Q3 2025 Core & Main Inc Earnings Call
Hello, and welcome to the colon main Q3 of 2020 full earnings call. My name is Alex and I'll be coordinating the call today.
Like to ask a question one presentation of offended. Please press star followed by one on your telephone keypad.
Speaker Change: I don't know how to actually our highest Robin Bradbury speaking. Please go ahead.
Speaker Change: Good morning, everyone. This is Robin Bradbury senior Vice President of Finance and Investor Relations for Corning. We are happy to have you join US. This morning for our fiscal 2024 third quarter earnings call.
Speaker Change: I am joined today by Steve Leclair, our chair and Chief Executive Officer, and Mark with Koski, Our Chief Financial Officer.
Steve LeClair: Steve will lead today's call with a business update and an overview of our recent acquisitions.
Steve LeClair: Mark will then discuss our third quarter financial results and updated fiscal 2024 outlook followed by a Q&A session.
Speaker Change: We will conclude the call with Steve's closing remarks.
Speaker Change: We issued our earnings press release, this morning, and posted a presentation to the Investor Relations section of our website. Our press release presentation and the statements made during this call may include forward looking statements.
Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.
Speaker Change: Such risks and uncertainties include the factors set forth in our earnings press release and in our filings with the Securities and Exchange Commission.
Speaker Change: We will also discuss certain non-GAAP financial measures, which we believe are useful in assessing the operating results of our business. A reconciliation of these measures can be found in our earnings press release and in the appendix of our Investor presentation.
Speaker Change: Thank you for your interest in Corn me I will now turn the call over to chair and Chief Executive Officer, Steven Leclair.
Steve LeClair: Thanks, Robin and good morning, everyone and thank you for joining us today for our fiscal 2024 third quarter earnings call. Our teams delivered strong performance with record quarterly sales of over $2 billion and adjusted EBITDA of $277 million. We have once again shown that corn main can grow in any environment.
Steve LeClair: Our ongoing focus on driving organic market share gains combined with our disciplined approach to M&A.
Steve LeClair: To achieve nearly 12% sales growth in the third quarter.
Steve LeClair: We'll discuss our results in more detail later in our prepared remarks, but first I'll begin on page five of the presentation with some emerging themes in the water sector.
Steve LeClair: The United States continues to face a growing disparity between water supply and demand.
Driven by a combination of environmental demographic and economic factors groundwater reserves are being depleted at a rapid pace, especially in agricultural areas rely on irrigation.
Steve LeClair: Aging water infrastructure compounds, the problem as leaks and inefficiencies lead to significant losses in a resource that is becoming increasingly scarce.
Steve LeClair: Together.
Steve LeClair: These factors create a challenging situation for maintaining reliable water supply.
Steve LeClair: At the same time demand for water as surging.
Population growth is driving higher consumption levels for municipal and domestic use.
Steve LeClair: Economic development, including energy production and expanding industrialization also requires vast amounts of water.
Steve LeClair: Meanwhile, agriculture, which accounts for approximately 70% of freshwater use in the U S continues to consume large quantities to meet the demands of a growing population.
Steve LeClair: Without significant efforts to improve water conservation and repair and upgrade aging infrastructure the gap between water supply and demand will continue to widen.
Steve LeClair: Addressing the widening gap requires bold investments in modernizing and expanding water infrastructure in.
Steve LeClair: And the infrastructure investment and jobs Act provides a critical opportunity to do so.
Steve LeClair: The ACA allocates billions of dollars to improve water systems across the U S.
Steve LeClair: Funding projects to repair aging pipelines.
Steve LeClair: Upgrade treatment facilities and developed technologies for water reuse and recycling.
Steve LeClair: These investments, which we expect will continue to receive bipartisan support.
Steve LeClair: Our crucial for enhancing efficiency and reducing water loss, ensuring that every drop counts in a time of increasing scarcity with our extensive product and service portfolio spanning water wastewater storm drainage and fire protection systems.
Steve LeClair: <unk> main is well positioned to play an important role in meeting the growing demand for infrastructure upgrades and.
Steve LeClair: And supporting the development of resilient future ready water systems.
Steve LeClair: Turning now to our end markets in the third quarter.
The residential end market was modestly positive and there continues to be significant pent up demand for new housing in the U S.
Steve LeClair: If mortgage rates come down and affordability improves we expect to see stronger levels of residential construction activity as homebuyers reenter the market <unk>.
Steve LeClair: Unlocking demand that's been accumulating over the past few years.
Steve LeClair: The nonresidential end market remains stable and our backlog and bidding activity continued to grow.
Steve LeClair: This momentum strengthens our confidence in our outlook.
Steve LeClair: Municipal repair and replacement activity continues to be resilient and we were pleased to see an increase in new project starts from the second quarter.
Steve LeClair: We are also beginning to see more projects funded by the infrastructure investment and jobs Act signaling a positive trajectory for investments in municipal water infrastructure in 2025 and beyond.
Each of our end markets benefit from secular growth trends that are expected to continue over the long term.
Steve LeClair: Municipal demand, which represents over 40% of our business is.
Steve LeClair: As demonstrated steady growth historically due to the critical need to replace aged water infrastructure.
Steve LeClair: With better access to capital higher water utility rates and federal funding on the horizon. We expect this market to grow steadily for the foreseeable future.
Steve LeClair: Residential and nonresidential construction activity remained below long term historical averages when adjusting for population growth in both end markets are poised to benefit from demographic shifts population growth a shortage of buildable lots for new homes and the need for nonresidential infrastructure to support the expansion.
Steve LeClair: Suburban and rural communities.
Steve LeClair: Moving to our operations.
Steve LeClair: Our facilities in the southeast we're up and running again shortly after hurricane saline and Milton past and they suffered minimal damage hurricanes.
Steve LeClair: Hurricane has can be disruptive to our operations in the short term, but they can create medium and long term tailwind for our business and.
Steve LeClair: In the short term shipments slowdown as products are not able to be brought onto the job sites due to the destruction flooding and ground saturation and many of our customers are focused on the recovery efforts.
Steve LeClair: Over the medium term, we typically see a favorable impact from critical infrastructure repairs.
Steve LeClair: And over the long term new projects and regulations are designed and constructed to handle higher volumes of storm water.
Steve LeClair: Our associates in Florida, and Carolinas are safe and accounted for the many have their lives disrupted.
Steve LeClair: We continue to offer support to those who need assistance.
Steve LeClair: Our product customer and geographic expansion initiatives continue to outpace core end market growth highlight.
Highlighting by the 24% growth we achieved in meter sales during the quarter and supplemented by our execution on water and wastewater treatment plant projects.
Steve LeClair: Last quarter, we talked about our position as one of the nation's leading providers of advanced metering solutions and the value proposition, we bring to our municipal customers.
Steve LeClair: You are also a leading provider of engineered products that are found within water and wastewater treatment plants. We.
Steve LeClair: We have historically focused on the connections that bring water and sewer utilities to inform treatment plants and their customers, but these treatment plant projects provide us with a substantial opportunity to expand inside defense selling a wider variety of specialty valves and equipment.
We have continued to invest in key talent that understands the unique specifications for treatment plants has the knowledge and navigate the complex funding processes. They follow.
Steve LeClair: These investments coupled with our partnerships with national contractors, who specialize in these projects have been key to our growth.
Steve LeClair: We also opened new locations and hate in Idaho in Chattanooga, Tennessee during and after the quarter, expanding our geographic reach and allowing us to better serve our waterworks customers in key markets.
Steve LeClair: Each time, we add a new location, we had key talent to enhance our value proposition given us the opportunity to earn market share.
Our team is actively evaluating a pipeline in priority markets to expand into and we have plans to open more locations over the next several quarters.
We expanded gross margins by 20 basis points sequentially from the second quarter through the success of our initiatives.
We have done a tremendous job structurally enhancing gross margins over the years through the addition, and expansion of our private label strategy driving synergies through M&A and optimizing the way, we source and price our products.
Steve LeClair: We have been very transparent about the temporary gross margin tailwind as we've experienced over the past two years and our expectation for gross margin normalization.
Steve LeClair: As we communicated last quarter we.
Steve LeClair: We expected that gross margins had normalized providing a solid baseline for us to build upon moving forward.
Steve LeClair: We generated robust operating cash flow of $260 million during the quarter and our disciplined approach to capital allocation further demonstrates our commitment to growth and creating value for shareholders.
Steve LeClair: We completed five acquisitions during and after the quarter to expand our presence in key geographies gain access to new product lines and add key talent.
Steve LeClair: We also deployed $100 million to repurchase and retire nearly two 5 million shares under our share repurchase program.
Steve LeClair: We operate an asset light model, which has allowed us to convert between 60% to 70% of our adjusted EBITDA into operating cash flow historically.
Steve LeClair: We expect to maintain that same level of operating cash flow generation going forward, resulting in significant available capital that we will reinvest back into the business and returned to shareholders.
Steve LeClair: Turning to acquisitions.
We highlighted the acquisition of H M pipe products.
Steve LeClair: <unk> Green solutions, and Green equipment company, and our second quarter call in September.
Steve LeClair: We completed two more acquisitions since then including E Comm associates and Arco northeast.
Steve LeClair: <unk> associates is a distributor of utility protection equipment with a single location in New Jersey.
Steve LeClair: Since 1970 to the East Com team has provided exceptional service to surveyors and contractors across 13 states by offering damage prevention equipment training and services.
Steve LeClair: They have a strong reputation for their commitment to being dependable partner and.
Speaker Change: And we are excited to welcome them to the corn main family.
Speaker Change: Arco northeast is a single branch distributor fire protection products and services operating in New Jersey.
Speaker Change: They have become a trusted partner to the customers they serve delivering top quality fire protection products and outstanding support.
Speaker Change: A mirror our own level of commitment to customers here at core in Maine, We look forward to partnering with them to further our customer success.
Speaker Change: On a combined basis, the five acquisitions, we completed during and after the quarter generate roughly $150 million of annualized net sales.
Speaker Change: And year to date, we have now completed 10 acquisitions with combined annualized net sales of approximately $620 million.
Speaker Change: Integrating new businesses is a complex process that involves aligning diverse systems operations and cultures to create one cohesive organization.
Speaker Change: Our integration process is well defined scalable and highly flexible based on the needs of each acquisition.
Speaker Change: With an experienced team deep relationships with high performing companies and.
And our reputation as the acquirer of choice in our industry, we remain well positioned to grow through acquisitions for many years to come.
Lastly, I'll wrap up my prepared remarks, with our key investment highlights.
Speaker Change: What makes corn main an exceptional business.
Speaker Change: Corn main stands out as an industry leader in a large and growing $39 billion addressable market.
Speaker Change: We are one of only two national distributors competing in our space.
Speaker Change: With the remainder of the market served by one hundreds of other local and regional distributors.
Our local presence and expertise are backed by national scale, we can utilize our size and resources to capitalize on new growth opportunities.
Speaker Change: And our competitive edge.
Speaker Change: To deliver even better products and services that support our customers.
Speaker Change: As I mentioned earlier the end markets. We serve are supported by secular tailwind.
Speaker Change: <unk> the under supply of housing relative to population growth and household formations the critical need to repair and upgrade municipal water systems and a growing focus on water sustainability.
Speaker Change: We have multiple levers to drive organic growth.
Speaker Change: <unk> investments in Greenfields. The addition of new sales talent.
Speaker Change: Our ability to drive the adoption of new products throughout the industry and our relentless focus on improving our value proposition at the local level.
Speaker Change: We also have multiple levers to drive sustainable margin expansion.
Speaker Change: Including the expansion of our private label portfolio.
Speaker Change: Optimizing the way, we source and price our products and.
Speaker Change: And driving operational efficiencies throughout our vast distribution network.
Speaker Change: Our ability to identify execute and integrate acquisitions has been a cornerstone of our success.
Speaker Change: Enabling us to expand our capabilities and increase market share and deliver synergies across our network.
Speaker Change: Core <unk> is not just a distributor we differentiate ourselves through a comprehensive portfolio of product and service offerings enhanced by proprietary technology tools to streamline workflows improve efficiency and deliver a superior experience to our customers.
We are a trusted source to our customers because of our operational excellence across all products services and markets.
Speaker Change: Very rarely do our customers come to us with a list of materials.
Speaker Change: Instead, they come to us with a project idea, our engineered drawing and we bring those projects to life by converting them into comprehensive material project plans.
Speaker Change: Our geographic footprint and reach to local communities is also essential to our suppliers because we have a large and highly knowledgeable sales force with boots on the ground and the ability to reach our fragmented customer base.
Speaker Change: With a resilient financial profile characterized by strong cash flow generation disciplined capital allocation and attractive return characteristics corn, Maine is well positioned to create and deliver value for shareholders.
Speaker Change: While fulfilling its mission to advance reliable infrastructure across the communities we serve.
Speaker Change: Before I turn it over to Mark I want to take a moment to reflect on the past few quarters.
Speaker Change: Our teams have had to navigate several challenges and distractions from dynamic market conditions to unprecedented weather events and other external factors beyond our control.
Speaker Change: Our teams consistently rose to the occasion, demonstrating focus agility resilience and commitment.
Speaker Change: Their continued ability to adapt collaborate focus on our customers and drive results speaks volumes about the strength of our culture and the dedication of our people.
Thank you for your ongoing support I look forward to what we will accomplish in the years ahead go ahead Mark.
Thanks, Steve I'd also like to extend my thanks to our teams for their hard work and delivering another record quarter. We grew net sales approximately 12% in the third quarter to 2.0 of $4 billion.
As Steve mentioned this was the highest level of quarterly sales in the company history.
Acquisitions contributed about 9% of our sales growth and organic volumes were up mid single digits due to a rebound in municipal projects starts and more favorable weather conditions, which allowed our customers to resume some of the projects that were deferred last quarter.
Speaker Change: As anticipated.
Speaker Change: <unk> pricing remains stable on a sequential basis.
Speaker Change: Gross margins for the quarter finished at 26, 6% compared with 27% in the prior year.
Speaker Change: <unk> of approximately 40 basis points.
Speaker Change: Our second quarter call in September we communicated our expectation that gross margin normalization had run its course and that we would be in a position to expand gross margins sequentially through the execution of our initiatives.
Speaker Change: Our teams delivered on that delivering strong execution to expand gross margins by 20 basis points from the second quarter.
Speaker Change: Selling general and administrative expenses increased 14% in the third quarter to $274 million.
Speaker Change: The year over year increase in both SG&A and SG&A as a percentage of net sales primarily reflects the impact of acquisitions.
Interest expense in the third quarter was $36 million compared with $20 million in the prior year.
Speaker Change: The increase was primarily due to the addition of the $750 million term loan due 2031 and higher borrowings under our senior ABL credit facility.
Speaker Change: The provision for income taxes in the third quarter was $47 million compared with $39 million in the prior year and our effective tax rates were 25, 1% and 19, 8% respectively.
Speaker Change: This quarter's effective tax rate reflects a more normalized ongoing rate and the increase over the prior year period was primarily due to exchanges of partnership interests in conjunction with secondary offerings and the repurchase transactions, we completed in fiscal 2023.
Speaker Change: We recorded $140 million of net income in the third quarter compared with $158 million in the prior year the.
Speaker Change: The decrease in net income was primarily due to higher SG&A and amortization expenses and an increase in interest expense.
Speaker Change: Diluted earnings per share increased approximately 6% in the third quarter to 69.
Speaker Change: The increase in diluted earnings per share was due to lower share count following the share repurchase transactions executed throughout fiscal years, 2023, and 2024, partially offset by a decline in net income.
Speaker Change: Adjusted EBITDA in the third quarter increased approximately 7% to $277 million.
Speaker Change: Adjusted EBITDA margins decreased 60 basis points year over year to 13, 6%, reflecting a 50 basis point sequential improvement from the second quarter.
Speaker Change: Moving to our balance sheet and cash flow.
Speaker Change: We ended the quarter with net debt of approximately $2 4 billion and our net debt leverage was two seven times.
Speaker Change: Total liquidity was $1 billion.
Speaker Change: Consisting of $10 million of cash and the remaining amount being excess availability under our ABL revolver.
Speaker Change: We generated $260 million of operating cash flow during the quarter, reflecting over 90% conversion from adjusted EBITDA.
Speaker Change: We continue to strategically allocate our cash flow and our capital allocation priorities remain unchanged.
Speaker Change: With investments in growth being our top priority.
This year, we have completed 10 acquisitions and we continue to have a healthy pipeline.
Speaker Change: Our second priority is returning capital to shareholders.
Speaker Change: And in the third quarter, we deployed $100 million to repurchase and retire to $4 6 million shares under our share repurchase program.
Speaker Change: This brings our year to date share repurchases to $121 million and $2 eight 9 million shares in total.
Speaker Change: As of today, approximately $379 million remains under our existing share repurchase authorization.
Speaker Change: Before we head to Q&A I'll wrap up my prepared remarks with a discussion on our updated outlook for fiscal 2024, and a framework to consider for fiscal 2025.
Speaker Change: Yeah.
Speaker Change: The municipal repair and replacement portion of our business remains resilient and we continue to expect that our end markets will be stable for the remainder of fiscal 2024, we.
Speaker Change: We expect the pricing environment to remain sequentially stable and we believe our gross margins will sustain at current levels through the fourth quarter.
Speaker Change: With three quarters of the year behind us and considering our recent acquisitions current backlogs and order trends, we are raising our full year estimates for net sales and adjusted EBITDA.
Speaker Change: We now expect net sales to range from 735 to 745 billion.
Speaker Change: And we expect adjusted EBITDA to range from $915 million to $935 million.
Speaker Change: This will mark our 15th consecutive year of positive sales growth, averaging approximately 10% annually over that period.
Speaker Change: Consistency of this growth would not be possible without our resilient business model. The diversified end market mix, we've developed over the years. The targeted investments, we are making to support and execute our growth initiatives and the expertise and dedication of our associates.
Speaker Change: As we look beyond this year our growth algorithm remains firmly intact.
Speaker Change: We plan to provide our outlook for fiscal 2025 during next quarter's earnings call.
Speaker Change: However, as we sit here today, we generally expect end market volumes will be positive next year, depending on broader economic conditions, including the effective interest rate movements and progress on federal infrastructure funding.
Speaker Change: We are committed to driving two to four points of organic above market growth through the execution of our product customer and geographic expansion initiatives.
Speaker Change: In terms of M&A, we anticipate two points of growth from acquisitions that have already closed so far this year.
Speaker Change: We maintain a strong pipeline of acquisition opportunities and expect to remain acquisitive as we progress through the rest of this year and into next year.
Speaker Change: We are optimistic about our ability to achieve 30 to 50 basis points of adjusted EBITDA margin expansion annually through the execution of our initiatives.
Speaker Change: And we will strive to do this while producing strong operating cash flow at a rate of 60% to 70% of adjusted EBITDA on an ongoing basis.
Speaker Change: We will continue deploying capital on initiatives that will drive above market growth, including executing on our M&A pipeline and delivering on our organic growth initiatives.
Speaker Change: We will maintain significant liquidity and balance sheet flexibility to continue driving shareholder value through share repurchases or dividends.
Speaker Change: We have demonstrated that our business model is resilient and we can deliver strong results in any environment.
Speaker Change: We're looking forward to a strong finish to the year and helping our customers build more reliable infrastructure.
Speaker Change: At this time I'd like to open it up for questions.
Speaker Change: As a reminder, if your lifestyle ask a question. Please press star one telephone keypad.
Speaker Change: Our first question for today comes from Kathryn Thompson of Thompson Research Group. Your line is now open. Please go ahead.
Speaker Change: Great. Thank you for taking my questions today.
The first is just on focusing on end markets.
Speaker Change: Okay.
Municipal end market in particular.
Speaker Change: Current expectations for up low single digits for 2020.
Speaker Change: Not looking for 25 guidance.
Speaker Change: Any thoughts on.
Speaker Change: And momentum.
Speaker Change: Going into next year.
Speaker Change: Large amounts of.
Speaker Change: Money still to be spent.
Speaker Change: Municipalities that are generally steadier.
Speaker Change: There could be some unique tailwind, helping with that end market.
Speaker Change: Just a similar commentary on.
Speaker Change: Non res end market too.
Speaker Change: Thank you.
Speaker Change: Hey, Thanks, Katherine for the question, Yes, we saw really pretty stable and modest growth in municipal through the quarter and we saw the bidding activity and backlog continue to improve really feel encouraged by what we're seeing.
Speaker Change: Jay funds are starting to become a little bit more prominent out there. So we're seeing a number of projects that are.
Really hitting the going from drawing the drawing table to ultimately.
Speaker Change: Being executed in projects, which we think we'll start delivering in 2025 and these projects vary from what I would call a large diameter or bigger projects to some of the led replacement pipes, which can be smaller dollars and a little less material for us, but it's good to start seeing those funds starting to flow through so we're encouraged by what we are.
Speaker Change: Seeing with municipal very much in line with what we are anticipating along those lines nonresidential has been has been good for us as well too. So we've certainly seen roads and bridges in some of those areas continue to be strong a lot of the big Mega projects continued to be robust as we've seen some of the localized areas there in terms of.
Our fire protection.
Speaker Change: Activity and along with our <unk>.
Speaker Change: Underground work in those areas. So those those things that really helped pull through a lot of the storm drainage materials.
Speaker Change: And some of those products as well so we'll continue to see that nonresidential.
Speaker Change: Talk about.
Speaker Change: <unk> family still still struggling and still down but that was anticipated. So overall, we're encouraged by what we're seeing in the end markets as we get into the fourth quarter and then start 25.
Speaker Change: Just stepping back a push.
Speaker Change: Joe Smith, and say that momentum is.
Speaker Change: Generally better.
Speaker Change: As you head into next year.
Speaker Change: It's stable, yes, definitely stable and we're definitely seeing some really good pockets, particularly at municipal starting to gain some traction.
Speaker Change: Okay.
Speaker Change: One follow up just on the <unk>.
Speaker Change: Guidance clarification, if I missed it.
Speaker Change: Okay.
Speaker Change: But.
Speaker Change: In terms of the way how much was driven by acquisitions.
Speaker Change: But the beat in the quarter or just a little bit better.
Speaker Change: Sure.
Speaker Change: Color you can give to subtract.
Speaker Change: Yes.
Speaker Change: I think that between those three buckets. Thank you.
Speaker Change: Yeah. Thanks, Catherine this is mark I. Appreciate the question in terms of the guidance raise that we had I would say that was primarily due to the acquisitions that we closed subsequent to last quarter's call. So we.
Speaker Change: We did have those acquisitions close and we added those to the guide I'd say, we had a little bit better beat our internal expectations.
Speaker Change: And rolled that through into the guide as well and obviously you heard Steve's comments about the outlook and how we're feeling about the balance of the year gave us confidence to roll that through in a little bit more given the optimism on the end markets.
Speaker Change: Alright, thank you so much.
Speaker Change: Thanks Catherine.
Speaker Change: Thank you.
Speaker Change: Next question comes from Matt David Manthey of Baird Your.
Speaker Change: Your line is now open. Please go ahead.
Yes. Thank you good morning, everyone.
Speaker Change: First question just.
Speaker Change: Feels like that as we look into fiscal 'twenty five.
Speaker Change: It's still more like a normal year relative to your growth algorithm on slide 12.
Speaker Change: Could you just.
Speaker Change: As you think about that are there any unusual year to year factors on either growth or margin enhancement that we should consider as we look to model the next fiscal year.
Speaker Change: Yes, Thanks, Dave Yes in terms of 25, I think youre right on that is how we're thinking about this client obviously still early yet, but definitely looking forward to a more typical year as we think about the end markets. We think those are going to be.
Speaker Change: Slightly positive as we sit here today.
Speaker Change: Good execution across the board on our initiatives that we've had this year and feel like Thats going to play into next year really really nicely into that two to four points of above market growth.
Speaker Change: From.
Speaker Change: An operating margin standpoint, fully expect to deliver on our commitment of adding 30 to 50 basis points of operating margin next year and we've got some good momentum you saw us increase gross margins sequentially from Q2 to Q3 and in addition to that our SG&A.
Speaker Change: <unk> improved sequentially from last quarter as well so we've got some good momentum here going into the fourth quarter and like what we're seeing so far for the end markets in 'twenty five.
Speaker Change: Okay, and then second a little bit more broad here, obviously, you've been getting a lot of questions on presidential policy and.
That sort of thing could you talk about both labor conditions in turn rates, So I would assume labor.
Just given the technical nature of your customers' workforce, you probably don't have much in the way of immigration policy change risk there, but can you talk about that and then tariffs just.
Speaker Change: Address that percentage of Cogs that comes from Canada, Mexico or other outside U S.
Yes, Dave it really hard to predict what would happen in terms of the labor situation over there.
Speaker Change: My Best guess is that we wouldn't see much of a change at all for the type of contractors that we're dealing with here.
In regards to the tariffs.
Speaker Change: Generally we view tariffs as a neutral to positive type impact for our business.
Speaker Change: Very little of our product most the vast majority of our product is assembled and produced here in the United States.
Speaker Change: Less than 15% comes in as import and for our direct import that we do ourselves thats less than 2%. So we generally don't see a huge impact.
Speaker Change: From the from the tariffs and if anything it's.
Speaker Change: Say neutral to positive.
Speaker Change: We look at that going into this new administration.
Speaker Change: Thank you very much.
Dave: Thanks, Dave.
Dave: Thank you.
Speaker Change: She comes from Nigel Coe of Wolfe Research. Your line is now open. Please go ahead.
Speaker Change: Thanks, Scott Good morning, Mark I think you've just given 25 guidance. So thanks for that.
Speaker Change: But.
Speaker Change: Yes, so just taking a step back to <unk>.
Speaker Change: Sales came in quite a bit better than what you expected. So I'm just curious what drove the upside to your expectations.
Speaker Change: Any thoughts on how much of the <unk> projects that were.
Speaker Change: Impacted by the weather.
Speaker Change: Came in and benefited <unk>.
Speaker Change: Yes, thanks Nigel.
Speaker Change: In terms of the quarter I would say it came in slightly better than our internal expectations obviously.
Speaker Change: We had a decent beat to consensus on the topline and EBITDA margins, but we were expecting.
Speaker Change: A better construction cycle here in Q3 relative to the impacts that we saw in Q2. So we did see some of that released into Q3, but it really got us back on trends that we're expecting in.
Speaker Change: Really we're expecting to see throughout the quarter.
Speaker Change: Gross margins came in nicely like I mentioned sequentially, we were expecting some improvement there, but that probably came in slightly better as well than what we were expecting so.
<unk>, we were pleased to see us get back on the trend lines that we expect it to be for really this year.
Speaker Change: Outside of the impacts that we saw in Q2 some of those projects I'd say some of those projects have all released through there's probably a little bit more.
Speaker Change: We would expect in Q4, just depending on how late to construction season goes in particular in some of these northern geographies. So overall feel good with the performance in the quarter.
Speaker Change: Great. Thanks, Marc and then.
Speaker Change: On pricing your comments.
Speaker Change: Sequentially stable into the fourth quarter.
Speaker Change: I'm curious any perspectives on 25% are we getting beyond now the fire protection.
Speaker Change: And if you could maybe comment on the PVC pipe.
Speaker Change: Pricing environment, that's obviously, a hot topic right now.
Speaker Change: Yes, I'd say overall as we sit here today, we're expecting really a neutral impact in 2025 with the pricing I would say no really significant contributors either positively or negatively after 2025.
Speaker Change: I'd say on the steel pipe side, we've seen that decline throughout.
Speaker Change: 2024, we do think it kind of bottomed out in Q3, we start to see some momentum there, but we will have a headwind there as we get into the early part of the year.
Speaker Change: PVC again less than 15% of our business, but has been relatively stable here throughout 2024, and no real expectations for significant movement going into next year as we sit here today. So hopefully we got the steel pipe side on the fire protection behind us.
Speaker Change: We're seeing some other good information coming in from various suppliers good trends and a lot of these product categories. So that's kind of what leads us to believe at this point to neutral is a good estimate at this point for 2000.
Speaker Change: That's great. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Question comes from Mike Dahl of RBC capital markets.
Speaker Change: Please go ahead.
Speaker Change: Thanks for taking my questions I wanted to stick with the pricing environment for <unk>.
Speaker Change: John.
Speaker Change: Yes, obviously as Nigel said hot topic right now.
Speaker Change: Some of your some users of pipes.
Speaker Change: Suppliers of pipe, we do while pricing seems like it may not have.
Speaker Change: Significantly on the Muni side, yet I think there are still some comments out.
Speaker Change: In the industry about expectations for a continued decline, but your comments probably stand out as a little bit different there mark. So maybe you guys can give a little more.
Speaker Change: Color specifically on the Muni side.
Speaker Change: What youre seeing what Youre, what youre hearing what gives you the confidence that.
Speaker Change: Yeah that might be more stable through next year.
Speaker Change: Yes, my good question, obviously, a lot of attention on PVC, but I wanted to I wanted to talk a little bit about what when we talk about stable pricing what that really means for us. So most of our sales are project based so our customers really are looking for us for a full suite of products associated to complete.
Speaker Change: A project.
Speaker Change: So within that there are numerous different product categories, well beyond PVC pipe and and so pricing itself is really based on a lot of different factors, whether it's demand and competition in the local market complexity of the project local specifications.
Speaker Change: And the price for which we procured the product. So when we talk about stable pricing, we're talking about stabilization across a lot of those different product categories. A lot of the different value that we can add into these projects in regards to the project management.
Speaker Change: The delivery the quality of service et cetera, and so when we talk about when we're seeing stable pricing environment. That's what we're talking about as Mark mentioned less than 15% of our product.
Speaker Change: As PVC related in many projects don't even have PVC associated with it.
Speaker Change: We're already starting to see.
Speaker Change: Most of our manufacturers are seeing increases in their cost. So we're already starting to see price increases for many different product categories coming in now for 25. So that's what gives us confidence right now for about a stable pricing environment.
Speaker Change: Okay.
Speaker Change: That's really helpful and that's the nuance.
Speaker Change: Looking for them.
Speaker Change: Important for people to understand in terms of multi product jobs service orientation.
Speaker Change: But.
Speaker Change: The job level of stability.
Speaker Change: And for pumping question.
Speaker Change: Talking about the water treatment of initiatives.
Speaker Change: That's part of a broader portfolio.
Speaker Change: Our growth initiatives.
Speaker Change: Building and tier year above market growth expectations can you can you just.
Speaker Change: Give us.
Speaker Change: There have been a couple of different adjacency expansions.
Speaker Change: US kind of frame up like that.
Speaker Change: Opportunity in Canada and Europe.
Speaker Change: In medium term as you think about some of the some of the big ones like treatment plans like what's that specifically contributed to it.
Speaker Change: Your expectations are on the 25.
Speaker Change: Growth.
Speaker Change: Yes, we won't break that out specifically, but what I would share with you is that over the last 10 years, we've really been building our capabilities in this space. It is very long cycle type work a lot of the projects that are being executed now were ones that were really were working on five plus years ago.
Speaker Change: <unk>.
Speaker Change: Where we've gone through a lot of the design work initially with a lot of these contractors to help design and optimize material flow to these projects and these projects will carry on for generally have a duration for us once theyre starting into the execution for multi years. So that's why we like this business is one.
Speaker Change: Those areas, we've been able to invest in because we've got a long view on the on the industry getting access to the products associated with this these are specialty type products specialty line products all of them require special access and we've been able to build that capability over the last decade, and so we'll continue to see a lot of growth and that is the population expand.
Speaker Change: And water treatment and wastewater facilities continue to expand and new ones being developed and designed right. There in the forefront of these things and have a long pipeline ahead of us for projects to execute on.
Speaker Change: Okay.
Speaker Change: Thanks, Mike.
Speaker Change: Thank you. Our next question comes from Sam Reed with Wells Fargo Your line.
Speaker Change: Please go ahead.
Sam Reed: Awesome. Thanks, so much guys wanted to ask if you could rank order, perhaps greater detail the building blocks behind the sequential improvement in gross margin I know you've already touched on some of these but maybe just put a finer point on any benefits from acquisition accretion versus some of your self help initiatives like strategic sourcing.
Speaker Change: Private label, and then apologies if I missed but do you have an update on where private label as a percent of Cogs.
Speaker Change: The 2% or was there an increase in Q3 versus Q2.
Speaker Change: Yeah. Thanks, Sam I'll take that one in terms of the sequential improvement in gross margins. You saw we increased about 20 basis points since last quarter I would say in terms of the ranking there. The first and foremost was just strategic sourcing and some of the optimization work.
Speaker Change: We've done there it made a lot of really good progress on that throughout the year and.
Speaker Change: And then probably ranked private label.
Speaker Change: Second it was a good contributor.
Speaker Change: And we.
Speaker Change: To make really good progress there I would say, we're kind of in the range of 2% to 3% of Cogs on private label, we've advanced that pretty well since we updated that figure last and I will be providing some more detail on that in terms of how we wrap up the full year from a private label standpoint, and obviously expectations about where.
Speaker Change: We think that can go but.
Speaker Change: I would rank them their sourcing optimization and private label no real acquisition contribution sequentially. There. We did have some benefit year over year from an M&A standpoint at gross margins, but not not a significant contributor sequentially.
Speaker Change: Yes that helps and then to follow up on the election question or another broad one here.
Speaker Change: <unk>.
Speaker Change: Interesting on shoring given some of the policies of the incoming administration and some of the things they are looking to incentivize.
Speaker Change: And if we were to see.
Speaker Change: Large orange type projects and merge any sense as to when those projects would start to benefit your P&L specifically.
Sam Reed: Yes, Sam really way early innings on this one to really understand what our manufacturer sentiment would be about onshoring I will share with you that the vast majority of our manufacturers are onshore today.
Sam Reed: It will be interesting to see if there is.
Sam Reed: If there's other components are et cetera that theyre looking at it maybe onshoring, but it's hard to tell I mean, we're just weeks into this thing and those those cycles tend to take a little bit of planning on our our manufacturer standpoint.
Sam Reed: To do that so we'll see how that plays out maybe have a little bit more color for you on the next quarter.
Speaker Change: Yeah that helps thanks, so much.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Patrick Baumann of Jpmorgan.
Speaker Change: Your line is now open. Please go ahead.
Patrick Baumann: Hi, good morning, Thanks for taking my questions.
Appreciate the 25 end market margin.
Patrick Baumann: Absolutely.
Okay.
Speaker Change: Can you can you can you talk about what's been allocated out of that I think it was $55 billion of funding for water.
Speaker Change: From IHA like what's still to come and why it's been so slow to develop.
Speaker Change: And kind of whats the upside to that low single digit growth rate when it comes.
Speaker Change: And then on non res.
Speaker Change: If you could comment on if you have exposure to data center development.
Speaker Change: What that might be and could that be a meaningful tailwind for nonresident market for you or not really I'm. Just curious what you do from a data center perspective.
Yes, Thanks, Pat I appreciate the question, so I'll try to tick through dose but.
Speaker Change: IHA funding, we still haven't seen a majority of that get down to the state level. The federal allocation, there really needs to be pushed out and allocated into the state revolving funds and then thats when the local municipalities can can go in and access those funds. So theres still a lot more.
Speaker Change: Funding there to be allocated.
Speaker Change: Steve mentioned earlier, we are really optimistic with some of the movement. We saw in particular this quarter with a lot more projects.
Speaker Change: Being bid and applied for funding there. So do you expect that that momentum to continue in.
Speaker Change: Be a tailwind for us as we get into 2025 and as it relates to Mega projects in data centers I would say we participate.
Speaker Change: Significantly in those we've seen a lot of those projects all around the country.
Speaker Change: Participate in a lot of ways initially with all of the infrastructure needed.
Speaker Change: For water sewer storm drainage, there's a pretty significant amount of infrastructure that goes in.
Speaker Change: And then in some cases, there's fire protection.
Speaker Change: <unk>, that's addressable for us in those facilities.
Speaker Change: That's been a good area of momentum that we've seen in the nonresidential.
Speaker Change: Space and we will continue to participate in those we continue to see more and more of those pop up throughout the country and we are well positioned to capture that growth.
Speaker Change: This 55 billion of funding from AJ is is it like 10% of that been allocated 20% do you have any sense of numbers is it 50% how much of any sense on how much has been allocated so far.
Pat our best sense of that in terms of how much has been allocated it's roughly about a third of it at this point so still a lot of room there for additional funding growth.
Speaker Change: Okay, and then on the acquisition side My My My second question, you've now done a couple of deals for these.
Speaker Change: I think its distributors of instruments.
Speaker Change: Utility locating the damage prevention equipment that sort of thing can you provide a bit more color on like what's the opportunity here to scale. This across the network is this higher margin product set.
Speaker Change: Any more color you can provide I think it was green equipment and then the east.
Speaker Change: You talked about today.
Patrick Baumann: Yes, yes, Patrick.
Patrick Baumann: Patrick both of those are really good businesses in regards to doing a lot of the.
Patrick Baumann: Utility servicing type areas with.
Patrick Baumann: Line detection and things along those lines.
Patrick Baumann: Yeah.
We think now we cover a good number of states with getting access to that product, which is something that our all of our customers are pulling through at this point.
Patrick Baumann: <unk> been buying it from other sources, we believe we can add a lot of value in this.
Patrick Baumann: They continue to do that.
Patrick Baumann: In the big scheme of things, it's probably not.
Patrick Baumann: Something that we view as a multibillion dollar market by any means but it is a great complementary offering to what we're already serving and providing to our municipal customers across the board and these utility detection devices are.
Patrick Baumann: Fairly technologically advanced you get into radar and different types of things that are just really useful right. Now is as these municipalities are looking to locate services.
Patrick Baumann: Quite frankly have been.
Patrick Baumann: Buried for 60 to 70 years and helped facilitate a lot of the replacement of the product and the pipe that's in there.
Patrick Baumann: Sure.
Speaker Change: Helpful color. Thanks, a lot I appreciate it.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Question comes from Joe Ritchie of Goldman Sachs. Your line is now open. Please go ahead.
Speaker Change: Thanks, Good morning, everyone.
Speaker Change: So I just wanted to maybe you can start wearing your comments on her.
Speaker Change: I guess I just wanted to start by square and the comments on organic growth. It seems like volumes are up.
Speaker Change: Call it 4% to 5% this quarter.
Speaker Change: I know you have an extra week in the fourth quarter and it seemed like.
Speaker Change: The volume ex the 50 <unk> week.
Speaker Change: Your guidance is implying slightly down I, just want to make sure I had that straight.
Speaker Change: So.
Speaker Change: Any anything you guys want to call out there.
Speaker Change: Yes, Joe Youre pretty pretty close on that in terms of the.
Speaker Change: I would say mid single digit volume growth for the quarter I would say expectations that we've got embedded in the guide for Q4, obviously, it's <unk>.
Speaker Change: Much more of a seasonal quarter for us So I would say more in the like kind of call. It neutral to slightly positive volumes in the fourth quarter and then obviously, depending on the seasonal impacts that.
Speaker Change: We see that that could move around a little bit the 53rd week.
It'll be worth somewhere in the six to eight points of revenue.
Speaker Change: Growth in the quarter, so I get a little extra benefit there with the extra week.
Speaker Change: Okay, Great that's helpful Mark and then Steve.
Speaker Change: Maybe maybe going back to your comments from earlier around the delay typically see.
Speaker Change: Norm related activity.
Speaker Change: And the uptick that you see in your business I guess from all of that.
Speaker Change: All of that either related issues that we've seen this year I mean would you start to start to expect to see maybe some vendors a bump in your business in the early parts of 2025 does that start to come in maybe even this quarter just any thoughts around that would be helpful.
Yes, we definitely could see something coming into 'twenty five.
Speaker Change: What I would share with you is that in Q2, the weather related incidents. We had were incredibly pervasive from Texas, all the way up into Wisconsin.
Speaker Change: All the way up north into the upper Midwest and that obviously had a huge impact on us in second quarter. If you look at kind of what happened really in this third quarter with the hurricanes the back to back Hurricanes with.
Speaker Change: Hilton Helene and Milton.
Speaker Change: So those were fairly localized and obviously caused a pause in some construction related activity that was happening there.
Speaker Change: We will continue to see that evolve and stuff to release into the fourth quarter and then in the medium and longer term. What we generally see are much more robust replacement of water and storm drainage systems across the across those areas that were impacted.
Speaker Change: Some of them were completely wiped out in the Carolinas and thats going to be a total rebuild in those areas for many of the utilities out there. So we will continue to see some of that move into 2025 for sure.
Speaker Change: Okay, great. Thanks, guys.
Speaker Change: Thank you.
Speaker Change: <unk> comes from Keith Hughes of tourists. Your line is now open. Please go ahead.
Speaker Change: Thank you two questions first on the units and we've talked about this several calls but it was a pretty notable turnaround.
Speaker Change: From the negative numbers you had in the second quarter.
Speaker Change: We're debating region that you would call out that was particularly strong during the period or any specific end user market around that third quarter number.
Yes, thanks, Keith in terms of the regions I would say the area that we were impacted by last quarter. It was really up and down through the central part of the U S and in the third quarter, we definitely saw construction resume in that area. So.
Speaker Change: That that was really good to see for those those parts of the country where.
Speaker Change: They weren't able to complete a lot of that underground construction in Q2, So we did see that.
Speaker Change: Come back nicely I would say municipal also rebounded we were pleased to see some of the starts get back online with the activity that we were expecting it was a little tricky for us to call that last quarter and we're really pleased with how that came in in the third quarter really Brazilian non res yet.
Speaker Change: I'd say, both kind of came in fairly stable and in line with what our expectations were so.
Speaker Change: Those are the private areas that I'd highlight and call out.
Speaker Change: Okay.
Speaker Change: This has been referred to by several callers, but some of your suppliers have been receiving.
Speaker Change: Subpoenas around antitrust issues have you received or you're a party to any of this to be enacted.
No we have not received any any subpoenas anything along those lines in and just to reiterate.
Speaker Change: We are not named as a defendant in any of those cases, we won't comment on anything regarding any of our suppliers and in terms of.
Speaker Change: The activity has happened we hold by our statements that we made last quarter.
Speaker Change: Yes.
Speaker Change: Okay, great. Thank you.
Speaker Change: Okay.
Thank you.
Speaker Change: Our next question comes from Anthony Pettinari of Citigroup.
Speaker Change: Please go ahead.
Speaker Change: Good morning.
I was wondering if you could talk a little bit about how the M&A pipeline.
Speaker Change: In general for 25.
Speaker Change: Are you seeing any kind of increased competition for targets.
Speaker Change: New potential buyers or evaluations.
Speaker Change: ADR less reasonable than you've seen in the past and then just generally with net leverage at two points.
Speaker Change: Seven times.
Speaker Change: Healthy, but a bit above the two times that you talked about at the Investor Day, just wondering if you could talk about.
What level of leverage Youre willing to go to and just how we should think about that.
Speaker Change: Next year.
Speaker Change: Yes, Anthony I'll talk about the M&A pipeline, so really everything that we've looked at so far this year in our pipeline that we've got going into next year continue.
Speaker Change: <unk> continues to remain very strong in many cases that were looking at this these have been sole sourced.
Speaker Change: Deals that we've been working with directly with owners along those lines.
Speaker Change: We pride ourselves in being the acquirer of choice in this space. The multiples that were looking at are right in line with traditionally what we have continued to execute on for the last several years. So really don't see much change in that the pipeline has been robust as you saw this year and we've already executed 10 deals so far this year.
Speaker Change: To see a robust pipeline going into 2025 and would expect the same.
Speaker Change: Mark do you want to talk a little bit about leverage.
Mark Koski: Yes, Anthony in terms of leverage we're going to continue to maintain a conservative balance sheet with pretty significant liquidity throughout we're obviously expecting to generate pretty good amount over $250 million of cash in the fourth quarter.
Mark Koski: So I believe we will have ample capacity to continue on our M&A strategy.
Mark Koski: Our balanced approach to capital allocation with potential share repurchases.
Mark Koski: That sort of thing while maintaining leverage in a very reasonable line in <unk>.
Mark Koski: Laid out a target somewhere one five to three turns for debt leverage and very confident we're going to stay within that guidance that we had put out.
Mark Koski: Yes.
Speaker Change: Great Great and then just one follow up I mean, a lot of your end.
Speaker Change: The data has been kind of about expanding the product offering but I was just curious is there any kind of geographic white space or region that you are.
Speaker Change: Looking to.
Speaker Change: You are looking to enter there.
Speaker Change: Got it.
Speaker Change: Yes, you know the fill in areas that we've had we continue to find great opportunities out there we've done a number of bolt on acquisitions. This year, we strengthen our position.
Arizona, Nevada, even in Texas and some of these other areas. So there continues to be a lot of robust areas. In these local markets to continue to do that we also added in.
H M pipe products in Canada, and so we continue to look at the map and where we're at and continuing to find opportunities. Some cases theres really good acquisition targets in there and other cases, we find it as a great opportunity to do the Greenfields that we've been we've been rolling out as well too. So we will look at it along those lines a lot agree a lot of a lot of space.
Speaker Change: This left for us to fill in a lot of docs out there.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Matthew Bouley of Barclays.
Speaker Change: Your line is now open.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Speaker Change: Good morning, everyone. Thank you for taking the questions.
Speaker Change: Actually on that last point.
Speaker Change: Steve You mentioned the Greenfield I think you opened a couple in the quarter and you mentioned that there's kind of a pipeline of priority markets going forward. So I guess what is the typical ramp timeline of a Greenfield branch for you guys in terms of hitting kind of normal branch revenue and profitability and I guess, how many green.
Speaker Change: Fields would you look to be opening in 2025. Thank you.
Speaker Change #100: Yeah. Thanks, Matthew in terms of the ramp on Greenfields.
Speaker Change #100: <unk> I would say just from an earnings perspective, or breaking even within the first year and we're trying to ramp revenue to get to a typical branch size somewhere it usually in years three to five years. So it does take a little bit of time, there to get that mature in the market but.
Speaker Change #100: Something we're very experienced and we've got a great track record for rolling those out.
Speaker Change #100: In terms of the pace, it's really dependent upon various factors. So we don't necessarily set up.
Speaker Change #100: Target for Greenfields, but it's definitely a contributor when we talk about two to four points of above market growth. That's been a contributor there and it will it will continue to be <unk>.
Speaker Change #100: Contributor as we move forward. So you should expect to see continued announcements as we open up in new locations.
Speaker Change #101: Okay. Thanks for that Mark and then the <unk>.
Speaker Change #102: Secondly, I wanted to ask about sort of the near term margins and what that implies for 2025. I think you said gross margins should be kind of sequentially stable into the fourth quarter I guess that implies that.
SG&A dollars might be flattish sequentially. Despite I guess lower sequential sales I just wanted to check if that's the case and why that would be the case, but as you get into 'twenty five and you talk about 30% to 50 basis points of annual EBITDA margin expansion, given what's happening on SG&A right now.
Speaker Change #103: And is the expectation for now that most of that margin expansion would be coming on the gross margin side. Thank you.
Speaker Change #104: Yes, Matthew in terms of the.
Speaker Change #104: The fourth quarter.
Speaker Change #104: Correct that we expect about sequential gross margins into the fourth quarter from an SG&A perspective, we'll lose a little bit of leverage.
Speaker Change #104: In the fourth quarter with the seasonal ramp down in sales. So the SG&A rate will be a little higher into the fourth quarter.
Speaker Change #104: Which is typical for us.
As you think about 2025, we're very committed to the 30 to 50 basis points of operating margin improvement now thats going to come from a couple of different areas, one obviously potentially gross margins and SG&A.
Speaker Change #104: Productivity and I'd expect that we'll be in a good position to expand both of those as we go into 2025 so.
Speaker Change #104: Really good that we're going to get the productivity out of SG&A and continue to work on our gross margin initiatives that we've played out.
Mark Koski: Got it thanks, Mark Good luck guys.
Speaker Change #105: Thanks Keith.
Speaker Change #106: Our final question for state comes from Andrew <unk> of Bank of America.
Please go ahead.
Speaker Change #107: Thank you this is David Ridley Lane on for Andrew <unk>.
Speaker Change #107: Just a quick sort of clarification question.
Speaker Change #107: Percentage of your revenue today is multifamily and I believe that's just to confirm that's included in your.
Speaker Change #108: Non residential category correct.
Speaker Change #109: Yes, that's right David we group multifamily into nonresidential, primarily because we do a lot of other commercial.
Speaker Change #109: Work as well and it fits a little little better into that bucket for us, but it's I'd say it less than.
Less than 5% of our sales fit into that multifamily we do some of the obviously the water sewer storm drainage around those facilities and then usually there is quite a bit of fire protection component.
Speaker Change #109: And those types of projects.
Speaker Change #109: Thats really the.
Speaker Change #109: What makes up the majority of that participation in that end market.
Speaker Change #109: Yes.
Got it.
Speaker Change #109: Just to put up.
Speaker Change #109: This has been asked before but just to put a finer point on it.
Speaker Change #110: So last quarter, you said, you lost about $50 million of revenue from the weather.
Speaker Change #109: Check.
This quarter a lot drier.
Speaker Change #111: Did you catch up on the full $50 million in the third quarter or where do you think that it was.
Speaker Change #111: Less than that.
Speaker Change #113: Well, we think sequentially. It was it was obviously a much better construction quarters. So we got back onto the trend lines that we were expecting to have for Q3.
Speaker Change #113: Some of the projects, it's always difficult to tell exactly.
Speaker Change #113: Any of those bump ahead of other projects, but we do feel like a majority of that.
Speaker Change #113: Was.
Speaker Change #113: We achieved a lot of that in the quarter Theres, probably some some more to come yet in Q4 or that would get pushed into 2025.
Speaker Change #113: Think about it sequentially. It was an improvement from Q2 do you think about the benefit of it year over year Q3 last year was a decent construction quarter.
Speaker Change #113: Quarter generally the weather was fine so really not as not as much year over year benefit obviously.
Speaker Change #113: Sequentially from Q.
Speaker Change #114: Got it thank you very much.
Speaker Change #113: Yeah.
Speaker Change #115: At this time, we have nice other questions. So I'll hand back to Steve Mcclaren for any further remarks.
Steve Mcclaren: Thank you all again for joining us today, our third quarter performance highlights our resilience adaptability and commitment to operational excellence, we achieved record sales and maintained strong operational performance.
Steve Mcclaren: Underscoring the strength of our business model and our ability to drive growth.
Steve Mcclaren: By combining our local expertise with our national scale and innovative product offerings, we continue to deliver exceptional value to our customers and stakeholders.
Steve Mcclaren: Looking ahead, we remain focused on addressing our customers' critical infrastructure needs of the nation grapples with a widening gap between water supply and demand.
Steve Mcclaren: With significant federal investments on the horizon, we are well positioned to capture long term growth opportunities that exist.
Steve Mcclaren: While delivering sustainable margin expansion and value creation.
Steve Mcclaren: We are energized by the opportunities that lie ahead and are confident in our ability to drive meaningful progress across our strategic priorities.
Steve Mcclaren: Thank you for your support and we look forward to building on our success in the quarters to come.
Speaker Change #117: Operator that concludes our call.
Speaker Change #117: Thank you all for joining.
Speaker Change #118: You may now disconnect your lines.
Speaker Change #118: Yeah.
Speaker Change #118: Sure.
Speaker Change #118: Sure.
Speaker Change #118: Yes.
Speaker Change #118: Yes.