Q1 2025 Atkore Inc Earnings Call
John: Good morning, my name is John and I'll be your conference operator today. At this time, I would like to welcome everyone to ADCOR's first quarter fiscal year 2025 earnings conference call. All lines have been placed in a listen-only mode.
John: For adjusted EPS means adjusted diluted earnings per share.
Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures.
John: Reconciliations of non-GAAP measures in our presentation of the most comparable GAAP measures are available in the appendix to today's presentation.
Bill: That I will turn it over to bill.
Bill: Thanks, Matt and good morning, everyone.
Bill: Starting on slide three our Q1 performance was in line with our expectations.
Bill: We achieved net sales of $662 million and adjusted EBITDA of $99 million, both of which were within our outlook range.
Bill: Our $1 and 63% of adjusted EPS was near the top end of our outlook range organic.
Bill: Volume declined 5% in the first quarter, but this is in comparison to our strong volume performance in the first quarter of fiscal 2024 alright.
Bill: Alright teams have been focused on executing the growth initiatives that we discussed in November related to water and global construction services. We are on track with our organic initiatives and are planning for those to come online later in the year to support both our PV and HCP water problems.
We continue to pursue several opportunities for global Mega projects, as we look to grow our pipeline and eventual backlog.
Bill: We remain committed to returning cash to our shareholders as evidenced by the $50 million in share repurchased in the first quarter, which complements our quarterly dividend payment.
Bill: I'm also pleased to highlight the release of our fiscal year 2020 for sustainability report.
Bill: Which we published last month. This report details our ongoing initiatives accomplishments and progress toward our 2025 goals.
Bill: In the first quarter of 2025, we released additional environmental product declarations for our core products.
Bill: <unk> has <unk> for our core products covering approximately half of our global sales.
Bill: When we met in November we planned our year with an expectation that we continue to face challenges impacting both our volume and price due to increased foreign and domestic competition.
Bill: Most notably these challenges impact our PVC conduit and steel conduit businesses.
Bill: Having completed our first quarter, we now believe the challenges we outlined in November we will have a larger impact on our 2025 performance than previously anticipated.
Bill: We saw year over year volume increases in imported PVC conduit, which is impacting the market environment. Additionally, we continue to see year over year increases in imports for steel conduit.
Bill: Imports for both PVC conduit and steel conduit originated from countries, where quantity limitations are either non existent or poorly enforce.
Bill: During the first quarter, we saw downstream constraints impacting our utility scale solar market, which impacted our volume.
Bill: However, we are pleased by the improved operational performance within the F&I team and our hope art, Indiana facility.
Bill: I am disappointed that we continue to operate in these conditions. The challenges we are navigator and not what we anticipated at the end of fiscal year 2022, when we signaled normalization of our record profits.
Bill: We now expect full year 2025, adjusted EBITDA to be approximately $400 million at the midpoint of our range.
Bill: Our outlook reflects what we believe is most probable we are pleased that an announcement was made related to tariffs on Mexico.
These tariffs go into effect this should have a positive impact on our business at this time, our outlook does not contemplate any material benefits from tariffs on imported tied to it as.
Bill: As a reminder, the recently announced tariffs impacting Mexico, and Canada do not affect our PVC conduit business. We are currently forecasting the headwinds impacting PVC pricing may continue.
Bill: In the meantime, we are advancing our key initiatives to expand our business and new market areas. Secondly, we are prudently looking at our enterprise wide cost structure to mitigate the impact of these industry headwinds lastly, we are looking at alternative scenarios for certain assets to provide the best ex.
Bill: <unk> return.
Bill: My conviction and our team remains strong and we will lean into our business system to execute our strategy.
Bill: Like to take a moment to thank all of our employees for everything they do to support our key stakeholders.
Bill: With that I will now turn the call over to John to talk through the results from the quarter and provide more details on our outlook.
John: Thank you Bill and good morning, everyone moving to our consolidated results on slide four in the first quarter, we achieved net sales of $662 million and adjusted EBITDA of $99 million.
John: Our tax rate in the first quarter was 21% an increase from 17, 5% in the prior year as a reminder, the tax rate in the first quarter of last year had benefits from previously granted stock compensation.
John: These outsized benefits contributed to our stronger than anticipated EPS performance in the first quarter of fiscal 'twenty four.
John: Turning to slide five and our consolidated bridges.
John: Organic volumes were down 5% compared to double digit growth in the first quarter of fiscal 2004, when volume was up over 13%.
John: Our average selling prices declined 12% during the quarter, most of which came from our PVC conduit and steel conduit products.
John: Moving to slide six our volume declined during the first quarter was across most product categories as.
John: As we mentioned earlier volume in the first quarter last year was atypical for what is traditionally our slowest quarter.
John: However, our metal framing cable management and construction services businesses grew mid single digits in the first quarter of fiscal 'twenty five after being up high single digits in the prior year.
John: This growth is driven by both an increase in our construction services support of global Mega projects as well as the high density of metal framing products required for this type of construction.
John: We anticipate additional growth from these businesses throughout our fiscal year in part due to the addition of new capacity for metal framing to support large construction projects, such as data centers and chip fab manufacturing.
John: Our plastic pipe and conduit product category declined mid single digits during the quarter.
John: This category grew high single digits in the prior year as the channel was adding back inventory after a period of Destocking in 2023.
John: Separately as Bill mentioned earlier, we are also seeing an increase in imported products coming from multiple locations, including central and South America.
John: The combination of imports remains below 10% of the overall market, but we are continuing to monitor the situation closely. In addition, we are examining the product quality characteristics of these imported materials versus the standards and specifications.
John: Our volume decline for steel conduit was also impacted by year over year foreign competition.
Speaker Change: We believe that imports represent between approximately 20% to 25% of the overall market.
Speaker Change: As we look beyond Q1, we continued to expect growth across much of the portfolio, including contributions from our plastic pipe category driven by growth in our water related products.
Speaker Change: Overall, we continue to expect volume growth between low to mid single digits for the full year.
Speaker Change: Turning to slide seven.
Speaker Change: Adjusted EBITDA margins compressed in our electrical segment due to previously mentioned pricing and volume declines the.
Speaker Change: The adjusted EBITDA margins also declined in our F&I segment, primarily due to lower volume.
Speaker Change: <unk> segment margins, however, did improve sequentially from the fourth quarter 2024, and we are pleased with the operational performance and improvements being made in our key facilities such as Hobart.
Speaker Change: Turning to slide eight we continue to execute our balanced capital deployment model with an emphasis on returning cash to shareholders along with capital investments to progress our growth initiatives.
Our balance sheet remains in a strong position with no maturity repayments required until 2028.
Speaker Change: Next on slide nine we expect low to mid single digit percentage volume growth for the full year. We expect our Q2 net sales in the range of $685 million and $715 million. Our adjusted EBITDA is expected to be in the range of $85 million to $95 million or <unk>.
Speaker Change: <unk> EPS is expected to be in the range of $1 30 and.
Speaker Change: And $1 50.
Historically, we are accustomed to anticipating some amount of seasonality, we generally build in an expectation that the back half of the year will be stronger than the first half.
Speaker Change: We believe this will be the case this year for two main reasons first our overall business is generally stronger in the spring and summer construction season versus the fall and winter.
Speaker Change: As we continue to ramp up our initiatives our volume should steadily increase throughout the year.
Speaker Change: Therefore, we expect adjusted EBITDA to improve sequentially from Q2 into the second half of the year.
Speaker Change: As Bill shared we are also updating our full year 2025 outlook. We now expect full year adjusted EBITDA in the range of $375 million to $425 million and adjusted EPS in the range of $5 75.
Speaker Change: The $6 85.
Speaker Change: With that I'll turn it back to bill.
Bill: Thanks, John moving to slide 10, as I and the entire management team focused on executing our growth initiatives and creating greater value for our customers and shareholders. We remain confident that the electrical industry is a great place to be.
Bill: <unk> strong balance sheet breath of products service capabilities and goal of being the customers first choice positions us well to benefit from the strong electrical trends projected across numerous end market categories. We remain.
Bill: <unk> committed to returning cash to shareholders through a combination of share repurchases and quarterly cash dividends and look forward to sharing more about our progress against our growth initiatives related to global construction services and water related products later in the year.
Bill: Through it all we are guided by our strategy our process and our people the three fundamentals of the <unk> business system.
Speaker Change: One recent demonstration of the <unk> business system at work is our announcement of our new Chief operating officer held by John <unk>.
Speaker Change: John's multi disciplinary career combined with his experience podium various roles at <unk> since joining in 2015 makes him a tremendous asset and I'm excited by the additional value. He will help <unk> achieve for our customers and our shareholders.
Speaker Change: With that we'll turn it over to the operator to open the line for questions.
Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster. Thank you.
Speaker Change: Your first question comes from the line of Andy Kaplowitz with Citigroup. Please go ahead.
Andy Kaplowitz: Hey, good morning, everyone.
Speaker Change: Good morning, Andy and.
Speaker Change: Bill can you elaborate on the commentary that an important competition is gaining momentum in PVC, maybe what has changed with PVC imports versus the past that you've seen a pretty big move from this Latin American competition, and then metal conduit volume looks like a reverse course and declined in Q1 is that just tougher comps project delays.
Speaker Change: New capacity starting to come in.
Yes, so let's go through PVC.
Andy Kaplowitz: Take your question and gave a bunch of details here Andy.
Andy Kaplowitz: Imports have grown now theres still single digit numbers, but they've grown over 20% year over year, So I <unk>.
Andy Kaplowitz: Just whether it's hey is it starts working or they get customers. Therefore, they increase their shipments and thats, probably the primary thing again single digits overall market volume, but driving down price and our competition was slower markets matching price all those different things. So now the one thing I wanted to.
Andy Kaplowitz: <unk> ahead on is in our guide what we've done this year just because quite.
Andy Kaplowitz: Quite frankly for anybody frustrated with not having the numbers that we hit and exceed is that we put it out we have literally going down to pre COVID-19 levels by the time, we exit the year now is it our intention to add value and see if we can push price up and see what Trump does in every.
Andy Kaplowitz: Thing else, there, but for now and saying and saying Oh, we didn't expect it we've taken a very aggressive you quite frankly, our view for price declines in our forecast again, not what were internally managing too that this would be the worst year for year over year declines in PVC, So Andy I, both answered kind of the <unk>.
Andy Kaplowitz: I also think now again I don't know any base cost base, if you get to that point, where it's pre COVID-19 I don't think they can make money with the additional freight even if they have lower level from our analysis there resin costs. In these countries are the same as ours. There is the proportion that's labor.
Andy Kaplowitz: Just small compared to everything else that I don't think it would make economic sense anymore. So hopefully you get a feel for that steel I think look over my team and so forth, but it's mostly just year over year comp.
Andy Kaplowitz: Imports are still a challenge there, but literally imports have grown like 4%. So I think it's moderating with that.
Andy Kaplowitz: It's just we had a tough comp, but again, Andy one of the things. We did with this thing is to go you know what we talked in previous quarters. We did not expect much bump from Trump tariffs versus like Hey, somewhere at the end of the year things have this steady out and it's like no guys just take a linear.
Do not expect any price increase anywhere.
Andy Kaplowitz: So again I think you have not changed our guidance on the call, but I think we've taken out all variables and now it's just for us to perform any Trump tariff.
Andy Kaplowitz: <unk>.
Andy Kaplowitz: Any.
Andy Kaplowitz: Thing else as upside to these numbers.
Andy Kaplowitz: No. That's helpful. And then just on the volume side just wanted to make sure of this like <unk> volume was down 5%. It looks like that is just tough comps you're not forecasting any season any any sick.
Andy Kaplowitz: Cyclical improvement in construction markets. It's just seasonal improvement is that right and maybe any sort of commentary on the health of the markets that you see.
Andy Kaplowitz: Yeah, it's exactly Andy so no balance back in industries, no balance back in residential or anything else there.
Andy Kaplowitz: So it is literally as I think in John's prepared remarks, I think we will finally get back to normal.
Andy Kaplowitz: Covid things that there is that 710% just the summer months and so forth that we'll have that otherwise even most of our initiatives like Im sure somebody will ask while beads in hte, we really have going into 2006 and so forth.
And just one more for me like can you give more color on your comments regarding looking at your cost structure and are getting value. I think you said value for strategic assets might we see bigger activities on these fronts to Sharon what could that look like I'll start and turn it over to John 10 here because theres. So many things, but I'll steal some of John's just talking this morning, sorry.
Andy Kaplowitz: Hi.
Andy Kaplowitz: But it gave me the things that we've already done we had a facility in Tempe, Arizona and again, we do drive the lean we were able to close that operation So keep that.
Andy Kaplowitz: Business activity and move it into Phoenix move it up into Massachusetts. So Thats. One example, we did also as we look forward strategically.
Andy Kaplowitz: Can go Hey, we can produce in some areas I don't want to get what specific line, but to go hey, we can actually produce and we don't need this asset. So we sold two or three production lines again, we will still meet our customer demand without that we are.
Andy Kaplowitz: Cutting it back on I say personnel, but hey, headcount freeze for attrition, we're looking at lines back to let's say PVC kind doing water, making tradeoffs, depending on the economic return, making the economic return on how much.
Andy Kaplowitz: Mechanical product versus kind of where our products and the list goes on and we have and I think we'll hit this.
Andy Kaplowitz: Most aggressive for the highest year over year productivity.
Andy Kaplowitz: I'm aware of in <unk> history.
So Andy it's a bunch of things we're looking at.
Andy Kaplowitz: And could we see.
Andy Kaplowitz: Spin off small businesses that you bought with an acquisition that Werent strategic.
Andy Kaplowitz: All of those things are either have happened or are in place as we go.
Speaker Change: Yes, I agree with everything Bill mentioned, there I would just add to his point do we did have some positive productivity and we are going through almost every line item asset by asset what makes the most sense. So I think we are actively trying to understand what levers we have to pull.
Speaker Change: It's Andy sense for you I know you appreciate but.
Speaker Change: Again, it's a forecast we had two weeks of backlog all of those other things but.
Speaker Change: I do think this point, where I'm just frustrated with the unexpected and it's like okay, guys listen I assume good things they will raise forecast analytics work like Hell tick.
Speaker Change: To get these numbers moving forward.
Speaker Change: I appreciate the color and good luck guys.
Speaker Change: Thanks, Andy Thanks, Andy.
Speaker Change: Your next question comes from the line of Deane Dray with RBC. Please go ahead.
Deane Dray: Thank you good morning, everyone.
Speaker Change: Hey, good morning.
So just if I step back and look at the first quarter price and volume both came in largely in line with our expectations. So.
Speaker Change: Cut here is all prospective and how you think.
Speaker Change: The dynamics change.
Speaker Change: For the balance of the year and may be if it would be helpful. If you could just in broad strokes kind of breakout for us on that guidance cut how much is the PVC. How much is steel conduit just to size kind of the severity and you hadn't unless I missed it.
Speaker Change: <unk> talked about the new competitor in PVC, maybe it hasnt really become all of that volume online yet, but if you could address that yeah I'll hit the beginning there I'll turn it over to my illustrious financial partner just on what level of precision on the breakout between two groups.
Speaker Change: <unk>.
Andy Kaplowitz: To the earlier comments I made to Andy yes. He's out there others are there I think it's mostly the imports at this stage that are driving it and then just market reaction I would say and we this has been consistent for 10 years that I mean for accor ever a supply and demand is the biggest challenge in now.
Speaker Change: <unk>.
Speaker Change: December was light we answered that with the previous set of questions is mostly comp and then obviously January was light what I hate to talk about storms fires on California and.
Speaker Change: Freezing temperatures down south that.
Speaker Change: But looking saying Hey, how is January pricing gone and what happens to this trend continues I just don't want the optimism. This won't continue to happen so what glitch linearly extrapolate that now.
Speaker Change: Im not changing to go the first week of February whether the concern of terrorists have actually.
Speaker Change: If we keep this up it would be another number but that's one week. So I think we're going through those things and just saying hey, let's not here with what we would like to have back then.
Speaker Change: Could happen and work our way back up from there and then John.
Speaker Change: Been here.
Speaker Change: To help you dimension that dean so from a price versus cost standpoint, we roughly had an outlook of down $300 million. Previously now were at the midpoint roughly down $400 million. So it's $100 million delta from a price versus cost standpoint versus where we were at back in November I would say roughly 75 million.
Speaker Change: Or three quarters of that is on the PVC side, and probably 25% of that is on the steel conduit side. So overwhelmingly driven by the changes in expectations from a PVC conduit and I'd say that market is changing as we've talked about and I am probably kick in here over to Jon for Ganzer, who can kind of give some context on what we're.
Jon Ganzer: Seeing from an import perspective, where it's coming from because I don't think it's just about the domestic competition as well John.
Jon Ganzer: Thanks, John Good morning, Dana So when we look at the PVC market Theres been a number of new entrants from all different sources, whether its imports from Latin America from China.
Jon Ganzer: We've seen domestic producers diversify out of the water work business to get into the electrical space and obviously there is new entrants that are coming in out of nowhere. So it's my career, probably the most disruptive period, we've ever seen in regards to number of new entrants and that is creating a lot of.
Jon Ganzer: Pressure on price and spread that we're experiencing and there's been a significant acceleration here as we've been tracking this price normalization over the past couple of years.
Jon Ganzer: The last quarter to two quarters has really accelerated so I think what we're trying to do is to capture that going out for the rest of the year.
Jon Ganzer: Only thing I'd ask go ahead.
Speaker Change: <unk> sorry.
Speaker Change: Great color to be able to size, what those are and to hear John's comments about the.
Speaker Change: How many other entrants are in the PVC side, we were thinking just it was Venezuela.
Speaker Change: And Dominican Republic, but it's much more than that so thats very helpful.
Speaker Change: And Bill I cut you off.
Speaker Change: Oh, yes, no and the only thing I would put a pin in it is like Hey, we have factored and you never know, but literally as I mentioned earlier to go okay. So.
Speaker Change: So, let's bring it back to pre Covid levels and Dean back to again I can't commit to this dean or anybody else, but <unk> been around for decades, plus or even before that as you know, but the PBC role of the 500 miles.
Speaker Change: The margins arent there to substantiate it so we actually think before we get to that number some of this would shut off but I'd rather have it so as best as we can in the forecast.
Speaker Change: Yes, that's a great last point, there and just one question.
Speaker Change: And I'll hand, it off was are.
Speaker Change: Are you, suggesting that some of these imports and as it both PVC and steel might not be meeting specs.
Speaker Change: Yes, I would say without getting too specific and we will get over my attorney here because there is not a 32nd rewind.
Speaker Change: We've communicated in the past there's two there are several things occurring.
Speaker Change: One there is products that don't have all of this back. So for example, you can use it in this application, but you can't use it and that so then a contractor has to decide are they meeting as they put this and quite frankly, they're not looking to go Oh. It doesn't meet a temperature of 90 degrees Celsius to we are.
Speaker Change: Working with the authorities.
Speaker Change: On products coming in even for example by won't call what specific customers and so forth, but where they have to pass impact test of seven out of 10, you have to drop away from a certain thing and not crack and we have recently tested one significant importer and theyre passing <unk>.
Speaker Change: <unk> 10.
Speaker Change: So from <unk> to customers to our government relations.
Speaker Change: This also or things just for the safety of society needs to be fixed.
Speaker Change: Thanks for sharing that I appreciate it. Thank you yeah. Thanks.
Deane Dray: Thanks Dean.
Speaker Change: Your next question comes from the line of David Tarantino with Keybanc capital markets. Please go ahead.
David Tarantino: Hey, everyone maybe.
David Tarantino: Maybe just to put a finer point on PVC is the revision entirely from the imports or is there also additional capacity domestically and then could you maybe give us an updated view on the degree of incremental capacity being added.
David Tarantino: From the market as a whole.
David Tarantino: Yes, I think David it's a little of both to what Jon for gains or said, what we don't know because again, we don't talk to our competition I don't know how much is additional lines coming on board first is just the mix of some of these people will go hey on municipal just like we're moving into like we generically call. It the water market you got <unk> you got.
David Tarantino: Plumbing municipal within there, but how much did these others, saying, let's expand some.
David Tarantino: I'd say expand but sign up an agent and so forth. So is it capacity versus expanding their market presence that is a little bit tougher, but it is imports. So large part of what I'm seeing in large again I'm trying to dimensionalize is still less than 10%, but it was up over 20% year over year.
David Tarantino: And then it's expanding out with some of the U S manufacturing companies.
David Tarantino: Just to confirm this quarter's revision was mostly just the imports that.
David Tarantino: Well I think it's pricing it's at one problem with this even ive talked in the past, whether it's steel condo or whatever else.
David Tarantino: Like the outbreak Frac or and then I'll try to answer your question I still think we're the market leader out there we had the full breadth of products. We have regional service centers, we have national footprint because of our spend we have relationships with all these companies and we're kind of the first choice in last look but.
David Tarantino: People are trying to enter the market trying to grow will leverage price, it's hard to say to go while holding who was the one that dropped their price or now that somebody dropped their price, even a well known recognized competitor of ours called it a tier one person has been around for a century or something of that PVC hasn't been along that along but you get it to go.
David Tarantino: Now there are matching or now they think thats the market price. So David it's just hard to say here is the one.
David Tarantino: Causing it.
David Tarantino: I think it's more of the imports.
David Tarantino: Can <unk>.
David Tarantino: Say or you cant pointed down to one specific line.
David Tarantino: Does that makes sense hopefully.
Speaker Change: Yeah. That's helpful. And then on the volume growth is there a way to break it out between kind of end market expectations and the internal initiatives and maybe on that could you give us an update on the progress around the growth initiatives, particularly between solar and water.
Speaker Change: Yeah, absolutely David. Thank you. So I would just think about the framework we laid out on page six is a good way to start that metal framing cable management construction services business.
Speaker Change: Did very well in the first quarter mid single digit growth after high single digit growth in the previous year. This is where we have really good exposure to some of the strongest growing end markets like data centers and some of the large manufacturing projects and then we have the capability that we've talked about from construction services.
Speaker Change: As well as we have some new equipment related to the metal framing product line that we think will really help us here drive a significant portion of that growth.
Speaker Change: That product category to continue to grow in the back half of the year, probably that that would be a key driver for us as you mentioned the other key driver.
Speaker Change: The plastic pipe conduit product category, we think with the new water related products that will have that as the next biggest growth driver in the back half of the year, especially as we manage through some of these comps we talked about the first quarter. We had the difficult comparison around last year with the restocking things like that but now we have that equipment and benefiting so.
Speaker Change: That's probably the next biggest driver and then we expect the metal conduit electrical cable there should be that kind of market level growth of low single digits for the overall nonresidential.
Speaker Change: Market, but we do have the competitive factors, especially thinking about the steel conduit dynamics and then the mechanical tube area, we were <unk>.
Speaker Change: Soft here in the first quarter, we do anticipate that getting better in the back end of the year.
Speaker Change: But there is challenges with that with the solar market in general we are performing well as we mentioned, but there are some dynamics that I think some people are trying to sort through so that's kind of the construct and the framework on how to still get to that low single digit volume growth for the back end of the year I think it's the X.
Speaker Change: There are some positives we've talked about a lot of unfavorable items here. We are positive here. This metal framing construction services is doing well and I think not just this year, but as we look.
Speaker Change: In the future. This is a really key area for us to combine a few different offerings. So I think it can be really good for years to come.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thanks, David.
Speaker Change: Your next question comes from the line of Chris Dankert with loop capital. Please go ahead.
Chris Dankert: Hey, good morning, guys. Thanks for taking the questions.
Speaker Change: Good morning, Chris.
Chris Dankert: Okay.
Chris Dankert: Forgive me if im misunderstanding.
Chris Dankert: The expectation around profitability is now that we're kind of.
Chris Dankert: Reset to pre COVID-19 levels on the PVC side. However, we have seen more imports come in we've seen more domestic production. So how do we get confidence that that is actually the right level and not something lower than pre COVID-19.
Chris Dankert: Okay. So I'll go through that.
Chris Dankert: There is no guarantee.
Chris Dankert: But what I would say Chris to my earlier remarks at first off I'll, even clarify a little bit what we have in here is our pricing down to that level and then the nuance to that is I think everybody would agree that labor costs going through COVID-19 at double digit inflation for a couple of years transportation going up.
Chris Dankert: That the margins, we have at the Andrew or even lower than pre COVID-19.
Chris Dankert: We're thinking for industry level, and then to answer I gave earlier again, I don't know others cost position, but at some point or.
Speaker Change: Quick analysis. She says it's just no longer effective.
Speaker Change: Because of the freight back in the day.
Speaker Change: I am saying pre COVID-19, we used to have as general rule that you didn't ship more than 500 miles 700, 800 miles because back then freight was around 7% to 8% of revenue you just see it as.
Speaker Change: Big bulky light item at cubes out it doesn't weighed out for the pricing therefore at some point imports coming from across the globe no longer in our opinion from our analysis at the moment make economic sense. So.
Speaker Change: I can't guarantee the future there, but I just think at some point you start getting down to your.
Speaker Change: Cost position from that standpoint, I feel good with accor, because we are one of the largest resin buyers. We've talked in previous years has been mass over the last couple of years, just with pricing, but we have automated factories, where people have things we automatically.
Speaker Change: We will bundle our products and the 20 other things so mix things that people do manually that I think we have a good efficient.
Speaker Change: And as I mentioned earlier, even this year alone, including PVC should be our best year for productivity.
Speaker Change: Im aware of per year post IPO.
Speaker Change: That's extremely helpful. Thank you for the color there.
Speaker Change: And then I guess just on whole bird I mean, maybe can you tell us where production levels are kind of at versus target.
Speaker Change: And then to my understanding if the IRA or those incentives are narrow changed whatever that doesn't particularly shift the profit pool for Hobart right like most of those incentives or pass along to customers correct.
Yes, so a couple of things.
Speaker Change: Operations is doing well and I think even to the point of where I was on a call with the operations teams last week, saying Hey.
Speaker Change: Arent plant why are you going to do and there was a little bit of bravado, I think I wish I had the year before but the team go on well what we did at Hobart, we're going to now come due there in my point. There is operations are hitting speeds productivity all the different things that we're expecting at the time. So is now back in our one of our top.
Speaker Change: Sales teams to go Okay. Now that we got this in addition to solar customers or anything else go fill the mills expand beyond and so forth. So.
Speaker Change: We're in a good spot there in general again now is let's go get volume as for the IRI and so forth.
Speaker Change: Our expectations, whether its that or no one's asked me about beads in hte that I think these were all bipartisan acts that spending that hit most states. Therefore, whether you read or below so I don't see things changing <unk>, if theres Lex <unk> back to our current president if theres less.
Speaker Change: Less incentives you would think theres there are tariffs to offset that he has spoken to how he would rather run things. So short term when you get to solar and I think in the prepared remarks, we talked about.
Speaker Change: There is some hooking up to the grid.
Look I'm well beyond my skis here, but if anything as president Trump talks about deregulation over time that could be an enabler that we get things moving quicker as we add more solar capacity one of them I would like to reference other people in other words. This is just <unk> or one of the largest solar trackers I think are.
Speaker Change: <unk> had their earnings announcement, and they talked about record backlog and so forth. So again I'm not getting into the quarter, but longer term I still think there's a great market to be in and by the way. We started the solar torque tubes before there ever was like an IRR a tax credit. So we're prepared to grow this market with.
Speaker Change: Or without incentives.
Speaker Change: Got it well. Thank you so much for the color there and best of luck guys.
Chris Dankert: Thanks, Chris.
Operator: Your next question comes from the line of Chris Moore with CJS Securities. Please go ahead.
Chris Moore: Hey, good morning, guys.
Then answer good morning, maybe good morning can you provide perhaps the puts and takes as to why fiscal 'twenty five.
Chris Moore: We will be the bottom from a revenue and adjusted EBITDA standpoint.
Chris Moore: So here's to puts and takes.
Chris Moore: We do expect as I had mentioned earlier and I'll give you some caveats. It thinks it was models, Chris and everybody house that.
Like the PVC and so forth asked to go okay, let's just take it down and that it's not going all drop in January again or February right. Now first week of February is pretty damn good.
Chris Moore: But over time, let's just bring it down and as I already answered basketball in price and there is more cost than there was five years ago in the industry. So we think it's a natural number and then as star productivity or growth in global Mega projects.
Chris Moore: And so forth that will actually be upsides now the one thing in the model that people have to think about is going into next fiscal year.
Speaker Change: Would be some.
Speaker Change: Europe, if pricing levels out the end of the year there would be some decline in 2026, because if you just think about comps to think about October of 26 versus October 25 pricing dropping this year will make it a tougher comp at the beginning of next year. So now we're not here to give guidance on <unk>.
Speaker Change: <unk> six yet I want to show and perform over the next three quarters and Accor and drive these initiatives, but do we have enough productivity.
Really think and I look forward in future earnings talk about global Mega projects, and what we have accomplished there and various things.
Speaker Change: The puts and takes but thats, Chris our thought on 26 going forward.
Speaker Change: Fair enough I will leave it there thanks guys.
Speaker Change: Thank you Sir.
Speaker Change: This concludes the question and answer session I would now like to turn the call back over to Bill Waltz for closing remarks.
Speaker Change: Thank you let me take a moment to summarize my three takeaways from today's discussion first <unk>. It continues to evolve as we expand our products and services portfolio through our initiatives, which we believe are natural extensions of what we've built over many years.
Speaker Change: Second we continue to monitor the overall market dynamics and competitive landscape and believe several factors could have a positive impact for us as we move throughout the year.
Speaker Change: Finally, we remain committed to our capital deployment strategy to create shareholder value over the long term.
Speaker Change: With that thank you for your support and interest in our company. We look forward to speaking with you during our next quarterly call. This concludes the call for today.
Speaker Change: That concludes today's conference call you may now disconnect.
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