with our customers.

Speaker Change: Educate and collectively problem solve to make our critical infrastructure more reliable and resilient.

Speaker Change: Key takeaways from several days of discussions with our largest customers who are clear utilities are in investment mode.

Garvin: Our customers anticipate a multiyear T&D investment cycle as the combined effects of ageing infrastructure.

Garvin: <unk> electrification and load growth will require more hardened infrastructure as well as unique solutions to emerging challenges.

Gerben W. Bakker: As we highlighted throughout 2023, we accelerated our investment levels as the year progressed in areas such as innovation and engineering, capacity and lean, as well as sourcing and procurement. These investments continued in the first quarter, and we are confident they will deliver attractive payback through higher long-term growth and productivity levels. Before I turn it over to Bill, I wanted to share some insights from our Hubbell Utility Connect customer conference a few weeks ago.

Garvin: <unk>, leading quality and service levels together with our proactive investments in capacity and innovation will position us well to grow with our customers as their investment levels accelerate in the coming years.

Garvin: In particular utility customers are focused on the impact of load growth driven by data center power consumption.

Garvin: While this phenomenon is still early days the impact to our customers is real and will require incremental investment over a period of many years as large projects progressed and require grid interconnections.

Garvin: Higher growth and more specifically higher peak load growth will require more transmission and substation infrastructure areas.

Garvin: Areas, where hubbell has recently doubled down and we'll be well positioned to serve.

Garvin: It also means novel solutions and grid modernization will be required to solve the emerging problems and <unk> unique leadership across utility components communications and control when enabled us to partner with our customers for continued long term success.

Gerben W. Bakker: We hosted over 400 utility customers to showcase our solutions across each of our brands, product lines, and end markets. This was the first time Hubbell held a customer event of this magnitude across the entire Utility Solutions franchise.

Garvin: With that let me turn it over to bill for more details in the quarter.

William R. Sperry: Thank you good morning, everybody.

William R. Sperry: We're well aware of that you're all over schedule. There is a lot of releases today. So we appreciate you taking time.

William R. Sperry: To discuss hubbell's performance.

Gerben W. Bakker: And I'd like to thank Greg Gumbs and his leadership team for creating a unique forum for us to engage with our customers, to educate, and collectively problem-solve to make our critical infrastructure more reliable and resilient. Key takeaways from several days of discussions with our largest customers were clear. Utilities are in investment mode. Our customers anticipate a multi-year T&D investment cycle as the combined effects of aging infrastructure, renewables, electrification, and load growth will require more hardened infrastructure, as well as unique solutions to emerging challenges.

William R. Sperry: My comments are starting on page five of the slides that you hopefully found and.

William R. Sperry: Overall, the enterprise performed.

Garvin: Solidly little bit better than we anticipated.

Garvin: The net had some puts and takes.

Garvin: But very consistent with our full year outlook.

Garvin: Our expectations of normal seasonality.

Garvin: Our sales for the quarter were $1 4 billion.

Garvin: High single digit growth organic was about 2% of that inorganic about six so we'll talk about the inorganic story quickly three acquisitions contributing in the quarter systems control, which is a substation turnkey solution business.

Garvin: <unk>, which is.

Garvin: Helping our <unk> business.

Garvin: AIG, which is power control components.

Gerben W. Bakker: Hubbell's leading quality and service levels, together with our proactive investments in capacity and innovation, will position us well to grow with our customers as their investment levels accelerate in the coming years. In particular, utility customers are focused on the impact of load growth driven by data center power consumption.

Garvin: All three in the utility segment contributing about eight five points of growth in the quarter.

Garvin: And we closed on residential lighting distant Bruce disposition.

Garvin: And very early February so we lost two months of sales in the first quarter and that cost us.

Garvin: Two points.

Garvin: So I think thats.

Garvin: The quantitative side of the inorganic but qualitatively, we feel we meaningfully added to the growth and margin profile of the enterprise.

Garvin: Operating profit at attractive levels of 19, 7%.

Garvin: Down a point better.

Gerben W. Bakker: While this phenomenon is still in its early days, the impact on our customers is real and will require incremental investment over a period of many years as large projects progress and require grid interconnection. Higher load growth, and more specifically, higher peak load growth, will require more transmission and substation infrastructure, areas where Hubbell has recently doubled down and will be well positioned to serve. It also means novel solutions in grid modernization will be required to solve the emerging problems, and Hubbell's unique leadership across utility components, communications, and control will enable us to partner with our customers for continued long-term success. With that, I will turn it over to Bill for more details in the quarter. Thank you, Gerb. Good morning everybody.

Garvin: Better than expected performance on price cost productivity was more than offset by incremental in our enclosures business, which as well.

Garvin: <unk> exposure is.

Garvin: And higher investment levels in growth and productivity, including some restructuring spending, which we'll talk more about when we get to the segment revenue earnings per share was $3 60.

Garvin: Flat to last year and.

Garvin: Operating profit dollar growth was offset by interest expense and free cash flow on track to deliver our full year outlook of $800 million.

Garvin: We'll dig down on page six a little bit deeper into the performance.

Garvin: Specifically, we're showing the year over year compares and as we do that it's worth a mention.

Garvin: The first quarter of 2023.

Garvin: It's quite a difficult compare really really strong performance last year, where price cost was a particularly strong tailwind.

Garvin: Pre.

Garvin: Destocking in pre investments that we made and maybe just to remind everybody we had.

Bill: We're well aware that you're all over the schedule. There are a lot of releases today, so we appreciate you taking time to discuss Hubbell's performance. My comments start on page five of the slides that you hopefully found. And overall, the enterprise performed solidly, a little bit better than we anticipated. The net had some puts and takes, but it was very consistent with our full-year outlook and our expectations of normal seasonality. Our sales for the quarter were $1.4 billion, high single-digit growth.

Garvin: And earnings per share up, 70% and margins up seven points.

Garvin: So.

Garvin: Think that context important as we look to the year over year compares.

Garvin: Sales were up as we said 9% to $1 four.

Garvin: 2% of that was organic which is comprised of three points of price.

Garvin: Really driving the topline volume was slightly down.

Garvin: And we're quite pleased with that price performance.

Garvin: Showing real strengths.

Garvin: Of our franchise.

Garvin: The operating profit is up 3% in dollars to $275 million.

Bill: Organic was about 2% of that, and inorganic was about 6%. We'll talk about the inorganic story quickly. Three acquisitions contributing in the quarter. Systems Control, which is a substation turnkey solution business. Elestro, which is helping our arresters business, and EIG, which is power control components.

Garvin: And as we talked about the.

Garvin: The difficult compare year over year could you see its down a point.

Garvin: It's worth commenting on the sequential.

Garvin: We see margins up 30 basis points sequentially. So we think thats quite positive to setting up.

Garvin: Our normal seasonal year, earning.

Garvin: Earnings per share at $3 60, <unk> flat to last year.

Garvin: The.

Garvin: Okay.

Garvin: It was offset by interest expense from the three companies that we bought.

Bill: All three in the utility segment, contributing about 8.5 points of growth in the quarter, and we closed on residential lighting disposition in very early February. So we lost two months of sales in the first quarter, and that cost us about $1.5 million. So I think that's the quantitative side of the inorganic, but qualitatively, we feel we meaningfully added to the growth and margin profile of the enterprise. Operating profit at attractive levels of 19.7%, down a point, better than expected performance on price-cost productivity, was more than offset by a decline in our enclosures business, which is a well-known telecom exposure, and higher investment levels, growth, and productivity, including some restructuring spending, which we Earnings per share was $3.60, flat to last year, and operating profit dollar growth was offset by interest expense, and free cash flow on track to deliver our full year outlook of $800,000.

Garvin: I mentioned those.

Garvin: The combined.

Garvin: A combined value of that investment was about $1 billion in a quarter.

Garvin: And it's worth maybe a comment.

Garvin: On how the balance sheet absorb that level of investment.

Garvin: We finance those three acquisitions with a combination of.

Garvin: Debt and cash and also sold our business as we mentioned so the balance sheet impact of all that we went from one three times gross debt to EBITDA, we increase to have turned to one eight times.

Garvin: So after investing $1 billion a quarter is still a very very solid balance sheets very easily absorbed.

Garvin: And very well positioned to continue to invest in acquisitions, and Capex, which I'll talk about in a second when you see free cash flow at $52 million in.

Garvin: And I did want to highlight that that's absorbing a 20% increase in capital expenditures.

Garvin: To $40 million and I really think that.

Garvin: Our confidence in our.

Garvin: Short and medium term outlook.

Garvin: You can see that when we're when we're ramping up capex.

Garvin: At the 20% level.

Garvin: So I think we'll learn a lot as we dig into the segments, we'll start with the utility segment on page seven.

Garvin: Sales up 14% and <unk> up 2%.

Garvin: The 14% growth in sales is essentially all acquisitions.

Garvin: Again, it is neutral where there's three points of price.

Garvin: Offset by a similar sized decline in volume.

Garvin: Youll see with the bold words on the lower left.

Bill: We'll dig down on page six a little bit deeper into the performance, and specifically, we're showing the year-over-year comparisons. And as we do that, it's worth mentioning the first quarter of 2023. It's quite a difficult comparison.

Garvin: We've reclassified the businesses into these two units to be consistent with the way.

Garvin: Greg has organized his operating team so grid infrastructure versus grid automation and grid infrastructure, we have our traditional T&D business, we have the new acquisition.

Bill: Really, really strong performance last year where price cost. It was pre-D stock and pre-investments that we made. And maybe just to remind everybody, we had OP and earnings per share up 70%, and margins up seven points. So I think that context is important as we look to the year ahead.

Garvin: It's in substation turnkey solutions, and we have some specialty infrastructure businesses, namely enclosures and gas components. That's all in the grid infrastructure area and in automation.

Garvin: We have a clear which is the meters and the communications products as well as protection and control products to.

Garvin: You'll recall that named Beck with <unk>.

Garvin: Controls as well as switching and fusing products, which are providing the protection. So.

Garvin: I'll show you on the next page all the sizes and what to expect from us but.

Bill: Sales were up, as we said, 9% to $1.4 billion; 2% of that was organic, which is comprised of three points of price. Really driving the top line volume was slightly down, and we're quite pleased with that price performance, showing the real strengths of our franchise. The operating profit was up 3% in dollars to $275 million.

Garvin: The infrastructure business.

Garvin: It was in the core utility business performed very very well transmission up double digits.

Garvin: Distribution still going through their channel inventory normalization.

Garvin: We're getting near the end of that persists.

Garvin: Persisting a little longer than we expected as.

Garvin: We think the channel is has worked largely worked its way through but we think the end customers are still holding some inventory. So we're getting closer to putting that behind us and when we get to the electrical segment next.

Bill: And as we talked about... The difficult compare year-over-year, because you see it's down a point, it's worth commenting on the sequential, where we see margins up 30 basis points, and others quite positive to setting up. Normal season, Earnings per share at $3.60, flat to last year. The O.P.

Garvin: Youll see that they went through the same last year and have emerged very healthily.

Garvin: So.

Garvin: Really good PCP performance in that T&D business set itself various constructively for its.

Garvin: Financial performance grid automation, likewise double digit growth.

Garvin: Both in the meters and comm area, but also in the control and protection area.

Garvin: So really strong contribution there.

Bill: was offset by interest expense from the three companies that we bought. I mentioned those earlier. The combined value of that investment was about a billion and a quarter, and it's worth maybe a comment on how the balance sheet absorbed that level of investment. We financed those three acquisitions with a combination of, and are dead in cash, and also sold a business, as we mentioned. So the balance sheet impact of all that, we went from 1.3 times gross debt to EBITDA. We increased a half turn to 1.8 times.

Garvin: Headwinds really coming.

Garvin: From the telecom sector.

Garvin: Which is inside that specialty infrastructure infrastructure business and are really enclosures that we make.

Garvin: For the Telecom segment.

Garvin: They are navigating a both channel and customer inventory normalization period, creating a significant headwind.

Garvin: 40% decline in volumes.

Garvin: Business line is very profitable.

Garvin: And so it's creating an op drag so the effect of that is about four points on the <unk>.

Garvin: Segment top line.

Garvin: And as you can see about a point.

Bill: So after investing a billion and a quarter, we're still a very, very solid balance sheet, very easily absorbed, and very well positioned to continue to invest in acquisitions and CapEx, which I'll talk about in a second. But when you see free cashflow at 52 million, and I did want to highlight that that's absorbing.

Garvin: <unk>.

Garvin: On the op line so.

Garvin: <unk> for the segment is up 2%.

Garvin: To remind you of the compare.

Garvin: Last year.

Garvin: Utility.

Garvin: <unk> was up 87%.

Garvin: So.

Garvin: Growing off of that is very impressive.

Garvin: Decline of two five points of margin being led by the Decrementals in telecom.

Bill: 20% increase in capital expenditures to $40 million. And I really think that our confidence in our short and medium-term outlook can be seen when we're ramping up CapEx at the 20% level. I think we'll learn a lot as we dig into the segments.

Garvin: To be clear our medium term outlook for telecom business is quite positive.

Garvin: And.

Garvin: We've also made continue to make investments in the long term growth and productivity.

Garvin: Of the segment those created about one point of drag.

Garvin: And the acquisitions that we mentioned, which are all doing really well and are all performing very profitably.

Garvin: But against that mid twenties level actually created a half point of drag essentially in the first quarter of systems control being part of almost so.

Bill: We'll start with the utility segment on page seven, sales up 14% and OP up 2%. 14% growth in sales is essentially all acquisition. The organic is neutral, where there are three points of price and offset by a similar size decline in volume.

Garvin: So I think very good performance, there and the price cost productivity equation.

Garvin: Was positive so again, we're showing you the year over year compares I do want to highlight sequentially from.

Garvin: From the fourth quarter of last year. The margins are up 40 bps. So we're feeling again like where we are setting up for a successful normal seasonality year here I wanted to add a page.

Garvin: On page eight just to make sure we're being clear.

Bill: You'll see from the bold words on the lower left that we've reclassified the businesses into these two units to be consistent with the way Greg has organized his operating team, so grid infrastructure versus grid automation. In grid infrastructure, we have our traditional T&D business. We have the new acquisition that's in substation turnkey solutions, and we have Specialty Infrastructure, namely enclosures and gas components. That's all in the grid infrastructure area. And then in automation, we have Clara, which is the meters, communications products, as well as protection and control products, called the name Beckwith with the controls as well as switching and fusing products which are provided.

Garvin: About our nomenclature and where we have the different business units. So on the left you can see the grid infrastructure comprising 75% of the.

Garvin: This segment and the balance is grid automation.

Garvin: Can see from about noon to about six o'clock there I'm a pie that's the traditional T&D businesses between substation transmission and distribution.

Garvin: Then.

Garvin: From about six o'clock hour seven o'clock to nine you can see the telecom and gas, which represent the specialty and then from nine to noon you see declarer utility meters.

Garvin: <unk> products, so hopefully that gives some clarity to the relative sizes of those different businesses.

Garvin: We just added a little bit of because they are not all performing exactly the same so we wanted to lay out first quarter trends against.

Garvin: What we're expecting for the balance of the year and.

Garvin: Distribution, we're expecting that sequential improvement transmissions.

Bill: The infrastructure business and the core utility business performed very, very well. Transmission up double digits, distribution still going through their channel inventory normalization, we're getting near the end of that, persisting a little longer than we expected. We think the channel has largely worked its way through, but we think the end customers are still holding some inventory. So we're getting closer to putting that behind us, and when we get to the electrical segment next. You'll see that they went through the same thing last year and emerged very healthy.

Garvin: <unk> very strong.

Garvin: Telecom was weak as we said.

Garvin: And we are anticipating some softness.

Garvin: But again the rebound will come.

Garvin: In the medium term and so balancing our cost cutting there.

Garvin: <unk> being able to serve when demand comes back it's representing interesting challenge.

Garvin: Meters has been successful in its backlog conversion, we expect that to continue we are noting the comps get a little more difficult for them.

Garvin: And the protection and controls products very strong so.

Garvin: In sum in utility very pleased with the pricing.

Garvin: Of these segments.

Garvin: We've got strong visibility in the majority of our markets.

Garvin: And we're expecting normal seasonality in at a nice healthy setup really we think.

Bill: So really good PCP performance in that T&D business and sets it up very constructively for its financial performance. Grid automation, likewise, double-digit growth, both in the meters and comm area but also in the control and protection area. So really strong contribution there.

Garvin: Uniquely positioned business.

Garvin: So I wanted to switch to on page nine to the electrical segment.

Garvin: Little bit more straightforward to explain to everybody you see flat sales at about $500 million you take out the effect of the divestiture of residential lighting.

Bill: We were up six points organically.

Garvin: Two points of price, which we're pleased about four points of volume, which we're also pleased about as they emerge from their destocking helps give us confidence that that will be.

Bill: You know the headwinds are really coming from the telecom sector, which is inside that specialty infrastructure business, and they are really enclosures that we make for the telecom segment. They are navigating both a channel and customer inventory normalization period, creating a significant headwind. A 40% decline in volumes. The business line is very profitable. And so it's creating an OP drag.

Garvin: Quick on the utility side as well.

Garvin: The strength in industrial markets, but also specifically in what we describe as our growth verticals renewables as well as data centers, which are up.

Garvin: Over 20% each.

So great to see electrical solutions, performing so well on the topline and that's translating nicely.

Garvin: Op level, you see 6% increased to $80 million and 80 point 80 basis point expansion of margin.

Bill: So the effect of that is about four points on the segment's top line. And, as you can see, about a point and a half on the OP line. So the OP for the segment is up 2%. Again, to remind you of the comparison, last year, utility OP was up 87%. So, growing off of that is very impressive.

Bill: On both the volume and price cost performance.

Garvin: We would call out that Marc and his team as we've discussed with you all are continuing to execute on the playbook that he successfully implemented at power systems to create a more.

Bill: Pete collective Lee mindset in the segment.

Bill: Really emphasizing cross selling optimizing the footprint simplifying the structure. So there is some R&R spending to be done.

Bill: Decline of two and a half points of margin being led by the decrements in telecom. And to be clear, our medium-term outlook... for Telecom Businesses, Coyne Posadance. And we've also made, and continue to make investments in the long-term growth and productivity of the segment. Those created about a point of drag.

Bill: And.

Bill: We would have added another five points of op growth.

Bill: <unk> be in double digits.

Bill: Another 80 bps of margin expansion, if we were to adjust out.

Garvin: That restructuring as many of our peers do.

Bill: Great to see electrical having such a solid quarter.

Bill: And the acquisitions that we mentioned, which are all doing really well and are performing very profitably. But against that mid-20s level, they actually created a half point of drag, essentially in the first quarter of systems control being part of Hubbell. So still, I think, very good performance there, and the price-cost productivity equation was positive. So again, we're showing you the year-over-year comparisons. But I do want to highlight, sequentially from the fourth quarter of last year, the margins are up 40 bps. So we're feeling, again, like we're setting up for a successful normal seasonality. I wanted to add a page on page 8, just to make sure we're being clear about our nomenclature and where we are.

Bill: And with that I'll turn it back to <unk> and on our outlook for the balance of the year great.

William R. Sperry: Great. Thanks Bill.

Garvin: Sum it up our performance in the first quarter, what's hubbell well on track to achieve our full year 2020 for outlook for double digit adjusted operating profit growth, which we are reaffirming today.

Bill: Relative to our prior outlook, our electrical markets are off to a stronger start.

Garvin: And we have better visibility to positive price traction across both of our segments, which we believe will enable us to absorb the near term impact of weaker cellcom markets.

Bill: Additionally, we are increasing our expectations for full year restructuring investments from 25 to 35 as.

Bill: As we proactively manage our cost structure in certain areas of the business, while continuing to invest in the long term growth and productivity initiatives.

Garvin: Looking further ahead, the acceleration of grid modernization and electrification megatrends together with our unique leading positions in front of and behind the meter will enable Hubble to continues to deliver differentiated performance for our shareholders over the long term.

Bill: On the left, you can see the grid infrastructure comprising 75% of the segment, and the balance is grid automation. You can see from about noon to about six o'clock there on the pie, that's the traditional T&D businesses between substation, transmission, and distribution. Then from about six o'clock or seven o'clock to nine, you can see the telecom and gas specialty, and then from 9 to noon, you see the Eclaira utility meters and then the protection products.

Garvin: We look forward to sharing more details on our long term strategy and outlook with you at our upcoming Investor Day on June four at once.

Bill: Let me now turn it back to Michelle to begin our Q&A session.

Speaker Change: Thank you <unk>.

Bill: Mind or to ask a question. Please press star one one on your telephone and wait for your name to be announced.

Bill: To withdraw your question. Please press star one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Bill: Our first question comes from Jeffrey Sprague with vertical research partners. Your line is now open.

Bill: So, hopefully that gives some clarity to the relative size of those different businesses and, We just added a little bit of that because they're not all performing exactly the same. So we wanted to lay out first quarter trends again, what we're expecting for the balance of the year and distribution. We're expecting that sequential improvement, transmission substation, very strong. Telecom was weak, as we said.

Speaker Change: Thank you good morning, everyone.

Bill: Hey, a few questions from me Hey, good morning.

Speaker Change: First just on and I'm, sorry, if I missed it just hopping between calls.

Bill: Did distribution actually grow for hubbell in the quarter and if so can you size it and then.

Bill: Whether the answer is yes, or no can you kind of triangulate that to what your view of end demand or sell through might have been in the quarter and the channel.

Speaker Change: Yes, So I think the second half of your question is we will get to first I mean, I think where we have the most visibility through our customer base and Gerber referred to being with 400 of them as recently as a week or two ago.

Bill: We believe the distribution markets are growing.

Bill: We're anticipating some softness. But again, the rebound will come in the medium term, and so balancing our cost cutting there against being able to serve when demand comes back. It's representing an interesting challenge. Meters has been successful in its backlog conversion.

Bill:

Bill: But it's also clear to us that.

Bill: There.

Bill: The end customer they actually utilities have a decent amount of inventory that.

Bill: In addition to what the channel had so I think thats, causing the order patterns Jeff.

Bill: We expect that to continue. We're noting the comps get a little more difficult for them, and the protection and control product is very strong. So in sum and utility, very pleased with the pricing of this segment. We've got strong visibility in the majority of our markets, and we're expecting the normal seasonality and a nice healthy setup, really, a uniquely positioned business. So I want to switch to, on page 9, the electrical segment.

Bill: But can build piece to be just extended period of a little bit softer.

Bill: And so while we've got good price.

Bill: Net.

Bill: Did not grow in the quarter, but we think it's going to bounce back.

Bill: Strongly and we feel very confident.

Bill: And then maybe I'll add some context as what we see.

Bill: Even through the first quarter and maybe a common even into April is the good news is we are seeing a sequential as you look from February to March into April.

Bill: The increase in order rate and I think that's a reflection of that debt.

Bill: Channel inventory to distribution channel inventory normalizing in that our visibility into that as clearly.

Bill: A little bit more straightforward to explain to everybody, you see flat sales at about $500 million, unless you take out the effect of the divestiture of residential lighting. We were up six points organically, two points of price, which we're pleased about, four points of volume, which we're also pleased about as they emerge from their de-stocking and helps give us confidence that that'll be. There's strength in industrial markets, but also specifically in what we describe as our growth vertical, so renewable, as well as data centers, which are up over 20% each. Great to see electrical solutions performing so well on the top line. That's translating nicely at the OP level.

Bill: Better I would say that if you look at it sort of traditional uptick as we go into construction season, it's a little bit delayed in a little bit slower that ramp up for the comments that bill made that.

Bill: Feedback from the end user is that Theyre still working through it and that's also happening a different magnitude somehow added more aggressively somewhere going at it.

Bill: Looking for that inventory to just this be utilized in their growth.

Bill: But the encouraging news that we are seeing it come up this is exactly what happened in the electrical segment.

Bill: And it's a.

Bill: A little bit.

Bill:

Bill: Get nervous while youre going through that but we clearly went through that there we saw a rebound in the first quarter and we think that will happen in the utility as well, particularly in that distribution more book to bill.

Bill: For the business.

Bill: And then Bill noted I think that some.

Bill: <unk> prices allows you to kind of offset telecom and the guide.

Bill: But cost is also going up right copper is up some other stuff is moving so.

Bill: You know <unk> got better price, but are you actually in a better price cost position than you were thinking three months ago.

Bill: You see a 6% increase to 80 million and an 80 basis point expansion of margin on both the volume and price cost performance. We would call out that Mark and his team, as we've discussed with you all, are continuing to execute on the playbook that he so successfully implemented at Power Systems, to create a more competitive-collectively mindset in the segment, really emphasizing cross-selling, optimizing the footprint, and simplifying the structure. So there's some R&R spending to be done. And, you know, we would have added another five points of operational growth, i.e.

Bill: Yes.

Speaker Change: Yes, so we've got productivity levers too and you are right to point out.

Bill: They were looking at price kind of against material cost and then productivity against non material inflation that you're right that inflation persists. So I think important Jeff for us to keep our eye on the productivity ball.

Bill: Well as is make sure we're being as surgical on price as we can be.

Bill: But your price cost equation really hasnt changed that much then.

Bill: Yeah.

Bill: I mean.

Speaker Change: No I mean, it was stronger in the quarter than we had originally anticipated.

Bill: But also I think as the year unfolds. When we told you that we have started our outlook with about a point of price.

Bill: be in double digits and another 80 bps of margin expansion. If we were to adjust out... that restructuring, as many of our peers do. But great to see electrical having such a solid.

Bill: We obviously had three points in the quarter. So we are we're sort of off to a good start there, but I think very specifically in telecom.

Bill: We may need to use price surgically to build back some volume there so it some.

Gerben W. Bakker: And with that, I'll turn it back to Gerben on our outlook for the balance sheet. Thanks, Bill. So to sum it up, our performance in the first quarter puts Hubble well on track to achieve our full year 2024 outlook for double-digit adjusted operating profit growth, which we are reaffirming today. Relative to our prior outlook, our electrical markets are off to a stronger start, and we have better visibility to positive price traction across both of our sectors, which we believe will enable us to absorb the near-term impact of weaker telecom markets.

Gerben: It's a dynamic equation I would say.

Speaker Change: Great and then just one more for me if I could.

Speaker Change: What what was the sequential impact on utility solutions margins.

Gerben: From the telecom weakness it was encouraging to see the margins move up sequentially and I think you have certainly mix headwinds between grid infrastructure and grid automation relative growth rates, but.

Speaker Change: Telecom, specifically sequentially was that a meaningful headwind in the quarter.

Gerben W. Bakker: Yes.

Gerben W. Bakker: Headwind less than 150 year over year in China.

Gerben W. Bakker: Yeah.

Gerben: Okay. Thanks, I'll leave it there.

Speaker Change: One moment for the next question.

Gerben W. Bakker: Our next question comes from Steve Tusa with Jpmorgan. Your line is now open.

Gerben: Hi, good morning.

Gerben: Hey, Thanks, Steve.

Speaker Change: Can you guys just give us a little bit of color on the.

Gerben W. Bakker: Additionally, we are increasing our expectations for full-year restructuring investments from $0.25 to $0.35 as we proactively manage our cost structure in certain areas of the business while continuing to invest in long-term growth and productivity initiatives.

Gerben: The second quarter.

Gerben: Now on EPS, just relative to normal seasonality any kind of sequential color. There and then how you expect the utility margins to trend throughout the year.

Speaker Change: Yes, so it's a little bit of a first of all nice sweep by the way, but it's a little bit of a question just because we don't give quarterly guidance, but I think.

Gerben: The way we're looking at it.

Operator: Looking further ahead, the acceleration of grid modernization and electrification megatrends, together with our unique leading positions in front of and behind the meter, will enable Hubbell to continue to deliver differentiated performance for our shareholders over the long term. We look forward to sharing more details on our long-term strategy and outlook with you at our upcoming Investor Day on June 4th. With that, let me now turn it back to Michelle to begin our Q&A session. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: First half of the year to be normally seasonal.

Operator: <unk> should be in that 47 ish percent range of contribution and we feel good.

Michelle: That will be delivering.

Operator: At that level to get to our range on the full year guide so.

Michelle: And as you.

Michelle: I think maybe that's a macro way I'm not sure if that's getting exactly what you want but.

Michelle: No that's perfect that's absolutely perfect.

Michelle: Just that utility marginally.

Operator: Over the course of the earthquake.

Operator: Okay.

Michelle: Yes, I think that.

Michelle: You know as we get normal seasonality for us is to pick up volume and margin in the second and third quarters Q4 kind of steps back.

Operator: So.

Michelle: To be thinking about.

Operator: Please stand by while we compile the Q&A roster. Our first question comes from Jeffrey Sprague with Vertical Research Partners. Your line is now open. Thank you. Good morning, everyone.

Jeffrey Todd Sprague: Quarter compares can get tricky, but if.

Jeffrey Todd Sprague: If you extend your question to the full year, we're expecting.

Operator: Margins.

Operator: To be reasonably flattish over the course.

Jeffrey Todd Sprague: Hey, a few questions from me. Hey, good morning. First, just on that, and I'm sorry if I missed it, just pop in between calls. Did distribution actually grow for Hubbell in the quarter? And if so, can you size it?

Speaker Change: The whole year.

Jeffrey Todd Sprague: On a year over year basis, but the second quarter will be up from the sequential or expect.

Jeffrey Todd Sprague: Margins in the second quarter over the first.

Jeffrey Todd Sprague: Stay elevated.

Jeffrey Todd Sprague: I would state that space in the third quarter and then decline.

Speaker Change: Got it okay, great. Thanks, guys.

Bill: And then, whether the answer is yes or no, can you kind of triangulate that to what your view of end demand or sell-through might have been in the channel? Yes, I think the second half of your question is, we'll get to that first. I think where we have the most visibility through our customer base, and Gerben referred to being with 400 of them as recently as a week or two ago. You know, it's, we believe the distribution markets are growing.

Speaker Change: One moment for our next question.

Bill: Next question comes from Nigel Coe with Wolfe Research Your line is open.

Bill: Sure.

Speaker Change: Thanks, Thanks for the question guys I appreciate it.

Bill: So just going back to the utility inventory level.

Bill: So where are we in terms of the channel inventories I think six weeks is the therapy, where they've been in the past just wondering if we get down to that level.

Bill: And then any Intel on the amount of inventory still held shadow inventory held by the customers and I guess my broader question is when do you expect.

Bill: And spell out to equalize.

Bill: But it's also clear to us that the end customer, the actual utilities, have a decent amount of inventory in addition to what the channel has. So I think that's causing the order patterns, you know, Jeff, and the book and bill piece to be just an extended period of a little bit softer.

Speaker Change: Yes, maybe I'll start bill.

Bill: Bill fill in but I would say in the <unk>.

Bill: Distribution channel and that's why we have better visibility right because we sell in and we see their sellout.

Bill: And.

Bill: Fairly good amount of them are stronger.

Bill: Our partners there.

Bill: I'd say typically and that varies of course by product line, but if you think about 90 ish days of inventory there.

Bill: We're pretty much back there I mean, they are pretty much done with.

Gerben W. Bakker: And so while we got a good price, that D, you know, did not grow in the corner, but we think it's going to bounce back strongly, and we feel very confident. Maybe I'll add some context as to what we see, even through the first quarter and maybe even into April, the good news is we are seeing a sequential, as you look from February to March, into April, increase in order rate. And I think that's a reflection of that channel inventory, the distribution channel inventory normalizing. And our visibility into that is clearly better.

Gerben W. Bakker: Inventory destocking of our materials, particularly the distribution material square, whereas for stock and flow.

Gerben W. Bakker: It gets harder when you look at the end customers and we do have very close relations with some of them are we get direct feedback with events like we were at a couple of weeks ago, where you had.

Gerben W. Bakker: A lot of them we triangulate.

Gerben W. Bakker: And it is elevated but it's by varying degrees of elevation, it's really really hard to say there Nigel of exactly what the level.

Gerben W. Bakker: It did even more interesting is that when you talk with them. Some say they clearly have and are working that down, whereas others are saying, it's not our focus right now we're looking to.

Gerben W. Bakker: <unk> served the needs out there.

Gerben W. Bakker: And perhaps it's a thought for down the road. So this is where it gets really hard so for us what we look at is that ramp up what we would normally see seasonally happening and to what extent in.

Gerben W. Bakker: I would say that if you look at it through the traditional uptick as we go into construction season, it's a little bit delayed and a little bit slower. That ramp-up for the comments that Bill made that, you know, feedback from the end user is that they're still working through it. And that's also happening at different magnitudes. Some are going at it more aggressively.

Gerben W. Bakker: As I stated in my earlier comment that's coming a little later than we would typically see it and the magnitude of the ramp up is a little slower but the good news that is coming up and that's what you expect when you're when you distribute distributor has done Destocking you would expect that to come up and it has gone up so.

Gerben W. Bakker: It's really as we've even stated in the first quarter. The last thing. We said, we thought we would be mostly through within the first quarter I think that's probably still the case.

Bill: Some are going at it, you know, looking for that inventory to just be utilized in their growth. But the encouraging news is that we are seeing it come up. This is exactly what happened in the electrical segment, you know, and it's, you know, a little bit if you're nervous while you're going through that, but we clearly went through that there. We saw the rebounds in the first quarter, and we think that will happen in the utility as well, particularly in that distribution business, more book-to-bill for the business.

Bill: But to exactly pinpoint when it will be done it's just it's just very hard.

Bill: Okay, so thinking about the sequencing of the full year.

Bill: At the utility solutions segments.

Bill: 5% for the full year, so second quarter still below that but I am assuming then second half above on easier comps.

Speaker Change: Yeah, and again I think.

Bill: We've tried to put in that little box, we think.

Bill: T&D compares get a little bit easier.

Bill: Some of the automation compares get a little harder, but the larger part of the business is the infrastructure piece and that's where we think you'll see them backend growth okay.

Bill: And then a quick one on the utility margins.

Bill: Obviously recognized that the bulk of the year over year was driven by the telecom headwinds so that the balance the 300 basis points outside of that headwind would that be mainly volume deleverage.

Bill: And then Bill noted, I think, that some additional prices allowed you to kind of offset telecom in the guide. But costs are also going up, right? Copper's up, some other stuff is moving. So are you now, you've got a better price, but are you actually in a better price-cost position than you were thinking three months ago? Yes. Thank you.

Bill: <unk> was an M&A impacting system control.

Bill: Yeah.

Bill: Yes, the M&A impact from systems control.

Bill: It was very modest given that.

Bill: Right It was 14% of sales.

Bill: And the margins were in the mid Twenty's that it was kind of comping against so.

Bill: It did it did very nicely and its margin, but it had a slightly.

Bill: Yeah, so, you know, we've got productivity levers, too, and you're right to point out that we're looking at price kind of against material costs. Productivity Against Non-Material Inflation.

Speaker Change: Uh huh.

Bill: It had a slight drag to it.

Bill: From there.

Bill: But I think if you think about operationally.

Speaker Change: The investments that we made.

Bill: Ultimately.

Bill: <unk> created a point of <unk>.

Speaker Change: Drag as we went through so.

Bill:

Bill: That is something we're very intentionally not harvesting quarterly margin. We believe that we're going to add capacity to this business for this kind of very immediate and multiyear growth that's in front of us. So.

Bill: And you're right that inflation persists. So I think it's important, Jeff, for us to keep our eye on the productivity ball, as well as make sure we're being as surgical on price as possible. So your price-cost equation really hasn't changed that. I mean, we... No, I mean, it was stronger in the quarter than we had originally anticipated, but also, I think as the year unfolds, when we told you that we had started our outlook with about a point of price, we obviously had three points in the quarter, so we're sort of off to a good start there. But I think, very specifically in telecom, we may need to use price surgically to build back some volume there. So it's a dynamic equation.

Bill: Yeah.

Bill: Thats.

Bill: But I think we were encouraged by the sequential pickup as well.

Jeff: Great. Okay. Thanks, Bill Thanksgiving.

Speaker Change: One moment for the next question.

Bill: The next question comes from Tommy Moll.

Speaker Change: Your line is open.

Speaker Change: Good morning, and thank you for taking my questions.

Bill: Morning, Tommy.

Speaker Change: I wanted to start on the topic of the supply environment for your utility business.

Bill: You've invested in response to significant demand in an expanding your supply base.

Jeff: But others in the market have as well so I'm just curious at a high level, how would you characterize that.

Bill: Supply demand environment today.

Bill: Has it shifted at all.

Speaker Change: Yes, I think where we're adding capacity is in the areas, where we see visible longer term growth right. So if you think about transmission and substation.

Jeffrey Todd Sprague: Great, and then just one more for me, if I could. What was the sequential impact on utility solutions margins from the telecom weakness? You know, it was encouraging to see the margins move up sequentially. And I think you have certainly mixed headwinds between grid infrastructure and grid automation relative growth rates, but telecom specifically, sequentially, was that a meaningful headwind in the quarter? Yeah, Jeff, it was still ahead when, what, less than 150 years ago, I'd say.

Jeffrey Todd Sprague: <unk> area of the business that.

Jeffrey Todd Sprague: Orders are very strong our backlog.

Jeffrey Todd Sprague: <unk> has continued to grow.

Jeffrey Todd Sprague: Discussions with our customer it's clear that they need these materials.

Jeffrey Todd Sprague: And so.

Jeffrey Todd Sprague: We've invested in those areas I think if you look across the industry.

Jeffrey Todd Sprague: Fab different peers investing in different areas of course I would also expect those that compete in the same areas.

Jeffrey Todd Sprague: Invest in that are level, though of of increase I think is supportive of the supply and demand characteristic rather than then.

Speaker Change: Somehow over investing in there.

Jeffrey Todd Sprague: A couple of metrics that support I think Garmin is I think our service levels are reaching.

Jeffrey Todd Sprague: Very good levels.

Bill: Thanks, I'll leave it there. One moment for the next question. Our next question comes from Steve Tusa with JP Morgan. Your line is now open. Hi, good morning. Hi, Steve.

Charles Stephen Tusa: And our lead times.

Bill: <unk>.

Charles Stephen Tusa: In most areas Tommy back to normal in.

Charles Stephen Tusa: Those those two facts or outcome I would say our.

Charles Stephen Tusa: Pretty demonstrated.

Charles Stephen Tusa: Of an improving supply chain environment maybe.

Charles Stephen Tusa: Good morning, Steve. Can you guys just give us a little bit of color on, you know, the second quarter, on EPS, just relative to normal seasonality, any kind of sequential color there, and then how you expect the utility margins to trend throughout the year? Yeah, so it's a little bit of a, first of all, nice sweep, by the way, but it's a little bit of a tough question just because we don't give quarterly guidance, but I think the way we're looking at it.

Charles Stephen Tusa: Go on that again because it.

Charles Stephen Tusa: What our customers.

Charles Stephen Tusa: We want most from us.

Speaker Change: We service them, well with quality products and again in the discussion that we have with them. That's what they are really <unk>.

Speaker Change: Concerned about the fact that we've been able to take our lead times down and we have.

Speaker Change: The fact that we've been able to increase our service levels.

Charles Stephen Tusa: Is all that we are investing in the business and capacity with areas of visible that's what our customer wants us to do and now one of the outcomes is that that when you look at your.

Charles Stephen Tusa: You know, the first half of the year, which is normally seasonal, should be in that 47-ish percent range of contribution, and we feel good that will be delivering at that level to get to our range, you know, on the full year guide. So, and as you know, I think maybe that's a macro way. I'm not sure if that's getting exactly at what you want, but No, that's perfect. That's absolutely perfect.

Charles Stephen Tusa: The supply chain normalizes, you can actually destock they can take comfort in the fact that we're going to deliver for them. So it's a very natural hunter and its actually good thing.

Charles Stephen Tusa: For the business long term to do this.

Speaker Change: Wanted to follow up on the comment you made regarding pricing for telco.

Speaker Change: Just clarify a bit what you meant I think bill that was the comment you made in the context of a broader pricing discussion.

Speaker Change: Yes, I mean, I think we're really pleased generally with the pricing construct.

Charles Stephen Tusa: We had.

Charles Stephen Tusa: About a point of wrap around price from our last year actions.

Charles Stephen Tusa: So for us to garner three points in the first quarter.

Bill: And just the utility margin over the course of the year. Yeah, I think that, you know, as we get, normal seasonality for us is to pick up volume and margin in the second and third quarters, Q4 kind of steps back. So, you know, to be thinking about... can get tricky, but if you extend your question to the full year, we're expecting margins to be reasonably flattish, you know, over the course of the whole year, on a year over year basis. But the second quarter will be up from the first, so go ahead and show all this back. Artists in the second quarter do better than the first, that stays in the third quarter and then declines. I got it.

Bill: Flies success at getting some new price and.

Bill: I would say generally Tommy while electrical did very well in that regard.

Bill: Utility did even better.

Bill: And so.

Bill: So across the enterprise.

Bill: We think that.

Bill: The pricings in.

Bill: Very good shape.

Bill: And I think we're going to be quite surgical about it and there may need to be instances on the enclosures area.

Speaker Change: Where are we.

Bill: Need to use price a little bit.

Bill: But overall net net as an enterprise we feel quite good about overall pricing.

Bill: I think thats a function of.

Bill: Kind of the quality of the product the quality of the relationships that we have.

Bill: The positions that we have.

Bill: But maybe most importantly.

Bill: Okay, great. Thanks, guys. One moment for our next question. The next question comes from Nigel Coe with Wolf Research. Your line is out.

Bill: The relative service levels that we have.

Nigel Coe: And being able to supply.

Nigel Coe: Our customers with the critical infrastructure.

Nigel Coe: Solutions that they need so that's been.

Nigel Coe: Thanks for the question, guys. Appreciate it. So, just going back to the utility inventory levels, so where are we in terms of the channel inventory? I think six weeks is pretty much where they've been in the past. Just wondering if we're getting down to those levels.

Nigel Coe: That's been a very good story net net Tommy for us.

Nigel Coe: Thank you Bill I'll turn it back.

Nigel Coe: One moment for the next question.

Nigel Coe: The next question comes from Julian Mitchell with Barclays. Your line is open.

Nigel Coe: Hi, good morning.

Nigel Coe: Hi, Joanne.

Nigel Coe: Hey, just apologies I wanted to circle back to telecom, just I see the color on sort of slide eight.

Bill: And then any intel on the amount of inventory still held, like the shadow inventory held by the customers? And I guess my kind of broader question is, where do you expect to sell in and sell out to Ecolife? Yeah, maybe I'll start, Bill Philip, but I would say in the distribution channel, and that's where we have better visibility, right? Because we sell in, and we see their sell out in a fairly good number of them, especially our stronger partners there. I would say typically, and that varies, of course, by product line, but days of inventory, they're, they're pretty much back there.

Bill: And clearly that exposure was down 40% in the first quarter.

Bill: But just to try and understand fully or as a whole kind of what are you dialing in for that telecom.

Bill: Business in terms of.

Bill: Year on year.

Bill: Trends in telecom.

Bill: We're anticipating Julien double digits down for.

Bill: For the full year.

Speaker Change: See the second quarter kind of continuing from the first quarter the comps in the second quarter get easier because this started.

Bill: As we went through the second half and.

Bill: As we went.

Bill: Towards the end of the year, but.

Bill: But our view right now is for it to be.

Gerben W. Bakker: I mean, they're pretty much done with inventory; the stock of our materials, I think is distribution materials where there's more stock and flow. It gets harder when you look at the end customers. And we do have very close relations with some of them where we get direct feedback on events like we were at a couple of weeks ago where you have, You know, a lot of them. We triangulate. And it's elevated, but it's by varying degrees of elevation.

Bill: Down double digit and we contemplated some of this in our and as we presented the guidance to you for that that Theres. Some thoughts in the industry that we could see a second half rebound.

Speaker Change: Yeah, we were a little.

Gerben W. Bakker: Perhaps a more conservative in that view and I think thats proven out to be it would be right.

Speaker Change: That's helpful. Thank you and then just my second question would be around.

Gerben W. Bakker: Utility.

Gerben W. Bakker: <unk> and the trajectory there.

Speaker Change: I understand the pricing sounds pretty good there and you've now got the.

Gerben W. Bakker: Systems control effect in that Q1 margin already so as we're thinking sort of the balance of the year in utility margins.

Gerben W. Bakker: Do we think about as sort of steady sequential increase through the year and then you end up at that sort of flattish margins for the year as a whole.

Gerben W. Bakker: It's really, really hard to say there, Nigel, exactly what the levels are. What makes it even more interesting is that when you talk with them, some say they clearly have and are working that down, whereas others are saying, you know, it's not our focus right now. We're looking to, you know, serve the needs out there. And, you know, perhaps it's, you know, a thought for down the road. So this is where that gets really hard.

Gerben W. Bakker: If that's the right way to think about it indeed.

Gerben W. Bakker: The only I would say.

Gerben W. Bakker: The classification to that typically in the fourth quarter, we will see it come down again, so youll see it go up second and third down a little bit, but the construct over a year over year.

Gerben W. Bakker: For this particular utility T&D component is right.

Speaker Change: Great. Thank you.

Speaker Change: One moment for the next question.

Gerben W. Bakker: Yeah.

Gerben W. Bakker: The next question comes from Brett Linzey with Mizuho. Your line is now open.

Speaker Change: Hello, Good morning, all.

Speaker Change: Good morning.

Speaker Change: Yes, just wanted to come back to some of the investments can.

Gerben W. Bakker: So for us, what we look at is that ramp-up, what we would normally see seasonally happening and to what extent. And, you know, as I stated in my earlier comment, that's coming a little later than we would typically see it. And the magnitude of the ramp-up is a little slower, but the good news is that it is coming up, and that's what you expect when you're, when your distributor is done destocking, you would expect it to come up, and it has come up.

Gerben W. Bakker: Can you just remind us or in size, what youre thinking about in terms of investments for the year and then what was spent in Q1 and I'm just trying to think about the phasing first half second half on some of the spending initiatives.

Gerben W. Bakker: Yeah.

Speaker Change: Yes, so let's characterize the investments maybe first right. So.

Gerben W. Bakker: Some of it is in capacity expansion inside of the utility segments.

Gerben W. Bakker: And.

Gerben W. Bakker: That's S curve and sort of highlighted kind of focused in the transmission and substation area.

Gerben W. Bakker: On the electrical side, a little more around helping mark.

Gerben W. Bakker: You know, it's really, as we even stated in the first quarter, the last time we said we thought we would be mostly true within the first quarter. I think that's probably still the case, but to exactly pinpoint what will be done, it's just, it's just very hard. Okay, so think about the sequencing of the full year for the utility solutions segment for the full year. So, second quarter still below that bar, I'm assuming, and then second half above it on ECOMP.

Gerben W. Bakker: Get to get to his vision of getting that segment to compete collectively so there is some restructuring element in there.

Gerben W. Bakker: And as <unk> said, we're kind of adding.

Gerben W. Bakker: 10 cents to the annual outlook, specifically for restructuring from 25 to 35.

Gerben W. Bakker: And.

Gerben W. Bakker: So I think that you'll see you should see that.

Gerben W. Bakker: Reasonably ratably.

Gerben W. Bakker: Through the year.

Gerben W. Bakker: Especially because some of the investment is depreciation from Capex that.

Gerben W. Bakker: But yeah, and again, I think, as we try to put in that little box, we think the T&D compares get a little bit easier, and some of the automation pairs get a little harder, but the larger part of the business is the infrastructure piece, and that's where we think you'll see the back-end growth. I had a quick one on utility margins.

Gerben W. Bakker: That was spent last year right. So you see that.

Gerben W. Bakker: Come through rapidly.

Gerben W. Bakker: And the restructuring is based on when we can.

Gerben W. Bakker: When we can execute and maybe the only thing to add there that if you look to the <unk> expense I think as you stated, but youll see it over a year over year is that that will start flattening as the year progresses, because we accelerated.

Gerben W. Bakker: The investments, particularly in the second half of last year. So from that perspective, the comps just get gets.

Bill: Obviously, recognizing that the bulk of the year-over-year growth was driven by the telecom headwinds, so the balance, the roughly 100 basis points outside of that headwind, would that be mainly volume de-leverage, or was there an M&A impact on system control? Yeah, that M&A impact from systems control, you know, is very modest, given that it, it's not right, it was 14% of sales. And the margins were in the mid-20s, so it was kind of comping against.

Gerben W. Bakker: Here on that investment.

Speaker Change: Okay, Great and then just a quick follow up bill.

Bill: Your prepared remarks, you noted something about a sequential 30 basis point pick up.

Bill: Was that what was that to the <unk>.

Bill: Just the context and what you meant there.

Speaker Change: No no.

Bill: <unk> <unk> is what I meant so.

Bill:

Bill: Yes.

Bill: <unk>.

Bill: When you saw about one point year over year decline. It also is a 30 basis point.

Bill: Improvement from the fourth quarter and so we actually think that's that's a good sign.

Speaker Change: Yes, Okay makes sense, thanks a lot.

Speaker Change: One moment for the next question.

Bill: The next question comes from Nicole <unk> with Deutsche Bank. Your line is open.

Speaker Change: Yeah. Thanks, good morning, guys.

Bill: Good morning, Paul.

Bill: So it did very nicely in its margin, but it had a slightly... You know, it had a slight, you know, from there. But I think that if you think about operationally, the investments that we made, you know, ultimately created a point of drag as we went through, that that something, you know, we're very intentionally not harvesting quarterly margin. We believe that we have to add capacity to this for this kind of very immediate and multi-year growth that's in front of us. So, But I think we were encouraged by this.

Bill: And just on the electrical segment outlook, just double checking that organic you guys are still thinking up three to four for the full year and I guess in light of the outperformance in the first quarter could this maybe be an area of upside. Thanks.

Speaker Change: Yes, I think <unk> got the outlook right and I think you also have that we were encouraged by the first quarter. So I think both both of your statements I agree with you.

Speaker Change: Okay perfect. Thank you and then secondly on the meters and Ami business, you guys kind of put that additional color in the slides.

Speaker Change: Is your expectation that it actually declined year on year in the second half on the back of those tough comps or still up but just not as much as the first half. Thank you.

Bill: Great. Okay. Thanks, Bill. Thanks, Kevin. One moment for the next question. The next question comes from Tommy Moll with Stevens.

Speaker Change: Yeah, we're just Nicole trying to indicate a flattening there. So you saw pretty impressive growth in the first quarter.

Thomas Allen Moll: And as those comps get harder and we kind of managed through the backlog, we were expecting that to be a lot flatter.

Thomas Allen Moll: Your line is open. Good morning, and thank you for taking my question. We're in.

Thomas Allen Moll: Yeah.

Thomas Allen Moll: Got it thanks I'll pass it on.

Thomas Allen Moll: One moment for the next question.

Thomas Allen Moll: The next question comes from Christopher Glynn with Oppenheimer. Your line is open.

Gerben W. Bakker: I wanted to start on the topic of the supply environment for your utility business. You've invested in response to significant demand and in expanding your supply base, but others in the market have as well. So I'm just curious, at a high level, how would you characterize that supply and demand environment today? Has it shifted at all?

Speaker Change: Thanks, Good morning.

Gerben W. Bakker: Nicole just beat me to the punch on the electrical question there but.

Gerben W. Bakker: Going in touch further you talked about electrification driving broad based strength across industrial markets can you talk a little bit about the kind of.

Gerben W. Bakker: Right.

Gerben W. Bakker: The ability to market.

Gerben W. Bakker: What types of electrification gasoline station.

Bill: Yeah, I think where we're adding capacity is in areas where we see visible longer-term growth, right? So if you think about transmission and substation, it's actually an area of the business where orders are very strong, and our backlog, you know, has continued to grow. In discussions with our customers, it's clear that they need these materials. And so, you know, we've invested in those areas. I think if you look across the industry, you see perhaps different peers investing in different areas. Of course, I would also expect those that compete in the same areas to invest in that.

Gerben W. Bakker: Sorry.

Bill: Yes.

Bill: I think a lot of.

Bill: Kind of background trends, Chris going on I think.

Bill: There is some legitimate onshoring I think theres some.

Bill: Legitimate like electrification driving.

Bill: Really big.

Bill: Uh huh.

Bill: Semiconductor plants.

Bill: So it's a big kind of construction and project work, that's being driven there and for us.

Bill: We called out specifically.

Bill: Our renewables.

Bill: As well as data centers.

Bill: Which are I think both.

Speaker Change: Growth of what.

Bill: What would fit under the electrification theme in.

Gerben W. Bakker: Our level, though, of increase, I think, is supportive of the supply and demand characteristic rather than, you know, that we're somehow over-investing in that area. Oh, and a couple of metrics, you know, that support, I think, Gerben, are I think our service levels are reaching, you know, very good levels, and our lead times are, uh, in most areas, Tommy, back to normal. And those two facts or outcomes, I would say, are pretty demonstrative of an improving supply chain.

Bill: So broadly speaking we think the industrial outlook is good onshore.

Gerben W. Bakker: Onshoring I would maybe call out as one of the more important trends in.

Gerben W. Bakker: Electrification really driving some of those verticals that.

Gerben W. Bakker: Our focus areas for us to service those verticals so.

Gerben W. Bakker: That's a good I think that's quite a good setup for us in the electrical segment.

Speaker Change: Okay. Thanks, just a little scale on the size of the renewables in the data center businesses, if you could.

Gerben W. Bakker: <unk> helps there.

Gerben W. Bakker: Yes, it's in the range of 5% to 10% each of the segment, Chris less than 10% each.

Speaker Change: Thanks, Dan.

Speaker Change: One moment for the next question.

Gerben W. Bakker: Yeah.

Gerben W. Bakker: The next question comes from Joe <unk> with Wells Fargo. Your line is open.

Gerben W. Bakker: Maybe I'll go on that again, Bill. What our customers want most from us is that we service them well with quality products. And again, in the discussion that we have with them, that's what they're really... All of us are concerned about.

Speaker Change: Hi, good morning.

Speaker Change: Are you Joe.

Speaker Change: Doing well thanks.

Speaker Change: Just wanted to ask on on telecom and it sounds like.

Gerben W. Bakker: Challenged environment currently, but also constructive medium term outlook and so can you just parse a little bit the key developments that you need to see to transition from kind of current challenges into something thats, that's more constructive.

Bill: So the fact that we've been able to take our lead times down and we have, The fact that we've been able to increase our service levels is all very accurate and that we're investing in the business in capacity with areas of business, but that's what our customer wanted to do. Now, one of the outcomes is that if when you do that, your supply chain normalizes, you can actually destock, and they can take comfort in the fact that we're going to deliver for them. So it's a very natural outcome.

Speaker Change: I think I'm sorry.

Speaker Change: And I was just going to say that the.

Bill: We saw the orders start to dip last year.

Bill:

Bill: It was coupled with a very large backlog.

Bill: So we started liquidating that backlog.

Bill: But watching the low orders suggest that once the backlog kind of got down to book and bill levels.

Bill: That basically which.

Bill: We need Joe is the order pattern to pick back up so.

Thomas Allen Moll: It's actually a good thing for the business in the long term to do this. I wanted to follow up on the comment you made regarding pricing for telco. I just want to clarify a bit what you meant. I think, Bill, that was a comment you made in the context of a broader pricing discussion. Yeah, I mean, I think we're really pleased, generally, with the pricing construct. We had about a point of wraparound price from our last year's action. So, for us to garner three points in the first quarter implies success at getting some new prices. I would say, you know, generally, Tommy, while electrical did very well in that regard.

Bill: Is this some enclosure segment serves tell.

Thomas Allen Moll: Telecom companies and cable companies and when we talk to them when we talk to our distributors just talk to them.

Thomas Allen Moll: When we talk to other suppliers, who supply those kind of companies.

Thomas Allen Moll: There just continues to be a bullishness around the.

Thomas Allen Moll: The need for build out an infrastructure build out by those companies.

Thomas Allen Moll: And it's.

Thomas Allen Moll: We need basically we just need the orders to pick back up which we think is purely a function of when.

Thomas Allen Moll: The inventory levels are hit.

Thomas Allen Moll: Their normal levels I think ultimately.

Thomas Allen Moll: As well, there's going to be some stimulus money that starts to hit that segment and.

Thomas Allen Moll: Independent of.

Thomas Allen Moll: Probably will happen at exactly the same.

Thomas Allen Moll: Stimulus will come in the inventories will be down and all of sudden.

Thomas Allen Moll: The orders will bounce but.

Bill: The Utility did, you know, even better. And so across the enterprise, we think that the pricing's in very good shape, and I think we're going to be quite surgical about it.

Thomas Allen Moll: That's basically what the business needs as those customers to start.

Bill: Placing orders and recognition that yet.

Bill: The end customer is installing and and the inventories are at normalized level.

Bill: And so it sounds like it's more of an inventory normalization headwind than it is in end market activity headwind is that fair.

Bill: And there may need to be instances in the enclosures area where we need to use price a little bit. But overall, net net as an enterprise. We feel quite good about overall pricing, and I think that's a function of, [inaudible] kind of the quality of the product, the quality of the relationships that we have, the positions that we have, but maybe most importantly, the relative service levels that we have, and being able to supply, you know, our customers with critical infrastructure, solutions that they need. So that's been, that's been a very good story. Net net, Tommy for. Thank you, Bill.

Speaker Change: We are 100% believe that that's true yes.

Bill: Okay.

Bill: And then just a question related to utility distribution side of things and the degree to which you see any instances of long lead times in certain product categories not necessarily.

Speaker Change: You ship.

Bill: That are inhibiting some end market activity and so the idea being that over time as those correct could there actually be a bit of an uptick or or sort of surge of demand.

Bill: As other channels sort of correct on lead times.

Tommy: I think you point out a good point that our distribution products by and large the lead times are quite normalized very very.

Bill: Quick to be able to satisfy demand.

Thomas Allen Moll: I'll turn it back. One moment for the next question. The next question comes from Julian Mitchell with Barclays. Your line is open. Hi, good morning.

Thomas Allen Moll: Ultimately.

Julian C.H. Mitchell: Products like Transformers.

Thomas Allen Moll: Sure.

Julian C.H. Mitchell: Our still gapped out in terms of lead time.

Julian C.H. Mitchell: So I think that makes project planning.

Julian C.H. Mitchell: I see the color on slide 8 and clearly that exposure was down 40% in the first quarter, but just to try and understand fully as a whole, what are you dialling in for that telcom business in terms of... year-on-year trends in telecom. We're anticipating, Julian, double digits down for the full year. We see the second quarter kind of continuing from the first quarter. The comps in the second quarter get easier because this started as we went through the second half and accelerated as we went towards the end of the year.

Julian C.H. Mitchell: A little more difficult in some of our products.

Julian C.H. Mitchell: It may suffer a little bit.

Julian C.H. Mitchell: From that but jet.

Julian C.H. Mitchell: Generally we're giving now.

Julian C.H. Mitchell: Good visibility hitting uptime promise dates.

Julian C.H. Mitchell: And I think our part is.

Julian C.H. Mitchell: Much more predictable.

Julian C.H. Mitchell: Year, and a half or so ago, so, but I agree with you there still are other long lead time.

Julian C.H. Mitchell: Products in.

Julian C.H. Mitchell: The transmission side.

Julian C.H. Mitchell: <unk>.

Julian C.H. Mitchell: Have some long lead time items too.

Julian C.H. Mitchell: But distribution I think you are right.

Julian C.H. Mitchell: Our stuff is ready to go.

Speaker Change: Understood. Thanks, a lot.

Speaker Change: One moment.

Bill: But yeah, our view right now is for it to be down double digits. And we contemplated some of this as we presented the guidance to you for that, that there are some thoughts in the industry that we could see a second half rebound. You know, we were a little, you know, perhaps more conservative in that view.

Julian C.H. Mitchell: Questions.

Julian C.H. Mitchell: Yeah.

Bill: The next question comes from Scott Graham with Seaport Research Partners. Your line is open.

Speaker Change: Hey, good morning, Thanks for taking my question I have one and one follow up.

Bill: On H U S would it be fair to say second quarter sales volumes.

Bill: Flat or can they be up and then obviously second half this up.

Speaker Change: Then I have that follow up.

Speaker Change: Yes, so Scott we don't we're not giving quarterly guidance I think the slide eight should give you good considerations of how are the units sequentially.

Bill: And I think that's proven out to be right. That's helpful. And then my second question would be around utility margins and the trajectory there. You know, I understand that the pricing sounds pretty good there, and you've already got the systems control effect in that Q1 margin already. So as we're thinking sort of the balance of the year in utility margins, do we think about a sort of steady sequential increase through the year, and then you end up at that sort of flattish margin for the year as a whole? I think that's the right way to think about it, indeed.

Bill: The comparisons played out into acute in the second half.

Speaker Change: No problem. Thank you.

Bill: You made a comment in the <unk>.

Bill: Slide on project activity could you elaborate on that a bit.

Bill: Yeah.

Bill: Just think there's some big projects out there.

Bill:

Bill: And.

Bill: Things like.

Bill: Chip plants and re shoring of.

Bill: Large scale industrial projects that.

Bill: Our multi year projects or products tend to go in mid and late cycle on that construction and so.

Bill: To us that's a great leading indicator as we see those projects get started.

Bill: The only clarification I would say is that, typically, in the fourth quarter, we'll see it come down again. So you'll see it go up second and third, down a little bit, but your construct over year over year, particularly for that utility T&D component, is right. Great, thank you. One moment for the next question. The next question comes from Brett Linzey with Mizuho.

Bill: Sure.

Brett Logan Linzey: And we're quite confident we will get our fair share of that mid and late cycle install components.

Bill: Okay.

Brett Logan Linzey: Got it thank you.

Brett Logan Linzey: I show no further questions at this time in the queue I would like to turn the call back over to Dan for closing remarks.

Brett Logan Linzey: Great I'll take it.

Brett Logan Linzey: From there and I appreciate everybody's time as Bill said on a busy morning, we really look forward to.

Brett Logan Linzey: Your line is now open. Hello. Good morning, all.

Brett Logan Linzey: Spending time with you in June at our Investor Day.

Brett Logan Linzey: A lot more there about where our business is going in the next three years.

Bill: I just want to come back to the investments. Can you just remind us in size what you're thinking about in terms of investments for the year and then what was spent in Q1? I'm just trying to think about the phasing, first half, second half, on some of the spending initiatives. Yeah, so let's characterize the investments maybe first, right? So some of it is in capacity expansion inside of the utility segment, and that's, as Gerben sort of highlighted, kind of focused on the transmission and substation area.

Bill: Certainly we're excited about.

Bill: This is what we've been stating on building profitable growth on this base that we've built in.

Bill: Those are kind of the expectations you have as we go into June so thanks, so much and we'll see you soon.

Bill: Yeah.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Bill: Hum.

Bill: [music].

Bill: On the electrical side, a little more around helping Mark get to his vision of getting that segment to compete collectively. So there's some restructuring element in there, and as Gerben said, we're kind of adding $0.10 to the Annual Outlook specifically for restructuring from $25 to $35. So I think that you should see that, you know, reasonably, radibly, you know, through the year. Especially because some of the investment is depreciation from CapEx that was spent last year, right?

Bill: Yeah.

Bill: [music].

Bill: Okay.

Bill: [music].

Bill: So you see that come through radically. And the restructuring is based on when we can, you know, when we can. And maybe the only thing to add there, that if you look sort of throughout the year at this expense, I think, as you stated, what you'll see year over year is that that will start flattening as the year progresses because we accelerated investment, particularly in the second half of the last year. So from that perspective, the comps just get easier on that investment.

Bill: Yeah.

Bill: [music].

Bill: Yes.

Bill: Yes.

Bill: [music].

Brett Logan Linzey: Okay, great. And then just a quick follow-up, Bill. In your prepared remarks, you noted something about a sequential 30-basis point pickup. Was that 1Q to 2Q?

Bill: Just the context and what you meant there. No, no, 4Q to 1Q is what I meant. So... You know, just when you solve a one-point year-over-year decline, it also is a 30-basis point.

Bill: An improvement from the fourth quarter, and so we actually think that's, Yep. Okay. Makes sense.

Nicole Sheree DeBlase: Thanks a lot. One moment for the next question. The next question comes from Nicole DeBlase with Deutsche Bank. Your line is open. Yeah, thanks. Good morning, guys.

Bill: Just on the electrical segment outlook, just double-checking that organic, you guys are still thinking up three to four for the full year, and I guess, in light of the outperformance in the first quarter, could this maybe be an area of upside? Yeah, I think you've got the outlook right. And I think you also have that we were encouraged by the first quarter.

Bill: Okay.

Bill: [music].

Nicole Sheree DeBlase: So I think both of your statements. Okay, perfect. Thank you. And then secondly, on the meters and AMI business, you guys kind of put that additional color in the slides. Is your expectation that it actually declined year-on-year in the second half on the back of those tough comps, or is it still up, but just not as much as the first half? Thank you. Yeah, we were just Nicole trying to indicate a flattening there.

Bill: So you saw pretty impressive growth in the first quarter. And as those comps got harder, and we kind of managed through the backlog, we were expecting that to be a lot. Got it. Thanks. I'll pass it on.

Bill: Yes.

Bill: [music].

Nicole Sheree DeBlase: One moment for the next question. The next question comes from Christopher Glynn with Oppenheimer. Your line is open. Thanks. Good morning.

Christopher D. Glynn: Nicole just beat me to the punch on the electrical question there, but going in a touch further, you talked about electrification driving broad-based strength across industrial markets. Can you talk a little bit about the kind of electric planter in an industrial market? What type of electrification application are you associating with that?

Christopher D. Glynn: Yes.

Christopher D. Glynn: [music].

Bill: Yeah, look, there's I think a lot of kind of background trends going on, Chris. I think there's some legitimate onshoring, I think there's some legitimate, like electrification, driving really big semiconductor plants, so it's this big kind of construction and project work that's being driven there, and for us, we called out specifically renewables as well as data centers, which are, I think, both outgrowths of what would And so, broadly speaking, we think the industrial outlook is one of the more important trends in electrification really driving some of those verticals, you know, our focus areas for us to serve those verticals. So that's a good, I think that's quite a good setup.

Bill: Okay.

Bill: [music].

Bill: Yes.

Bill: [music].

Bill: Okay, thanks. Just a little scale on the size of the renewable energy in the data center businesses, if you could help there. It's in the range of 5% to 10% each of the second, Chris, or less than 10% each.

Joe Odia: One moment for the next question. The next question comes from Joe Odia with Wells Fargo. Your line is open. Hi, good morning. How are you, Joe?

Joe Odia: Okay.

Joe Odia: [music].

Joe Odia: Hi, doing well. Thanks. Just wanted to ask about telecom, and it sounds like you need a Challenge Environment currently but also a Constructive Medium-Term Outlook, and so can you just parse a little bit the key developments that you need to see to transition from kind of current challenges into something... It's more constructive.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: [music].

Bill: I was just going to say that, you know, we saw orders start to dip last year, and it was coupled with a very large backlog. So we started liquidating that backlog, but watching the low orders suggests that once the backlog kind of got down to book and fill levels, that basically, what we need, Joe, is the order pattern to pick back up. So, you know, this enclosure segment serves telecom companies and cable companies.

Bill: Okay.

Bill: Okay.

Bill: Okay.

Bill: Yes.

Bill: Okay.

Bill: [music].

Bill: Okay.

Bill: [music].

Bill: And when we talk to them, when we talk to our distributors, just talk to them, uh, when we talk to other suppliers who supply those kinds of companies, there just continues to be a bullishness around the need for build-out and infrastructure build-out by those companies. And it's basically, we just need the orders to pick back up, which we think is purely a function of when, you know, the inventory levels are hitting their normal levels.

Bill: Okay.

Bill: [music].

Bill: Okay.

Bill: [music].

Bill: Right.

Bill: [music].

Bill: Thanks.

Bill: Okay.

Bill: Okay.

Bill: Okay.

Bill: Yes.

Bill: Okay.

Bill: Okay.

Bill: [music].

Bill: Yes.

Bill: Yes.

Bill: [music].

Bill: Okay.

Bill: [music].

Bill: Okay.

Bill: Okay.

Bill: Yes.

Bill: Yes.

Bill: Okay.

Bill: Yes.

Bill: Okay.

Bill: Okay.

Bill: [music].

Bill: Okay.

Bill: Sure.

Bill: Yes.

Bill: Okay.

Bill: I think, ultimately, as well, you know, there's going to be some stimulus money that starts to hit that segment, independent of what probably will happen at exactly the same time that the stimulus comes and inventories will be down, and all of a sudden, you know, the orders will bounce.

Bill: Okay.

Bill: [music].

Bill: But that's basically, you know, what the business needs is customers to start placing orders in recognition that the end customer, installation, and the inventories are at that normal level. And so it sounds like it's more of an inventory normalization headwind than it is an end market activity headwind. Is that fair?

Bill: Okay.

Bill: Yes.

Bill: Okay.

Joe Odia: We 100% believe it. Okay. And then just a question related to the utility distribution side of things and the degree to which you see any instances of long lead times in certain product categories, not necessarily what you ship, that are inhibiting some end market activity. And so the idea being that over time, as those correct, could there actually be a bit of an uptick or sort of surge of demand as other channels sort of correct.

Bill: Okay.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Yes.

Joe Odia: [music].

Joe Odia: I think you point out a good point that for our distribution products, by and large, the lead times are quite normalized, very, very, very quick to be able to satisfy demand. You know, ultimately, products like transformers [inaudible] you know, are still gapped out in terms of lead time, and so I think that makes project planning a little more difficult for some of our products. They may suffer a little bit, but, Generally, we're giving now.

Joe Odia: Okay.

Joe Odia: Great.

Joe Odia: Yes.

Joe Odia: Okay.

Joe Odia: Yes.

Joe Odia: Sure.

Joe Odia: Okay.

Joe Odia: Yes.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Good visibility, hitting on time, promised dates, and I think our part is much more predictable than it had been a year and a half or so ago. But I agree with you, there still are other long-lead-time products, and on the transmission side, we have some. So, on distribution, I think you're right.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Okay.

Joe Odia: Sure.

Joe Odia: Yes.

Joe Odia: Yes.

Joe Odia: Okay.

Joe Odia: [music].

Bill: Our stuff is ready to go. Okay. Thanks a lot. One moment, the next question. The next question comes from Scott Graham with Seaport Research Partners. Your line is open. Hey, good morning.

Joe Odia: Okay.

Joe Odia: [music].

Bill: Okay.

Bill: Okay.

Bill: [music].

Scott Graham: Thanks for taking my question. I have one in one follow-up. On H-U-S, would it be fair to say second quarter sales volume was flat, or can it be up, and then obviously the second half is up?

Scott Graham: Hum.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: [music].

Bill: Then I have that follow-up. Scott, we're not giving quarterly guidance. I think slide eight should give you good considerations of how our units sequentially and how the comparisons play out in 2Q in the second half. No problem, thank you. You made a comment on the HEAS slide on project activity. Could you elaborate on that a bit?

Bill: Okay.

Bill: Okay.

Bill: Yes.

Bill: [music].

Bill: Hi.

Bill: Yes.

Bill: Yes.

Bill: Okay.

Bill: Okay.

Scott Graham: Just think there are some big projects out there, and things like chip plants and uh, reshoring of large-scale industrial projects that, You know, our multi-year projects, our products tend to go in mid and late cycle on that construction, and so to us, that's a great leading indicator as we see those projects get started, and we're quite confident we'll get our fair share of that mid and late cycle installation component. Thank you. I show no further questions at this time in the queue. I would like to turn the call back over to Dan for his closing remarks. Great I'll take it from there.

Bill: Yes.

Bill: Yes.

Scott Graham: [music].

Scott Graham: Okay.

Scott Graham: Sure.

Scott Graham: Okay.

Scott Graham: Yes.

Scott Graham: Hi.

Scott Graham: Yes.

Scott Graham: Yes.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Yes.

Scott Graham: Okay.

Scott Graham: Yes.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Okay.

Scott Graham: Yes.

Scott Graham: Okay.

Scott Graham: <unk>.

Dan Innamorato: I appreciate everybody's time, as Bill said, on a busy morning. We really look forward to spending time with you in June at our Investor Day. We'll talk a lot more there about where our business is going in the next three years. And certainly, we're excited about this, what we've been stating, building on profitable growth on this base that we've built. And those are the expectations you should have as we go into June.

Dan Innamorato: Okay.

Dan Innamorato: [music].

Dan Innamorato: Okay.

Dan Innamorato: Okay.

Dan Innamorato: Yes.

Dan Innamorato: Hum.

Dan Innamorato: Okay.

Dan Innamorato: Okay.

Dan Innamorato: [music].

Dan Innamorato: Yes.

Dan Innamorato: Okay.

Dan Innamorato: Yes.

Dan Innamorato: Okay.

Dan Innamorato: Yes.

Dan Innamorato: Yes.

Operator: So, thanks much, and we'll see you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Thomas Moll, Brett Linzey, Nigel Coe, Christopher Snyder, Dan Innamorato, Julian Mitchell, Dan Amicucci, Scott Graham, Charles Tusa, Hubbell Inc, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ??

Dan Innamorato: Okay.

Operator: Yeah.

Operator: Sure.

Operator: [music].