Q3 2024 Enpro Inc Earnings Call
Speaker Change: Greetings and welcome to the Enpro Q3 2024 earnings conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host, James Gentile. Thank you. You may begin.
James Gentile: Thanks, Irene, and good morning, everyone. Welcome to NPRO's third quarter 2024 earnings conference call. I will remind you that our call is being webcast at npro.com, where you can find the presentation that accompanies this call.
James Gentile: With me today is Eric Vaillancourt, our President and Chief Executive Officer, and Joe Bruderek, Executive Vice President and Chief Financial Officer.
Speaker Change: During today's call we will reference a number of non-GAAP financial measures. Tables reconciling the non-GAAP measures to the comparable GAAP measures are included in the appendix to the presentation materials.
Speaker Change: Also, a friendly reminder that we will be making statements on this call that are not historical facts and that are considered forward-looking in nature. These statements involve a number of risks and uncertainties, including those described in our filings with the SEC.
Speaker Change: Also note during this call that we will be providing full year 2024 guidance, which excludes unforeseen impacts from these risks and uncertainties. We do not undertake any obligation to update these forward-looking statements.
James Gentile: It is now my pleasure to turn the call over to Eric Vaillancourt, our President and Chief Executive Officer. Eric? Thanks, James. And good morning, everyone. Thank you for joining us today as we review our third quarter results and updated outlook for the balance of 2024.
Speaker Change: Third quarter sales were up year over year.
Speaker Change: and up slightly organically despite persistent softness in more than half of our surf markets. Aftermarket or recurring revenue solutions comprise 54% of our revenue year-to-date which provides underlying stability to our portfolio enables us to perform well on a variety of demand environments.
Speaker Change: Our results have been quite good, even in the face of demand headwinds in certain large surf markets. Overall, Consolidated Adjusted Even and Margin was a healthy 24.6%, demonstrating the inherent strength and balance in the Enpro portfolio.
Speaker Change: Our teams are motivated and working hard, excited by our vision and our strategy for long-term growth.
Speaker Change: Our long-term vision is for revenue growth in the ceiling technology segment to be in the mid-single-digit range and AST to grow in the high-single-digit range. Both segments have demonstrated the ability to generate 30% adjusted EBITDA margins, plus or minus 250 basis points.
Speaker Change: depending on the macroeconomic environment and mix.
Speaker Change: We plan on achieving this consistently by investing in a number of areas where we are strongest while implementing our continuous improvement playbook to optimize our performance over time.
Speaker Change: We would like to thank our colleagues across the company for their commitment to our core values of safety, excellence, and respect, while remaining motivated and agile as we provide critically important solutions to our customers.
Speaker Change: Now on to our third quarter performance. After my review, I will turn the call over to Joe for a more detailed discussion of our results and a revised outlook for the balance of the year.
Speaker Change: Operating performance in the fueling technology segment was solid in the third quarter with 4.5% sales growth and consistent profitability despite steep declines in commercial vehicle OEM sales.
Speaker Change: At AST, while we delivered a 5% sequential improvement in sales, profitability was flat, both year-over-year and sequentially.
Speaker Change: We continue to see areas of strength, particularly in our precision cleaning solutions tied to advanced chip production. Demand, however, continues to be choppy for the remainder of the semiconductor business.
Speaker Change: which has broad exposure to the semiconductor capital equipment spending.
Speaker Change: In ceiling technologies, adjusted segment EBITDA margins expanded 300 basis points to 32.7%. Continuous improvement initiatives, effective supply chain management, and favorable mix contributed to another strong quarterly result.
Speaker Change: As a reminder, our continued positive momentum and profitability in ceiling technologies reflects the underlying strength of this segment.
Speaker Change: We have created a firm foundation for profitable growth by focusing on applied engineering differentiation, compelling aftermarket characteristics, incremental investment in organic growth, and a strong continuous improvement culture.
Speaker Change: Additionally, we continue to pursue strategic opportunities in adjacent markets that build upon our core competencies in safeguarding critical environments.
Speaker Change: Our outlook for this segment remains positive.
Speaker Change: In the Advanced Surface Technology segment, revenue improved 3.5% year-over-year and 5% sequentially.
Speaker Change: Adjusted segmented EBITDA margin, however, narrowed both year-over-year and sequentially driven mainly by a shifting demand profiles for waiver FAB equipment.
Speaker Change: Strategic growth investments, especially for precision cleaning solutions and operational improvement initiatives, proceed as we continue to position ASD for long-term growth.
Speaker Change: We are beginning to lap year-over-year AST sales. Let's see a more protracted recovery than we previously expected.
Speaker Change: We continue to see strength in areas tied to advanced node chip production, orders for equipment, and certain key solutions such as coding are choppier than we expected as the third quarter progressed.
Speaker Change: Overall, capacity utilization remains low across the industry, currently resulting in slow semiconductor capital equipment spending.
Speaker Change: Long-term, we are focused on executing our multi-year strategy to drive AST's growth in attractive markets while building differentiated capabilities and efficiency improvements that showcase our technological and process advantages and provide our customers with essential value in the semiconductor supply chain.
Speaker Change: Our balance sheet remains in excellent shape. Our free cash flow generation and strong underlying returns on investment enable us to pursue a variety of growth opportunities, both organically and through strategic acquisitions.
Speaker Change: We are adjusting our outlook to reflect the slower finish to 2024 than previously expected. Our strong execution and disciplined capital allocation will continue as we drive our value creating strategy forward. Joe.
Joe Bruderek: Thank you, Eric, and good morning, everyone. Let's now go into the details of our third quarter performance.
Joe Bruderek: In the third quarter, sales of $260.9 million increased 4% compared to the prior year, with organic sales up slightly.
Joe Bruderek: We saw strong ceiling technologies performance overall and year-over-year sales growth at AST Despite steep declines in commercial vehicle OEM and slow capital equipment sales and portions of our semiconductor business
Speaker Change: Third quarter adjusted EBITDA of $64.1 million increased 11% compared to the prior year period.
Speaker Change: Adjusted EBITDA margin of 24.6%, expanded 160 basis points driven by strong performance and ceiling technologies.
Speaker Change: Growth initiatives on new products and investments in our differentiated capabilities continued, along with ongoing continuous improvement discipline and supply chain efficiency.
Speaker Change: Corporate expense of 10.3 million dollars in the third quarter of 2024 increased from 9.8 million dollars a year ago. The increase was primarily due to an increase in share price based incentive compensation expense, partially offset by lower current year annual incentive compensation accruals and lower professional expenses.
Speaker Change: Moving to a discussion of segment performance, ceiling technology sales of $169 million increased 4.5% and organic sales were relatively flat.
Speaker Change: General industrial sales increased year-over-year driven by a demand recovery in Europe and firm North American performance offsetting tepid Asian markets.
Speaker Change: In addition to our solid general industrial performance, growth in space and commercial aerospace applications, improved food and pharma sales, and firm nuclear sales offsets deep declines in commercial vehicle OEM revenue.
Speaker Change: Strategic pricing actions and the acquisition of AMI, completed in January this year, also contributed.
Speaker Change: Aftermarket sales comprise 63% of total segment revenue.
Speaker Change: For the third quarter, Adjusted Segment EBITDA increased 15%.
Speaker Change: Strategic pricing, continuous improvement initiatives, the contribution from AMI, and improved aftermarket mix drove the segment's profit growth during the period.
Speaker Change: Adjusted segment EBITDA margin was 32.7% in the third quarter, up 300 basis points.
Speaker Change: For the first nine months of 2024, ceiling delivered adjusted segment EBITDA margins around 33%.
Speaker Change: As we have said since the beginning of the year, we expect a return to normal seasonal patterns in 2024, where the fourth quarter usually represents the low point of sales and adjusted EBITDA for the segment.
Speaker Change: We are excited about the number of drivers of long-term growth and value creation in ceiling technologies as we focus on expanding opportunities through growth investments and strategic acquisitions.
Speaker Change: Turning now to the advanced surface technology segment, third quarter sales of ninety two point five million dollars were up three and a half percent year over year and up five percent sequentially.
Speaker Change: We saw growth in precision cleaning solutions tied to advanced node chip production, supporting applications such as artificial intelligence and high bandwidth memory.
Speaker Change: However, demand for capital equipment, coatings, and optical filters remains choppy.
Speaker Change: Market forecasts from a variety of sources suggest that while the overall semiconductor market is in a strong secular growth position long-term, the timing and magnitude of an overall recovery in capital equipment spending continues to evolve and move to the right, and we are seeing similar dynamics play out for us in the near term.
Speaker Change: In the third quarter, adjusted segment EBITDA was flat year-on-year.
Speaker Change: Adjusted segment EBITDA margin was 20.8%, down 80 basis points from last year and 90 basis points sequentially.
Speaker Change: While we saw segment revenue increase, fixed cost of leveraging tied to slow wait for fab equipment demand and operating expense increases tied to growth investments crimped segment margins during the third quarter.
Speaker Change: We expect these dynamics to continue into the fourth quarter and expenses associated with the qualification work for advanced node applications are expected to accelerate.
Speaker Change: Throughout the downturn, we have invested in targeted capacity expansions that will position AST well as the semiconductor market resumes a growth trajectory.
Speaker Change: As well, as our AST platform matures, we are implementing select continuous improvement and optimization initiatives.
Speaker Change: The playbook underlying the success of the Ceiling Technologies platform.
Speaker Change: Turning to the balance sheet and cash flow.
Speaker Change: At the end of the third quarter, our net leverage ratio stood at 1.8 times trailing 12-month adjusted EBITDA.
Speaker Change: Free cash flow year-to-date was approximately $83 million, down from about $134 million last year.
Speaker Change: Timing of working capital and higher cash tax payments compared to last year were the primary drivers of the year-over-year reduction.
Speaker Change: For the year, we expect free cash flow to exceed $110 million.
Speaker Change: We are reducing our CapEx forecast for 2024 to around $40 million versus our previous expectation of $60 million.
Speaker Change: We continue to be excited about our pipeline of organic growth opportunities as we invest to drive long-term, high-margin growth.
Speaker Change: We have strong financial flexibility to execute our strategic initiatives, both organically and through acquisitions that broaden our capabilities, while continuing to return capital to shareholders.
Speaker Change: In the third quarter, we paid a 30 cents per share quarterly dividend, with year-to-date payments totaling $19 million.
Speaker Change: Finally, last week, the NPRO Board of Directors renewed our two-year, $50 million share repurchase authorization that recently expired.
Speaker Change: Moving now to our current view of guidance.
Speaker Change: Taking into consideration all the factors that we know at this time, we are reducing our full year 2024 earnings guidance ranges.
Speaker Change: And we also now expect total and pro sales to be down low single digits compared to 2023 versus our previous revenue guidance of approximately flat.
Speaker Change: The primary factors in adjusting our sales view are slower sales in AST, given variability in orders for wafer fab equipment and coatings lines for the fourth quarter, and continued weakness in commercial vehicle OEM sales and sealing technologies.
Speaker Change: We now expect adjusted EBITDA of between $250 million to $255 million.
Speaker Change: and adjusted diluted earnings per share to range from $6.75 to $7 versus our previous view of $260 million to $270 million and $7 to $7.60 respectively.
Speaker Change: The normalized tax rate used to calculate adjusted diluted earnings per share remains at 25% and shares outstanding approximate $21 million.
Speaker Change: In AST, we expect current soft demand conditions to persist into 2025.
Speaker Change: Lower than expected demand for critical in-chamber tools, lower shorter-cycle orders and codings, and accelerated growth spending related to qualification work for leading-edge applications will drive AST segment profitability down in the mid-single-digit range for the fourth quarter.
Speaker Change: In ceiling technologies, we continue to see a resilient backdrop during this seasonally low period, although commercial vehicle OEM sales will remain weaker than previously expected.
Speaker Change: I will now turn the call back to Eric for closing comments.
Eric Vaillancourt: We are advancing numerous opportunities to further optimize Enpro operationally, while investing in attractive opportunities to drive long-term, high-margin growth.
Eric Vaillancourt: Our balance sheet is in great shape, and we continue to build upon the strong foundation that we have for driving long-term value creation. Every day, we deliver critical, leading-edge solutions for our customers that safeguard critical environments and applications that meaningfully impact our lives.
Speaker Change: Thank you again for joining us today. There is no better time to be a Powered Event Pro, and I welcome your questions.
Speaker Change: Thank you. We will now be conducting the question and answer session.
Speaker Change: If you would like to ask a question, please press star and then 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: The first question we have is from Jeff Hammond of KeyBank Capital Markets. Please go ahead.
Jeff Hammond: Hey, good morning everyone. Morning, Jeff.
Jeff Hammond: So, maybe just to start with Semiconductor, we've kind of seen from peers that it's taking longer to inflect. Just wondering what you're seeing from an order, funnel?
Jeff Hammond: conversation with customers, you know, to kind of frame maybe, you know, early thinking on 2025. Is this kind of a slow bounce off the bottom or do we finally see, you know, more meaningful inflection?
Speaker Change: Well Jeff, the way I would describe it as still being choppy, as you said maybe a slow rebound from the bottom, but at this point it's just people are just pulling in their horns a little conservative. We've looked at
Jeff Hammond: the announcements with some of the leading IDM or one of the leading IDMs in the third quarter created a little bit of uncertainty and Our customers are just being cautious. So right now our demand profile just keeps bouncing around a little bit
Jeff Hammond: okay
Speaker Change: Sorry, Jeff, I was just going to add, yeah, I mean the build plans that we see from our key customers are just moving around.
Speaker Change: As Eric mentioned, a couple of the dynamics have caused our customers to kind of retrench on inventory a little bit and kind of wait out that uncertainty.
Speaker Change: So as things move into 2025, we kind of expect these conditions to remain through the beginning of the year. After that, we just don't have good visibility right now into what the rest of the market will do.
Speaker Change: I think, Jeff, just to add to it, we had a customer meeting and at one point they were happy with the inventory they had, and then as the quarter went on, I think they're doing a little bit more de-stocking based on some recent customer news.
Speaker Change: Okay, that's a really good color. Shifting gears to ceiling...
Speaker Change: Maybe just level set us on your nuclear business, how big it is today, and just, you know, there's been kind of a lot of news flow around resurgence and nuclear and some announcements around data centers and just wanted to understand better how you think you might participate in that resurgence.
Speaker Change: Nuclear business for us is about 7% of sales.
Speaker Change: That's where it is today. It's obviously good for us. At the same time, it's not going to change our trajectory fundamentally. When you look at the average reactor in terms of the content we have,
Speaker Change: It's significant to us, but at the same time, it's not going to be significant to the portfolio. To our nuclear business, it's good, but it's not going to create double-digit growth for Enpro or anything like that. So we have the seals for the reactor pressle vessels.
Speaker Change: and that while that's substantial there's only two of them and they buy two or three at a time and they replace them every couple of years.
Speaker Change: So, it's not going to be what you would consider a home run.
Speaker Change: So it's substantial and it's a good profitable business and it's a great long-term solution and as we get into these small modular reactors, there will be more and more of them. At the same time, I don't want people building in a huge increase for nuclear that's...
Speaker Change: likely not going to be that for us. It'll be consistent, long-term, steady growth that's very profitable.
Speaker Change: Eric Vaillancourt, Joe Bruderek, Joe Brederek, Eric Vaillancourt, Joe Brudererek, Joe Brudererek,
Speaker Change: When we think about the structure of the ceiling technology segment, nuclear and sustainable power generation are just one of many growth nodes that, when we talk about the dynamism of the segment,
Speaker Change: that organic growth dynamic into that mid-single-digit range long-term, and our teams are working really hard, you know, to make sure that we deliver that level of...
Speaker Change: of performance, complemented by, you know, incremental strategic acquisitions that expand our capabilities to customers.
Speaker Change: Okay, thanks. I'll get back in queue.
Speaker Change: The next question we have is from Steve Firzani of Sudotian Company. Please go ahead.
Steve Firzani: Morning, everyone. Appreciate all the detail on the call this morning.
Steve Firzani: I wanted to ask about part of the margin softening on ASTs related to increased spending for growth initiatives and then I know Joe you mentioned expecting accelerated spending on the certification process in 4Q. Can you walk us through those two elements?
Speaker Change: Yeah, thanks Steve.
Speaker Change: Yeah, so our progress in Arizona has gone quite well operationally, right? We've executed the build-out of that facility quite well. We're actually a little bit ahead of schedule there. So working with our key customers, we've accelerated.
Speaker Change: The qualification for leading edge node cleaning and so we can demonstrate copy exact into that Arizona facility and we're kind of pulling that work into 2024 a little bit more than previously expected. So that's going to put a little bit of cost ahead of
Speaker Change: of Demand in 2025 into the fourth quarter. And that's why I said, you know, some of that is accelerating. Remember, this is just phase one of the work we're doing in Arizona and we're very excited by that, but we've accelerated some of the qualification work and early returns are quite positive there, so.
Speaker Change: You know, we're just pulling some of that into 2024.
Speaker Change: Who'd you expect to...
Speaker Change: Go ahead, Eric.
Speaker Change: You know, I said the other factors are we're implementing our operational excellence playbook in the ASD.
Speaker Change: So what you're seeing is investment ahead of the value that will come later on. You're seeing it in terms of things like improving our inspection process, our cost of performance is lower. We've had recently some very significant innovation in both our optical business and also our semiconductor business.
Speaker Change: where some automation has reduced inspection time from hours to minutes in some cases.
Speaker Change: And so things like that, along with a little facility consolidation, moving some equipment around to get more positive flow throughout the factories, you saw the success of those initiatives in our ceiling technologies businesses, and we're just getting started, really, in the AST platform.
Speaker Change: So all that takes extra investment ahead of the benefit that comes from it. At the same time, it's a slower time in the industry, and so you've got a lot of people who are trying to keep busy. We're having them working on very meaningful projects. We don't get time to do anything because we're busy.
Speaker Change: And so we have the cost of those initiatives without the benefit at this point. But those benefits will flow in over time. And as we said earlier, that business will rebound to be 30%, even at plus or minus a couple hundred fifty basis points, depending on the mix and volume at the time. So we're still really excited about that business.
Speaker Change: If I could just ask about the expected ramp on Arizona, the certification process, when you would expect to see meaningful revenue generation out of that operation?
Speaker Change: That's the best answer we could give you right now. You may have thought of the press report yesterday that talked about one of our key customers mentioning they're starting up a ramp on 4 nanometer sometime in the middle of 2025.
Speaker Change: And that would drive some of our volume at that time, but I don't expect full ramp personally until 26
Speaker Change: You know when you bought Alexa you talked a lot about that being really customers came to Alexa because of their strong reputation for doing a very specific custom build.
Speaker Change: which they didn't have to market themselves. Have you flipped that at all? Are you trying to more aggressively market the capabilities of Alexa now, given the recent weak demand of the last, you know, multiple months?
Speaker Change: We wouldn't have flipped it. We're still investing in the same places they were.
Speaker Change: and those opportunities are coming back. Now, as I said before in previous calls, they had a blip really because of COVID. People stopped traveling, it started, stopped doing new projects. Everybody's working from home. I just caught, it's like a snake swallowing a...
Speaker Change: large animal. And so they had this bulb that went through or this bolt that went through without something behind it. The pipeline is now very active and we've had some very significant customer wins in the last few months. And so that business is starting to improve dramatically.
Speaker Change: There are several end markets that Alexa could be successful in and they have a very diversified customer base.
Speaker Change: But some of the areas of strength are in free space communications, certain new space applications, semiconductor areas as well. So the outlook remains steady for Alexa for us, and they continue to be at the top of the pyramid business.
Speaker Change: in the industry. Their life sciences surgical applications have also taken off recently again.
Speaker Change: Thank you. You're great.
Speaker Change: Thanks. That last one for me, one, you lowered CapEx, just what spending is not taking place, and then two, seeing some debt reduction, does that ramp up debt reduction if you're lowering CapEx?
Speaker Change: So, yeah, as you said, we lowered our CapEx guide to $40 million.
Speaker Change: Frankly, we probably overestimated our ability to execute a little bit on CapEx going into this year. Our capacity is probably more in the $40 million to $50 million range. At the same time, there's some really advanced work we're doing on gas dispersion equipment.
Speaker Change: And so our engineering teams have been working on that in multiple locations, and based on the innovation that's coming through that and some of the learnings, it's probably better to phase some of that over time, and it'll ultimately result in a more advanced solution, a more optimized solution at the end.
Speaker Change: So, even though, you know, some of that was a little bit ahead of ourselves, you know, it will result in a better ultimate solution because we're going to phase some of that spending over multiple periods there.
Speaker Change: You know, I think going forward, we're always going to prioritize organic investments and, you know, prioritize investments in M&A from a capital allocation standpoint, and those are going to be our two primary areas that we're investing in.
Speaker Change: We're not, at the current moment, looking to act on other legs of capital allocation, and the majority of our focus will be on organic and inorganic growth.
Speaker Change: We're going to generate well over $110 million of free cash flow in 2024, partially driven by the fact that we have a lower CapEx budget, and as we look forward...
Speaker Change: from a percentage of revenue perspective, you know, we'd like to, you know, put about three and a half to four percent of revenue to work in capital spending, two-thirds of which will be focused on, you know, high margin growth projects.
Speaker Change: Great. It's helpful. Thanks, everyone.
Speaker Change: Ladies and gentlemen, just a reminder, if you would like to ask a question, you're welcome to press star and then 1.
Speaker Change: The next question we have is from Ian Zafina of Oppenheimer & Co. Please go ahead.
Ian Zafina: All right, great. Thank you very much. I just wanted to drill down into AST a little bit more, kind of, you know, where exactly are you seeing that weakness? Is it, you know, very leading edge or less so? And maybe what has kind of moved against you in that kind of spectrum? Thanks.
Speaker Change: I think you said, was it leading edge? I didn't hear the first part of your question. Yeah, exactly. Where are you kind of seeing the difference? Where are things weaker than you had expected? Is it kind of on the leading edge, non-leading edge? Exactly, where is it?
Speaker Change: The leading edge cleaning and applications are very very strong and so everything leading edge We're doing very well within our cleaning and refurbishment business and new product testing as well
Speaker Change: on the legacy pieces and the capital equipment spending, which some of that does go to leading edge as well, so it's hard to break it out and say this much is leading edge and this much is trailing edge. That's where it's a little bit slower. The factories still aren't fully utilized, and so when utilization rates go up, they'll buy more equipment. But that's the slowest piece of it.
Speaker Change: The rest of our services business is very strong.
Speaker Change: We also saw a little incremental weakness in codings.
Speaker Change: compared to certain, you know, just the order flow is a little choppier than we had initially felt in that Q2 into this, you know, throughout this quarter as well and those tend to be shorter cycle product and solution lines that
Speaker Change: You know just kind of move around a little bit
Speaker Change: Okay and then you know as we look at like a return to growth in that in that space of the division
Speaker Change: constantly get a lot easier I guess in the first half of next year. Is that enough to kind of move back into let's say positive growth?
Speaker Change: or do we really need to see like a big semi cap equipment rebound you know or just cleaning solutions like enough to kind of get you back to positive growth? Thanks.
Speaker Change: I mean so we were up in AST sequentially 5% we were up three and a half percent year-over-year this is the first material quarter of like those lower comps starting to lap
Speaker Change: We are still seeing, for Q4, just kind of a flat, flattish from Q3 result from a top-line perspective with a little bit of headwinds on the margin like we discussed in the guidance section.
Speaker Change: You know, I think we're going to see a slow first half, but we're probably kind of still past the lowest point, because there are dynamics that...
Speaker Change: That should drive a little bit of growth, but in terms of that, you know, industry forecasted hockey stick type of acceleration That likely will not come to fruition which actually kind of benefits us when we when we think about you know balancing our costs
Speaker Change: with the Intermediate Demand Outlook while still investing in those opportunities for long-term growth. Yeah, I mean the first quarter we talked about of last year, or this year, represented the bottom for what we expected, and so we've seen slight...
Speaker Change: sequential improvement of demand, you know, quarter over quarter. It's just not as much as we originally expected.
Speaker Change: And so as we go into the fourth quarter and then the first and second quarter of last year, our expectations that we'll see year-over-year growth, we're just not seeing the sequential.
Speaker Change: substantial improvement that was originally predicted to come in the back half of this year. Yeah, like over the next few quarters, it's just going to be choppy until some of these things kind of come to fruition. That's just the realistic, you know, you know, situation at hand for us and many others.
Speaker Change: Okay. Thank you very much, guys.
Speaker Change: right here for the last part.
Speaker Change: We have a follow-up question from Jeff Hammond of KeyBank Capital Markets. Please go ahead.
Jeff Hammond: Hey guys, maybe just an update on the AMI integration and just, you know, actionability in your M&A pipeline.
Speaker Change: AMI Acquisition is a home run by every standard. We're very thrilled with that. Kevin and the team are doing an outstanding job culturally. Every aspect of that business has been just a home run and we're very excited about it.
Speaker Change: Term and Actionability, we have a robust pipeline we look at all the time. We literally look at Opportunities every week. I don't think a week goes by we don't look at something
Speaker Change: But we'll remain disciplined, and we're going to find another business similar to AMI at some point here. Yeah, it seems like things coming to market have kind of picked up. The activity's picked up through the second half quite a bit, so we're seeing more opportunities of things that we've been looking at closely.
Speaker Change: over a softer period now coming to market. So the pipeline is really active, Jeff, and...
Speaker Change: You know, we've got a couple of things that that we're really interested in nothing that's actionable yet
Speaker Change: But, you know, we continue to look at key focus areas in ceiling technologies for extension opportunities and, you know, food and pharma and test and measurement and other spaces that we're really interested. AMI is a really good model for the type of business that...
Speaker Change: meets all of our input criteria both strategic and you know from a culture and leadership perspective so you know we've got a number of opportunities like that in our pipeline that we're hopefully going to execute on here soon.
Speaker Change: Yeah, it's just more about timing rather than, you know, opportunity set in terms of availability of some of these
Speaker Change: Thank you. Thank you.
Speaker Change: Great. Thanks, guys.
Speaker Change: At this time there are no further questions and I would like to turn the floor back over to James Gentile for any closing remarks.
Speaker Change: That concludes today's conference. Thank you for joining us. You may now disconnect your lines.