Q1 2025 Hubbell Inc Earnings Call

Question and answer session to ask a question during the session need to press star one on your telephone. We will then hear an automated message device in your hand as race to withdraw your question. Please press star. One again. Please be advised today's conference is being recorded I would now like to hand, the conference off of your speaker today. They had in Morocco, you may begin.

Thanks, operator, good morning, everyone and thank you for joining US earlier. This morning, we issued a press release announcing our results for the first quarter of 2025 press release and slides are posted to the investors section of our website at <unk> Dot com joined today by our chairman President and CEO, Girvin, Docker, and our executive Vice President and CFO Bill Sperry. Please note. Our comments. This morning may include statement.

Related to the expected future results of our company. These are forward looking statements as defined by the private Securities Litigation Reform Act of 1990, 5%. Please note the discussion of forward looking statements in our press release and considered incorporated by reference to this call. Additionally comments may also include non-GAAP financial measures.

Speaker Change: Measures are reconciled to the comparable GAAP measures, which are included in the press release and slides now let me turn the call over to Kevin Great.

Kevin Great: Great. Thanks, Dan Good morning, Thank you for joining us to discuss hubbell's first quarter 2025 results.

Our results in the quarter were driven by continued strong operating performance in our electrical solutions segment, and a return to organic growth in grid infrastructure.

Kevin Great: All set by anticipated softness and grid automation and the impact of increased cost inflation from higher raw materials prices and tariffs.

Kevin Great: And electrical solutions, we delivered mid single digit organic growth with continued adjusted operating margin expansion and strong core adjusted operating profit growth.

Kevin Great: Our segment unification efforts and our strategy to complete compete collectively are driving outgrowth in key vertical markets.

Kevin Great: Most notably evidenced by strong data center growth in the first quarter.

Kevin Great: From an operational standpoint, we continued to simplify our business to drive productivity and operating efficiencies, which we're confident will drive long term margin expansion.

And utility solutions, while grid automation sales were down on challenging prior year comparisons as anticipated our grid infrastructure business returned to organic growth in the quarter.

Kevin Great: Transmission and substation markets remained strong as utility customers invest to interconnect new sources of low 10 generation on the grid.

Kevin Great: We delivered another quarter of double digit growth across these markets in the quarter as our leading positions and premium brands position us well to capitalize on a growing funnel of project opportunities.

Kevin Great: And distribution markets. We are encouraged by recent order trends and are confident that we are emerging from the recent period of customer inventory normalization.

Speaker Change: Before I turn it over to bill to discuss the results and our outlook in more detail I'd like to provide some opening comments on how we are positioning hubbell to mitigate recent cost inflation, our near term macroeconomic uncertainty.

Speaker Change: Hopefully, it's a U S centric manufacturing company with more than 90% of our sales in the U S and are largely U S based manufacturing footprint.

Speaker Change: Our international sales are serve primarily on our local for local basis.

Speaker Change: While recent raw materials inflation and tariffs.

Speaker Change: Implemented in February and March drove a headwind in the first quarter, we have already implemented actions to offset those impacts with in 2025.

Speaker Change: And we're taking the actions necessary to offset the more recent impact of reciprocal tariffs.

Speaker Change: Cost inflation cycles are not new to Hubbell, we have successfully dealt with them before and we have a playbook in place with several levers at our disposal to drive continued profitable growth under a range of scenarios.

Speaker Change: From a market standpoint, while the macroeconomic environment has become more dynamic over the last several months.

Speaker Change: We see no net change to our prior near term and long term views.

Speaker Change: We believe the current environment warrants caution and continued proactive cost management, but strong recent order trends and favorable end markets.

Speaker Change: The board of forward growth expectations.

Speaker Change: Additionally, our markets are not only bolstered by near and long term growth megatrends, but it also proven to be more resilient during periods of economic uncertainty.

Speaker Change: We are maintaining our full year 2025 outlook. This morning, and remain confident in our ability to achieve our financial and strategic commitments with that let me turn it over to bill.

Bill Sperry: Thanks, very much grubin good morning, everybody.

Speaker Change: I appreciate you taking the time to be with US we're quite aware too busy.

Bill Sperry: Busy morning, I'm going to start.

Bill Sperry: My comments on page four and we'll be using the slides that you hopefully you've found.

Bill Sperry: So the first quarter results for Hubbell, where strong performance from the electrical segment strong performance from grid infrastructure.

Some headwinds from grid automation.

Bill Sperry: Fees to very difficult prior year comparison.

Bill Sperry: And I would say.

Bill Sperry: That first quarter performance sets itself up now for.

Bill Sperry: For normal ramped up seasonality.

Bill Sperry: And for us to deliver.

Bill Sperry: In support of our full year targets and expectations that we have.

Bill Sperry: On the cost side, we had some incremental headwinds from higher raw material prices and tariffs, we're going to talk about tariffs.

Bill Sperry: More robustly in a little bit we're lumping in raw material inflation, just because we think about it as what we need to offset with price and productivity.

Bill Sperry: And I think we're going to provide slightly unique challenge for you all and our LIFO based income statement.

Operator: After the speaker's presentation, there will be a question and answer session.

Yeah.

Operator: To ask a question during the session, you need to press star 1 1 on your telephone. You will then hear an automated message device in your hand. To withdraw your question, please press star 1 again.

And I would say.

Bill Sperry: We are recognizing these cost increases as they happen.

That first quarter performance sets it.

Itself up now.

For normal ramped up seasonality.

Bill Sperry: FIFO reporters, you know will be a quarter or so down the road before they start recognizing those costs.

Operator: Please be advised, today's conference...

And for us to deliver.

Daniel Innamorato: I would now like to hand the conversation over to your speaker today, Daniel Innamorato. Thanks, operator.

In support of the full year targets and expectations that we have.

Bill Sperry: We're going to really be showing you a little bit of that gap.

Daniel Innamorato: Good morning, everyone. And thank you for joining us.

On the cost side, we had some incremental headwinds from higher raw material prices and tariffs, we're going to talk about tariffs.

Bill Sperry: And.

Daniel Innamorato: Earlier this morning, we issued a press release announcing our results for the first quarter 2025. The press release and slides are posted to the investor section of our website at hubbell.com.

Bill Sperry: But we have Scott S curve and highlighted actions to offset those and unable to hold onto our initial targets. So on page four in the left column you see sales.

More robustly in a little bit we're lumping in raw material inflation, just because we think about it as what we need to offset with price and productivity.

Daniel Innamorato: I'm joined today by our Chairman, President and CEO, Gerben Bakker, and our Executive Vice President and CFO, Bill Sperry. Please note our comments this morning may include statements related to the expected future results of our company. These are forward looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Bill Sperry: The $1 365 the.

Bill Sperry: The decrease largely driven by the divestiture of residential lighting quite.

And I think we're going to provide slightly unique challenge for you all in our LIFO based income statement.

Bill Sperry: Quite flat, otherwise, where the growth we experienced in the electrical segment as well as in grid infrastructure.

Daniel Innamorato: Please note the discussion of forward looking statements in our press release and consider it incorporated by reference to this call. Additionally, comments may also include non-GAAP financial. Those measures are reconciled to the comparable gap measures, which are included in the press release and slides.

We are recognizing these cost increases as they happen.

Bill Sperry: Was essentially offset by the decline in crude oil automation as they faced a tougher compare.

The FIFO reporters, you know will be a quarter or so down the road before they start recognizing those costs.

Gerben Bakker: Now let me turn the call over to Gerben. Great. Thanks, Dan.

Bill Sperry: We like to look at the sales sequentially as well not just year over year.

We're going to really be showing you a little bit of that gap.

Gerben Bakker: Good morning. Thank you for joining us to discuss Hubble's first quarter 2025 results. Our results in the quarter were driven by continued strong operating performance in our electrical solutions segment and a return to organic growth and grid infrastructure. offset by anticipated softness in grid automation and the impact of increased cost inflation from higher raw materials prices and tariffs. In electrical solutions, we delivered mid-single-digit organic growth with continued adjusted operating margin expansion and strong core adjusted operating profit growth. Our segment unification efforts and our strategy to compete collectively are driving outgrowth in key vertical markets. most notably evidenced by strong data center growth in the first quarter.

And.

And up 2%.

But we've got as carbon highlighted actions to offset those and unable to hold onto our initial targets. So on page four in the left column you see sales.

Bill Sperry: With strong orders and we'll talk more about that as we look forward to the balance of the year.

Bill Sperry: Really those order the order book supporting a strong seasonal ramp up.

The $1 365, the <unk>.

Bill Sperry: The second column, you see operating profit and you see the op down to $264 million.

Decrease largely driven by the divestiture of residential lighting.

Bill Sperry: Margins down 40 basis points.

Quite flat, otherwise, where the growth we experienced in the electrical segment as well as in grid infrastructure.

Bill Sperry: That includes a point of positive price.

Bill Sperry: And then some headwind from our material costs, creating about a $10 million drag of price and productivity against material inflation tariffs and other inflation.

It was essentially offset by the decline in crude oil automation as they faced a tougher compare.

We like to look at the sales sequentially as well not just year over year.

And up 2%.

Bill Sperry: Absent these $10 million drag you would have seen margins expand nicely.

With strong orders and we'll talk more about that as we look forward to the balance of the year, but really those order the order book supporting a strong seasonal ramp up.

Bill Sperry: And I make that comment.

Bill Sperry: Just because we're going to be offsetting.

Gerben Bakker: From an operational standpoint, we continue to simplify our business to drive productivity and operating efficiency. which we are confident will drive long-term marginal. In utility solutions, while grid automation sales were down on challenging prior year comparisons, as anticipated, our grid infrastructure business returned to organic growth in a quarter. Transmission and substation markets remain strong as utility customers invest to interconnect new sources of load and generation on the grid. We delivered another quarter of double-digit growth across these markets in the quarter, as our leading positions and premium brands position us well to capitalize on a growing funnel of project opportunity.

Bill Sperry: That drag in the second half of the year or so.

The second column, you see operating profit and you see the op down to $264 million.

Bill Sperry: Durable margins underlying that would have been up and we think thats.

Bill Sperry: Syed.

Margins down 40 basis points.

Speaker Change: I'm going to now unpack performance by segment.

That includes a point of positive price.

Speaker Change: And starting on page five we'll start with utility solutions.

And then some headwind from material costs, creating about a $10 million drag of price and productivity against material inflation tariffs and other inflation.

Speaker Change: You see the sales of $857 million down 4% from prior year.

Speaker Change: That's comprised of low single digit growth on the infrastructure side.

Absent these $10 million drag you would have seen margins expand nicely.

Speaker Change: And a 15% contraction on grid automation.

And I make that comment.

Good infrastructure side accounts for about three quarters of the segment.

Just because we're going to be offsetting.

That drag in the second half of the year so.

Speaker Change: And the markets are continuing in good shape in the transmission and substation side double digit growth by us.

Durable margins underlying that would have been up and we think thats.

Gerben Bakker: In distribution markets, we are encouraged by recent order trends and are confident that we are emerging from the recent period of customer inventory normalization.

Good sign.

Speaker Change: Feel very good about our strong positioning in differentiated solutions and fast growing market here.

I'm going to now unpack performance by segment.

And starting on page five we'll start with utility solutions.

Gerben Bakker: Before I turn it over to Bill to discuss the results and our outlook in more detail, I'd like to provide some opening comments on how we are positioning Hubbell to mitigate recent cost inflation and near-term macroeconomic concerns. Hubbell is a U.S.-centric manufacturing company with more than 90% of our sales in the U.S. and a largely U.S.-based manufacturing footprint. Our international sales are served primarily on a local-for-local basis. while recent raw materials, inflation and tariffs implemented in February and March drove a headwind in the first quarter. We have already implemented action to offset those impacts within 2025.

Speaker Change: That's being driven by grid modernization and electrification trends.

You see the sales of $857 million down 4% from prior year.

Speaker Change: And that that's got nice momentum and has been growing strongly expected to continue.

That's comprised of low single digit growth on the infrastructure side.

Speaker Change: Distribution was down in the quarter.

And a 15% contraction on grid automation.

Speaker Change: But again importantly sales and orders up sequentially.

Carbon: As carbon had mentioned the customer and channel inventory normalization, it really been a nagging headwind in 2024 for the grid infrastructure business unit, particularly for distribution products and telecom portion of enclosures.

Good infrastructure side accounts for about three quarters of the segment.

And the markets are continuing in good shape in the transmission and substation side double digit growth by us.

Feel very good about our strong positioning in differentiated solutions and fast growing market here.

Speaker Change: We would say that by the sequential.

Gerben Bakker: and we are taking the actions necessary to offset the more recent impact of reciprocal tariffs. Cost inflation cycles are not new to Hubbell. We have successfully dealt with them before, and we have a playbook in place with several levers at our disposal to drive continued profitable growth under a range of scenarios. From a market standpoint, while the macroeconomic environment has become more dynamic over the last several months, we see no net change to our prior near-term and long-term views. We believe the current environment warrants caution and continued proactive cost management. but strong recent order trends and favorable end markets in support of forward growth expectations.

That's being driven by grid modernization and electrification trends.

Carbon: And orders.

Carbon: Would say that normalization period at by the end of the quarter here, we've reached it and the period of Destocking is now behind us.

And that that's got nice momentum and has been growing strongly expected to continue.

Distribution was down in the quarter.

Carbon: Happy to say so.

Carbon: We're looking forward.

But again importantly sales and orders up sequentially.

Carbon: To seeing kind.

Carbon: Kind of a book and bill to demand.

Ed: As carbon Ed mentioned, the customer and channel inventory normalization.

Carbon: The orders across all of grid infrastructure up double digits and up sequentially.

Ed: Really been a nagging headwind in 2024 for the grid infrastructure business unit, particularly for distribution products and telecom portion of enclosures.

Carbon: That's really a broad based trend.

Carbon: Where we're seeing that in.

Carbon: In all three areas of transmission substation distribution and telecom.

Ed: We would say that by the sequential.

Carbon: On the grid automation side you see.

Ed: And orders.

Carbon: That business being down teens and mid teens that compares to a prior year comp of up 30%. So certainly a tough compare.

Gerben Bakker: Additionally, our markets are not only bolstered by near and long-term growth megatrends, but have also proven to be more resilient during periods of economic uncertainty.

Ed: Would say that normalization period at by the end of the quarter here, we've reached it and the period of Destocking is now behind us.

Gerben Bakker: We are maintaining our full year 2025 outlook this morning and remain confident in our ability to achieve our financial and strategic commitments.

Ed: Happy to say so.

Carbon: The sales are flattening sequentially from the fourth quarter, and we're seeing the large project roll offs being backfield by smaller projects and MRO activity.

We're looking forward.

Ed: To seeing.

Ed: Kind of a book and bill to demands.

Bill Sperry: With that, let me turn it over to Bill. Thanks very much, Gerben.

Ed: The orders across all of grid infrastructure up double digits and up sequentially.

Bill Sperry: Good morning, everybody. Appreciate you taking time to be with us. We're quite aware it's a busy, busy morning.

Carbon: So I think we see grid automation now in that.

Ed: And that's really a broad based trend.

Carbon: It's kind of a steadier environment rather than being.

Ed: Where we're seeing that in.

Bill Sperry: I'm going to start my comments on page four and I'll be using the slides that you hopefully found. So the first quarter results for Hubbell were strong performance from the electrical segment, strong performance from grid infrastructure, some headwinds from grid automation as they faced a very difficult prior year comparison. And I would say that first quarter performance sets itself up now for normal, ramped up seasonality and for us to deliver and support the full year target and expectations that we have. On the cost side, we had some incremental headwinds from higher raw material prices and tariffs.

Ed: In all three areas of transmission substation distribution and telecom.

Carbon: Consistent.

Carbon: Downdraft, we think it's <unk>.

Carbon: Nice steady based on these smaller projects and MRO.

Ed: On the grid automation side you see.

Carbon: The margins in utility you see $180 million of operating profit.

Ed: That business being down teens and.

Ed: Mid teens that compares to a prior year comp of up 30%, So certainly a tough compare.

Carbon: Decline of 80 basis points of margin.

Carbon: This is really where you see a lot of the price cost productivity headwind that we described.

Ed: The sales are flattening sequentially from the fourth quarter, and we're seeing the large project roll offs being backfield by smaller projects and MRO activity.

Carbon: Our utility segment.

Carbon: <unk> has a higher mix of LIFO units than does our electrical segment and so we're seeing those costs hitting the P&L sooner here.

Ed: So I think we see grid automation now in that.

Carbon: And in the utility, which is dragging those margins down just a little bit.

Ed: And kind of a steadier environment rather than being.

Ed: Consistent.

Carbon: Talking about electrical on page six.

Ed: Downdraft, we think it's <unk>.

Ed: Nice steady based on these smaller projects and MRO.

Carbon: Another strong quarter for the electrical segment, you see mid single digit growth when we net out the M&A impact of the divestiture of residential lighting.

Bill Sperry: We're going to talk about tariffs more robustly in a little bit. We're lumping in raw material inflation just because we think about it as what we need to offset with price and productivity. And I think we're going to provide a slightly unique challenge for you all in our LIFO-based income statement. We're recognizing these cost increases as they happen. The FIFO reporters, you know, will be a quarter or so down the road before they start recognizing those costs. So we're going to really be showing you a little bit of that gap. But we've got, as Gerben highlighted, actions to offset those and able to hold on to our initial target.

Ed: The margins in utility you see $180 million of operating profit.

Ed: Decline of 80 basis points of margin.

Carbon: We have finally now lapped that so we won't have to continue to torture, you buy kind of manually putting that out to make.

Ed: This is really where you see a lot of the price cost productivity headwind that we described.

Carbon: Same store sales comparisons for your strong margin expansion of 5% growth 70 basis point improvement in margin.

Ed: Our utility segment.

Ed: <unk> has a higher mix of LIFO units than does our electrical segment and so we're seeing those costs hitting the P&L sooner here.

Acquired if you pulled the lighting results out of the prior year to make it comparable you'd see something closer to that double digit growth. So.

Ed: And in the utility, which is driving those margins down.

Ed: Talking about electrical on page six.

Carbon: A strong quarter for the segment.

Carbon: If we look at the 5% sales growth.

Ed: Another strong quarter for the electrical segment you.

Carbon: Data centers was our largest contributor.

Ed: You see mid single digit growth when we net out the M&A impact of the divestiture of residential lighting.

Bill Sperry: So on page four on the left column, you see sales of a billion, 365. The decrease largely driven by the divestiture of residential lighting, quite flat, otherwise where the growth we experienced in the electrical segment, as well as in grid infrastructure was essentially offset by the decline in grid automation as they faced a tougher compare. We like to look at the sales sequentially as well, not just year over year, and up 2% with strong orders, and we'll talk more about that as we look forward to the balance of the year, but really those are the order books supporting a strong seasonal ramp-up.

Carbon: We had double digit growth in the balance of systems.

Carbon: Which are products like our connectors and grounding product wiring devices and alike.

Ed: We have finally now lapped that so we won't have to continue to torture, you buy kind of manually filling that out to make <unk>.

Carbon: Good momentum in that space healthy growth.

Ed: Same store sales comparisons for you strong margin expansion of 5% growth 70 basis point improvement in margin <unk>.

Carbon: In our <unk> business.

Carbon: Strong growth there as well so big contribution from data centers to the segment ex data center results are slightly more mixed where on the light industrial side, which is where our Burndy brand is we saw strong growth.

Ed: Likewise, if you pulled the lighting results out of the prior year to make it comparable you'd see something closer to double digit growth. So.

Ed: A strong quarter for the segment.

Carbon: We're benefiting there from Mega projects think of large industrial factories like chip plants.

Ed: If we look at the 5% sales growth.

Ed: Data centers was our largest contributor.

Carbon: As well as a general trend of industrial re shoring.

Ed: We had double digit growth in the balance of systems.

Bill Sperry: The second column you see operating profit, and you see the OP down to $264 million, margins down 40 basis points. That includes a point of positive price. and then some headwind from the material costs. creating about a $10 million drag of price and productivity against material inflation, tariffs, and other. Absentee's $10 million drag, you would have seen margins expand nicely. And I make that comment just because we're going to be offsetting that drag in the second half of the year. So the durable margins underlying that would have been up, and we think that's a good sign.

Carbon: Helping in light industrial on the heavy side, a little bit more mixed performance, where oil and gas was a good contributor on the non res side, we saw some softness which is consistent with the past few quarters.

Ed: Which are products like our connectors and grounding product wiring devices and the like.

Ed: Good momentum in that space healthy growth.

Ed: In our <unk> business.

Ed: <unk> strong growth there as well so big contribution from data centers to the segment ex data center results are slightly more mixed where on the light industrial side, which is where our Burndy brand is we saw strong growth.

Carbon: We're pleased that we got.

Good results from our vertical market strategy.

Carbon: That led to some contributions from new product development as well as some customer conversions as our newly aligned sales force.

Ed: We're benefiting there from Mega projects think of large industrial factories like chip plants.

Carbon: Proving to be effective in the marketplace on.

Carbon: On the <unk> side, you see 70 basis points.

As well as a general trend of industrial re shoring.

Margin expansion, 5% growth to $84 million.

Ed: Helping in light industrial on the heavy side.

Carbon: <unk>.

Ed: A little bit more mixed performance, where oil and gas was a good contributor on the non res side, we saw some softness which is consistent with the past few quarters.

Carbon:

Carbon: And that's driven really by the volume growth efficiency.

Bill Sperry: I'm going to now unpack performance by segment, and starting on page 5, we'll start with utility solutions. You see the sales of $857 million, down 4% from prior year. That's comprised of low single-digit growth on the infrastructure side and a 15% contraction on grid automation.

Carbon: See gains from our compete collectively initiatives and some price cost productivity headwinds.

We're pleased that we got good results from our vertical market strategy.

Carbon: Little bit less impactful than utility is they have a higher FIFO mix.

Carbon: But nonetheless a drag.

Ed: That led to some contributions from new product development as well as some customer conversions as our newly aligned sales force.

Carbon: That and the electrical segment.

Carbon: Yeah.

Carbon: We thought it would be helpful on page seven.

Carbon: To break down that.

Ed: Proving to be effective in the marketplace on.

Carbon: Tariff exposure.

Bill Sperry: The grid infrastructure side accounts for about three quarters of the segment, and the markets are continuing in good shape in the transmission and substation side, double-digit growth by us. We feel very good about our strong positioning and differentiated solutions in fast-growing market here. That's being driven by grid modernization and electrification trends. And that's got nice momentum and has been growing strongly. We expect it to continue.

Ed: On the <unk> side, you see 70 basis points.

Carbon: Be clear that we're including in tariff exposure.

Ed: Margin expansion, 5% growth to $84 million of op.

Carbon: The inflationary pressure on raw materials that those tariffs are influencing even if theyre not direct tariffs.

Ed: <unk>.

Ed:

Ed: And that's driven really by the volume growth efficiency.

Carbon: And we're hoping that that page seven helps.

Ed: See gains from our compete collectively initiatives and some price cost productivity headwinds.

Carbon: Shine the light here so.

Speaker Change: You see as <unk> had mentioned are U S centric company, but with a global supply chain.

Ed: Little bit less impactful than.

Ed: Utility is they have a higher FIFO mix.

Ed: But nonetheless a drag.

Speaker Change: Mexico being about mid teens of mix, China mid single digits, and the rest of world less than five.

Ed: From that the electrical segment.

Bill Sperry: Distribution was down in the quarter, but again, importantly, sales and orders up sequentially. As Gerben had mentioned, the customer and channel inventory normalization had really been a nagging headwind in 2024 for the grid infrastructure business unit, particularly for distribution products and telecom portion of enclosures. We would say that by the sequential and orders, we would say that normalization period at by the end of the quarter here we've reached it, and the period of de-stocking is now behind us, we're happy to say. So we're looking forward to seeing kind of a book and bill to demand.

Ed: We thought it would be helpful on page seven.

To break down.

Speaker Change: We find it most useful to separate the effects into two different buckets and the first category on the left is really.

Ed: The tariff exposure.

Ed: Be clear that we're including in tariff exposure.

Ed: The inflationary pressure on raw materials that those tariffs are influencing even if theyre not direct tariffs.

Speaker Change: The effects in the first quarter from tariffs that were implemented in February and March but also you see we're including higher raw material costs. So even if we're not paying tariffs on student all aluminum those commodities have experienced inflation.

Ed: And we're hoping that that page seven helps.

Ed: Shine the light here so.

Ed: You see as <unk> had mentioned U S centric company, but with a global supply chain.

Speaker Change: And the way we calculate this $135 million impact on 2025 from a cost perspective about half of that is these just these raw material costs and the balance being tariffs.

Ed: Mexico being about mid teens of mix, China mid single digits, and the rest of world less than five.

Ed: We find it most useful to separate the effects into two different buckets and the first category on the left is really.

Speaker Change: And.

Bill Sperry: The orders across all of grid infrastructure, up double digits and up sequentially, and that's really a broad-based trend where we're seeing that in all three areas of transmission, substation, distribution, and total.

Speaker Change: Got it.

Speaker Change: Set of initiatives that Durbin gave you a little insight to.

Speaker Change: Leading with price we have been in communications with our customers with letters.

Ed: The effects in the first quarter from tariffs that were implemented in February and March but also you see we're including higher raw material costs. So even if we're not paying tariffs on student all aluminum.

Speaker Change: We have enacted those price increases they are effective in mid April and we've now been taking orders at those new prices and.

Bill Sperry: On the grid automation side, you see that business being down teens and mid-teens. That compares to a prior year comp of up 30 percent, so certainly a tough compare. The sales are flattening sequentially from the fourth quarter, and we're seeing the large project roll-offs being backfilled by smaller projects and MRO activity. So, I think we see grid automation now in kind of a steadier environment, rather than being a consistent downdraft. We think it's nice, steady, based on these smaller projects and MRO.

Ed: Commodities have experienced inflation.

Speaker Change: The stick rate gives us confidence.

Ed: And the way we calculate this $135 million impact on 2025 from a cost perspective about half of that is these just these raw material costs and the balance being tariffs.

Speaker Change: On this call, even though it's a little early too.

Speaker Change: To let you know that we will neutralize that 135 impact within calendar year 2025.

Speaker Change: Yes.

Ed: And.

Speaker Change: The second column is the reciprocal tariffs were enacted in April.

Ed: We've got a set of initiatives that Durbin gave you a little insight to.

Speaker Change: We too will neutralize these effects using price and productivity levers.

Ed: Leading with price we have been in communications with our customers with letters.

And those mitigation actions are underway.

Ed: We have enacted those price increases are effective in mid April and we have now been taking orders at those new prices and the.

Speaker Change: Been in contact.

Speaker Change: With our.

Speaker Change: Are customers of those price increases are not yet fully implemented they are expected to go in later this month.

Bill Sperry: The margins in utility, you see 180 million of operating profit and a decline of 80 basis points of margin. This is really where you see a lot of the price cost productivity headwind that we described. Our utility segment has a higher mix of LIFO units than does our electrical segment. And so we're seeing those costs hitting the P&L sooner here in the utility, which is dragging those margins down.

Ed: Stick rate it gives us confidence.

Ed: On this call, even though it's a little early too.

Speaker Change: And so we don't know about take rates as well.

Speaker Change: And so while we're confident will offset neutralize these.

Ed: To let you know that we will neutralize that 135 impact within calendar year 2025.

Speaker Change: Not fully clear yet that will happen within calendar year 'twenty five given the LIFO lag and the fact that we'll be recognizing these costs immediately so you'll see when we get to the outlook page. We've given you a little bit of a sensitivity we are targeting to get all of this offset of neutralized within calendar year.

Ed: The second column is the reciprocal tariffs were enacted in April.

Ed: We too will neutralize these effects using price and productivity levers.

Ed: And those mitigation actions are underway.

Bill Sperry: Talking about electrical on page six. Another strong quarter for the electrical segment. We see mid-single-digit growth when we net out the M&A impact of the divestiture of residential lighting. We have finally now lapped that, so we won't have to continue to torture you by kind of manually pulling that out to make same-store sales comparisons for you. Strong margin expansion of 5% growth, 70 basis point improvement in margin. Likewise, if you pull the lighting results out of the prior year to make it comparable, you'd see something closer to a double-digit growth. So a strong quarter for the segment.

Ed: We've been in contact.

Speaker Change: But it's possible it takes till the first quarter of next year and we'll certainly keep you updated as those impacts become a little more clear.

Ed: With our.

Ed: Are customers of those price increases are not yet fully implemented they are expected to go in later this month.

Speaker Change: So our outlook is on page eight.

Ed: And so we don't know about take rates as well.

Speaker Change: And you see that we are maintaining our 2025 adjusted EPS outlook range.

Ed: And so while we're confident will offset neutralize these.

Ed: Not fully clear yet that will happen within calendar year 'twenty five given the LIFO lag and the fact that we'll be recognizing these costs immediately so you'll see when we get to the outlook page. We have given you a little bit of a sensitivity we are targeting to get all of this offset of neutralized within calendar year.

And.

Speaker Change: That involves organic growth of 6% to 8%, we believe that the markets are intact.

Speaker Change: So about half of that or a 3% to 4%. We think there is going to come from volume and the balance of 3% to 4% will be coming from price.

Bill Sperry: If we look at the 5% sales growth. um Data Centers was our largest contributor. We had double digit growth in the balance of systems. which are products like our connectors and grounding product wiring devices and the like. Good momentum in that space, healthy growth. and our PCX business, strong growth there as well. So big contribution from data centers to the segment. X data center results are slightly more mixed where on the light industrial side, which is where our Byrdie brand is, we saw strong growth. We're benefiting there from mega projects. Think of large industrial factories like chip plants, as well as a general trend of industrial reshoring, helping in light industrial.

Ed: But it's possible it takes till the first quarter of next year and we'll certainly keep you updated as those impacts become a little more clear.

And so.

Speaker Change: That price those price actions.

Speaker Change: I'm confident that we'll be offsetting that first phase.

Ed: So our outlook is on page eight.

Speaker Change: The first quarter tariffs and inflation on materials and you can see that illustrated by the Red and green bars offsetting each other getting back to the original range.

And you see that we are maintaining our 2025 adjusted EPS outlook range.

Ed: And.

Ed: That involves organic growth of 6% to 8%.

Speaker Change: The second set of reciprocals, we're targeting neutral.

Ed: We believe that the markets are intact, and so about half of that or 3% to 4%. We think there is going to come from volume and the balance of 3% to 4% will be coming from price.

Speaker Change: But we wanted to highlight a 50 sensitivity.

Speaker Change: Just in case, the LIFO accounting recognizes.

Speaker Change: <unk> recognized as a little more cost before the price.

Speaker Change: And we will be able to update you certainly next quarter on how that's going.

Ed: And so.

Speaker Change: So.

Ed: That price those price actions again confident that will be offsetting that first phase of the first quarter tariffs.

Speaker Change: The guidance is intact our free.

Speaker Change: Free cash flow.

Speaker Change: You saw on the opening page.

Bill Sperry: On the heavy side, a little bit more mixed performance where oil and gas was a good contributor. On the non-res side, we saw some softness, which is consistent with the past few quarters. We're pleased that we got good results from our vertical market strategy. That led to some contributions from new product development, as well as some customer conversions as our newly aligned sales force is proving to be effective in the marketplace. On the OP side, you see 70 basis points of margin expansion, 5% growth to 84 million of OP. and that's driven really by the volume growth.

Speaker Change: A little bit down quarter over quarter, but certainly in line to hit our target of 90% or greater of net income.

Ed: Inflation on materials, and you can see that illustrated by the Red and green bars offsetting each other getting back to the original range.

Speaker Change: On the free cash flow.

Ed: The second set of reciprocals, we're targeting neutral.

Speaker Change: You'll see on the right some comments on modeling considerations and we can talk about as much of that in Q&A.

Ed: But we wanted to highlight a 50 sensitivity.

Speaker Change: But essentially we're anticipating a ramp.

Ed: Just in case, the LIFO accounting.

Ed: <unk> is a little more cost before the price.

Speaker Change:

Speaker Change: And.

Speaker Change: That's going to allow us.

Ed: And we will be able to update you certainly next quarter on how that's going.

Speaker Change: To get some some growth good growth in the second quarter.

Ed: So.

Speaker Change: We wanted to and that's obviously guidance is around 25, we wanted to end on page nine with some comments that maybe extend beyond 25% to 26 and beyond and I wanted to talk about the balance sheet, which we think is in great shape, it's very poised to support.

Ed: Our guidance is intact free.

Ed: Free cash flow.

Ed: You saw on the opening page.

Ed: A little bit down quarter over quarter, but certainly in line to hit our target of 90% or greater of net income.

Bill Sperry: Efficiency Gains from our Compete Collectively initiatives, and some price cost productivity headwinds, a little bit less impactful than utility as they have a higher FIFO mix, but nonetheless a drag from that in the electoral sector.

Speaker Change: An active level of investment.

Ed: On the free cash flow.

Ed: Youll see on the right. Some comments on modeling considerations that we can talk about as much of that in Q&A as you want but essentially we're anticipating a ramp.

Speaker Change: As well as returns to shareholders.

Speaker Change: You can see in the graph.

Speaker Change: <unk> for the three year period of 25 to 27.

Speaker Change: $3 $5 billion of operating cash flow.

Ed: And.

Bill Sperry: We thought it would be helpful on page 7 to break down the tariff exposure and be clear that we're including in tariff exposure the inflationary pressure on raw materials that those tariffs are influencing, even if they're not direct tariffs.

Ed: That's going to allow us to.

Speaker Change: Burden that with Capex gets to about $3 billion of.

Ed: Get some some growth good growth in the second quarter.

Ed: We wanted to end.

Speaker Change: Our free cash flow with dividends and not anti dilutive share repurchases, we get to about $2 billion of cash generation.

Ed: Obviously guidance is around 20.

Ed: Page nine with some comments that maybe extend beyond 25% to 26 and beyond.

Speaker Change: That excludes and ignores the borrowing capacity inherent in the balance sheet.

Ed: I wanted to talk about the balance sheet, which we think is in great shape.

Bill Sperry: And we're hoping that that page 7 helps shine the light here. So you see, as Gerben had mentioned, a U.S.-centric company, but with a global supply chain, Mexico being about mid-teens of mix, China amid single digits, and the rest of the world less than five.

Speaker Change: Which would more than double that number.

Ed: It's very poised to support an active level of investment.

Speaker Change: And our bias is to deploy that into acquisitions, we think acquisitions give us the best way to improve the depth and breadth of our product positioning continue to deepen our importance to our customers add critical technologies as well as.

Ed: As well as returns to shareholders.

Ed: You can see in the graph.

Ed: Depicting for the three year period of 25 to 27.

Ed: Our $3 5 billion of operating cash flow.

Ed: Burden that with Capex gets to about $3 billion of.

Speaker Change: Provide very attractive rates of return on capital.

Bill Sperry: We find it most useful to separate the effects into two different buckets and the first category on the left. is really the effects in the first quarter from tariffs that were implemented in February and March. But also you see, we're including higher raw material costs. So even if we're not paying tariff on student-owned aluminum, those commodities have experienced inflation. and the way we calculate this $135 million impact on 2025 from a cost perspective, about half of that is these just these raw material costs and the balance being tariffs.

But we also have flexibility on the share repurchase side.

Ed: Free cash flow with.

Ed: With dividends and not anti dilutive share repurchases, we get to about $2 billion of cash generation.

Speaker Change: Just to remind everybody our authorization on that side had been increased earlier this year.

Ed: That excludes and ignores the borrowing capacity inherent in the balance sheet, which would more than double that number.

Speaker Change: Order of magnitude of $600 million of availability.

Speaker Change: We did buy $125 million worth of shares in Q1, we believe at attractive valuations and certainly the share repurchase lever is available to us as you can see the balance sheet and capital deployment here.

Ed: And so our bias is to deploy that into acquisitions, we think acquisitions give us the best way to improve the depth and breadth of our product positioning.

Ed: Continued to deepen our importance to our customers add critical technologies as well as.

Speaker Change: I wanted to comment on lessons left hand side the.

Speaker Change: Certainly the T&D core business is critical both to us achieving our 25 guide, but also to success beyond that so accurately comment on that please great. Thanks, Bill and before we turn the call over to Q&A, Let me provide some more context on T&D trends as.

Ed: Provide very attractive rates of return on capital.

Bill Sperry: and we've got set of initiatives that Gerben gave you a little insight to, leading with price. We've been in communications with our customers with letters. We have enacted those price increase They're effective in mid-April and we've now been taking orders at those new prices and the stick rate gives us confidence. uh on this call even though it's a little early to uh to to let you know that we will neutralize that 135 impact within calendar year 2025.

Ed: But we also have flexibility on the <unk>.

Ed: Share repurchase side.

Ed: And just to remind everybody our authorization side had been increased earlier this year.

Ed: Order of magnitude of $600 million of availability.

Speaker Change: We are beginning to see evidence of acceleration in areas of the portfolio, which face customer inventory normalization throughout 2024.

Ed: We did buy a $125 million for the shares in Q1, we believe at attractive valuations.

Speaker Change: Grid infrastructure orders were up double digits year over year in the first quarter and up solidly first was the fourth quarter and order trends were strong across each of the end markets.

Ed: Certainly the share repurchases lever is available to us as you can see the balance sheet and capital deployment here.

Ed: I wanted to comment on lessons left hand side the.

Speaker Change: More importantly, underlying end market dynamics are strong and forward outlooks for major customers have recently increased.

Ed: Certainly the <unk>.

Ed: <unk> core business is critical both to us achieving our 25 guide, but also to success beyond that so accurately comment on that please great. Thanks, Bill and before we turn the call over to Q&A, Let me provide some more context on <unk> trends.

Bill Sperry: The second column is the reciprocal tariffs that were enacted in April. We too will neutralize these effects using price and productivity levers and those mitigation actions are underway. We've been in contact. with our customers. Those price increases are not yet fully implemented. They're expected to go in later this month. And so we don't know about stick rates as well. And so while we're confident we'll offset, neutralize these, it's not fully clear yet that that will happen within calendar year 25, given the LIFO lag and the fact that we'll be recognizing these costs immediately.

Speaker Change: On average over the past six months multiyear capital plans from a representative group of our top investor owned utility customers.

Speaker Change: <unk> upwards by approximately 10% from prior multi year plans.

Ed: As we are beginning to see evidence of acceleration in areas of the portfolio, which face customer inventory normalization throughout 2020 for grid.

Speaker Change: As we have previously communicated we believe dnb markets are at the early stages of a long term investment cycle underpinned by secular trends and grid monetization and electrification.

Ed: Grid infrastructure orders were up double digits year over year in the first quarter and up solidly first with the fourth quarter and order trends were strong across each of the end markets.

Speaker Change: We are confident that we are emerging from the recent period of customer inventory normalization with leading positions solutions and service levels that will enable hubble to effectively capitalize on this visible long term opportunity.

Ed: More importantly, underlying end market dynamics are strong and forward outlook for our major customers have recently increased.

Speaker Change: And to conclude this morning's prepared remarks, and turning my comments back to all of Hubbell, we are confident in our ability to execute through near term uncertainties and deliver on our financial commitments in 2025, we.

Ed: On average over the past six months multiyear capital plans from a representative group of our top investor owned utility cost Tomorrow Reeves.

Bill Sperry: So you'll see when we get to the Outlook page, we've given you a little bit of a sensitivity. We're targeting to get all of this offset and neutralized within calendar year.

Ed: The revised upwards by approximately 10% from prior multi year plans.

Speaker Change: We are focused as a management team to drive the needed actions to navigate this dynamic environment and we view it as our obligation to manage the short term.

Bill Sperry: But it's possible it takes till the first quarter of next year, and we'll certainly keep you updated as those impacts become a little So our Outlook is on page 8. And you see that we are maintaining a 2025 adjusted EPS Outlook range. And that involves organic growth of 6% to 8%. We believe that the markets are intact. So about half of that, or 3% to 4%, we think is going to come from volume. And the balance of 3% to 4% will be coming from price. and so That price, those price actions. Again, confident that we'll be offsetting that first phase of the first quarter tariffs and inflation on materials, and you can see that illustrated by the red and green bars offsetting each other, getting back to the original range.

Ed: As we have previously communicated we believe dnb markets are at the early stages of a long term investment cycle underpinned by secular trends and grid monetization electrification.

Speaker Change: We have a demonstrated track record over the last several years of executing effectively through a wide range of macroeconomic and inflationary environments and we will continue to do so moving forward.

Ed: We are confident that we are emerging from the recent period of customer inventory normalization with leading positions solutions and service levels that will enable hubble to effectively capitalize on this visible long term opportunity.

Speaker Change: But we're also not losing sight of the long term opportunities ahead of us and we are increasingly confident that our utility and electrical customers will do significantly more business with Hubble over the next several years.

Ed: And to conclude this morning's prepared remarks, and turning my comments back to all of Hubbell, we are confident in our ability to execute through near term uncertainties and deliver on our financial commitments in 2025.

Speaker Change: This confidence is underpinned by our unique leading positions in market supported by visible Mega trends as well as recent customer insights and order trends.

Ed: We are focused as a management team to drive the needed actions to navigate this dynamic environment and we view it as our obligation to manage the short term.

Speaker Change: We anticipate that our attractive long term growth outlook combined towards structural opportunities in our operating model and capital deployment levels.

Ed: We have a demonstrated track record over the last several years of executing effectively through a wide range of macroeconomic and inflationary environments and we will continue to do so moving forward.

Speaker Change: Continue to drive consistent shareholder value creation.

Speaker Change: With that let me turn the call over to Q&A.

Speaker Change: Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone.

Ed: But we're also not losing sight of the long term opportunities ahead of us and we are increasingly confident that our utility and electrical customers will do significantly more business with Hubble over the next several years.

Bill Sperry: The second set of reciprocals, we're targeting neutral, but we wanted to highlight a 50-cent sensitivity just in case the LIFO accounting recognizes a little more cost before the price and we'll be able to update you certainly next quarter on. So the guidance is intact, free cash flow. You saw on the opening page a little bit down, you know, quarter over quarter, but certainly in line to hit our target of 90% or greater of net income. on the free cash flow. You'll see on the right some comments on modeling considerations.

Speaker Change: If your question has been answered or you wish to move yourself from the queue. Please press star one again and we also ask that you limit yourself to one question and one follow up we will pause for a moment, while we compile the Q&A roster.

Ed: This confidence is underpinned by our unique leading positions in markets supported by visible Mega trends as well as recent customer insights and order trends.

Jeffrey Sprague: Our first question comes from Jeffrey Sprague with vertical research your line is open.

Jeffrey Sprague: Hey, Thank you good morning, everyone.

Ed: We anticipate that our attractive long term growth outlook combined toward structural opportunities in our operating model and capital deployment levels, We will continue to drive consistent shareholder value creation.

Jeffrey Sprague: Maybe just to start on the guidance if we could.

Jeffrey Sprague: Coincidentally Your guide range is 50, right and you are talking about this 50 cent.

Jeffrey Sprague: Kind of sensitivity just to be totally crystal clear.

Ed: With that let me turn the call over to the Q&A.

Yeah.

Jeffrey Sprague: You're suggesting a negative outcome here relative to your plan is a year that looks like $16 85 to $17 35.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone.

Question has been answered you were seeing with yourself from the queue. Please press star one again and we also ask that you limit yourself to one question and one follow up we will pause for a moment, while we can follow Q&A roster.

Bill Sperry: talk about as much of that Q&A as you want. But essentially, we're anticipating a ramp and that's going to allow us to get some some growth, good growth in the second.

Jeffrey Sprague: 50, such top and bottom.

Jeffrey Sprague: Yes, I think Thats correct Jeff.

Speaker Change: Okay.

Jeffrey Sprague: Okay and then.

Speaker Change: Our first question comes from Jeffrey Sprague with vertical research your line is open.

Just just on Q2 bill be really great. If you could give us some <unk>.

Jeffrey Sprague: Hey, Thank you good morning, everyone.

Bill Sperry: We wanted to end, that's obviously guidance is around 25, we wanted to end on page nine with some comments that maybe extend beyond 25 into 26 and beyond and I wanted to talk about the balance sheet, which we think is in great shape, it's very poised to support an active level of investment, as well as returns to shareholders, you can see in the period of 25 to 27, about three and a half billion dollars of operating cash flow. burdened that with CapEx, gets to about 3 billion of free cash flow. With dividends and not anti-dilutive share repurchases, we get to about 2 billion of cash generation.

Jeffrey Sprague: Additional help here, obviously, you don't guide quarters, maybe this is the exception to the rule this quarter with all this LIFO hit likelihood would be coming through right in your price actions delaying so.

Jeffrey Sprague: Maybe just to start on guidance, so if we could.

Speaker Change: Coincidentally Your guide range is 50 cents right and you were talking about this 50 cent.

Speaker Change: What kind of sensitivity just to be totally crystal clear.

Jeffrey Sprague: You told us the topline will be strong seasonal lift.

Speaker Change: You're suggesting a negative outcome here relative to your plan is a year that looks like 16, 85% to $17 35.

Jeffrey Sprague: But just help us think about really what's going to happen with the margins and sort of the cost mitigation in the quarter.

Jeffrey Sprague: Yes, so without giving guidance that you think we can give you some.

Speaker Change: 50, such top and bottom.

Jeffrey Sprague: Insights that we have Jeff that hopefully would be helpful. So.

Speaker Change: Yes, I think Thats correct Jeff.

Speaker Change: Okay and then.

Jeffrey Sprague: On the topline typical seasonal.

Speaker Change: Just just on Q2 bill be really great. If you could give us some.

Jeffrey Sprague: <unk>.

Jeffrey Sprague: Sequential.

Jeffrey Sprague: It would be in the high single digits.

Speaker Change: Additional help here, obviously, you don't guide quarters, maybe this is the exception to the rule this quarter with all of the lifeboat is likely to be coming through right in your price actions delaying so.

Jeffrey Sprague: And <unk>.

Jeffrey Sprague: Certainly we will have some price being pulled in there and so I think thinking of getting sales growth year over year.

Bill Sperry: That excludes and ignores the borrowing capacity inherent in the balance sheet. would more than double that number.

Speaker Change: You told us the top line will be strongest seasonal lift.

Jeffrey Sprague: That mid single digit range is certainly a valid X.

Speaker Change: Just help us think about really what's going to happen with the margins and sort of the cost of litigation in the quarter.

Bill Sperry: And our bias is to deploy that into acquisitions. We think acquisitions give us the best way to improve the depth and breadth of our product positioning, continue to deepen our importance to our customers, add critical technologies, as well as provide very attractive rates of return on cap. But we also have flexibility on the share repurchase side. And just to remind everybody, our authorization on that side had been increased earlier this year, order a magnitude of $600 million of availability. We did buy $125 million for the shares in Q1, we believe at attractive valuation. Certainly the share repurchase lever is available to us as you can see the balance sheet and cap.

Jeffrey Sprague: Expectations.

Jeffrey Sprague: I think to your point on the LIFO lag.

Speaker Change: Yeah, so without giving guidance, but do you think we can give you some.

Jeffrey Sprague:

Jeffrey Sprague: We're anticipating an order of magnitude.

Speaker Change: Insights that we have Jeff that hopefully would be helpful. So.

Jeffrey Sprague: Of Twentyish million.

Speaker Change: On the topline typical seasonal.

Jeffrey Sprague: Again, that's going into.

Jeffrey Sprague: Our recovery bucket in the second half, but the timing of that we would have $10 million of that in the first quarter and $20 million.

Speaker Change: <unk>.

Speaker Change: Sequential.

Speaker Change: It would be in the high single digits.

Speaker Change: And.

Speaker Change: Certainly we will have.

Jeff: And the second Jeff So.

Speaker Change: Some price being pulled in there.

Jeffrey Sprague: I think those are the kind of primary primary drivers of the quarter.

Speaker Change: So I think thinking of getting sales growth year over year.

Speaker Change: And Jeff if I may make a comment back to your first question I think.

Speaker Change: In that mid single digit range is certainly a valid expectation.

Jeffrey Sprague: You are correct too.

Speaker Change: Interpret the both sides of the guidance to be down.

Speaker Change: I think to your point on the LIFO lag.

Speaker Change: 50, <unk> I would say, though that this at this point is merely a sensitivity analysis rather than than a guide and the actions that we have in place are to neutralize this and theres a lot of uncertainty still even on the tariffs right. There are a lot of discussions about it is there is going to be pulled back.

Speaker Change: Uh huh.

Speaker Change: We're anticipating an order of magnitude.

Gerben Bakker: I wanted Gerben to comment on the left hand side, certainly the T&D core business is critical both to us achieving our 25 guide but also to success beyond that, so ask Gerben to comment on that. Great, thanks, Bill. And before we turn the call over to Q&A, let me provide some more context on T&D trends, as we are beginning to see evidence of acceleration in areas of the portfolio which face customer inventory normalization throughout 2024. Grid infrastructure orders were up double digits year-over-year in the first quarter and up solidly versus the fourth quarter. And order trends were strong across each of the end markets.

Speaker Change: Twentyish million.

Speaker Change: Again, that's going into.

Speaker Change: Our recovery bucket in the second half, but timing of that.

Speaker Change: We would have $10 million of that in the first quarter and $20 million in the second Jeff So.

Speaker Change: Back.

Speaker Change: We're starting to action. We're early in this action in the market I would say in announcing that we're going to go but a lot can change here and this is why we wanted to merely provide.

Speaker Change: I think those are the.

Speaker Change: The kind of primary primary drivers.

Jeffrey Sprague: And Jeff if I may make a comment back to your first question I think.

Speaker Change: Some sensitivity around that that will continue to update you on rather than this this should be assumed in the guide at this point.

Speaker Change: The correct too.

Speaker Change: <unk>.

Speaker Change: Both sides of the.

Speaker Change: Great I appreciate that and then just a follow up.

Speaker Change: Guidance to be down.

Speaker Change: 50, <unk> I would say, though that this at this point is merely a sensitivity analysis rather than than a guide.

Speaker Change: One how youre thinking about utilities.

Speaker Change: Would you expect.

Speaker Change: You talked about the budgets right that budgets will be what will ultimately be but.

Gerben Bakker: More importantly, underlying end market dynamics are strong and forward outlooks for major customers have recently increased. On average, over the past six months, multi-year capital plans from a representative group of our top investor-owned utility customers have been revised upwards by approximately 10% from prior multi-year plans. As we have previously communicated, we believe T&D markets are at the early stages of a long-term investment cycle underpinned by secular trends in grid modernization and electrification. We are confident that we are merging from the recent period of customer inventory normalization with leading positions, solutions, and service levels that will enable Hubbell to effectively capitalize on this visible long-term opportunity.

Speaker Change: The actions that we have in place are to neutralize space and Theres a lot of uncertainty still even on the tariffs.

Speaker Change: Do you expect just a shift within their budgets between price and volume or.

Speaker Change: Lot of discussions about our risk.

Speaker Change: There is going to be pulled back.

Speaker Change: Are they.

We're starting to action. We're early in this action in the market I would say in announcing that we're going to go but a lot can change here and this is why we wanted to merely provide.

Speaker Change: Determined volumetric Lee to get.

Speaker Change: Certain things done.

Speaker Change: That would suggest maybe there's some upside here actually.

Speaker Change: They need the volume and then we'll have to deal with the price because it is what it is.

Speaker Change: Some sensitivity around that that will continue to update you on rather than this this should be assumed in the guide at this point.

Speaker Change: Yes, and it's probably a little of both Jeff because thats. Indeed attention that you have right. If you have budgets. If capex budgets are you limited by the spend and then youre going to just buy less to do with that I would say on the one hand, there is pressure to do to work both on the need for hardening load growth to support.

Speaker Change: Great I appreciate that and then.

Speaker Change: Just a follow up.

Speaker Change: One how youre thinking about utilities.

Speaker Change: Would you expect.

Speaker Change: You talked about the budgets it budgets will be what they will ultimately be but.

Speaker Change: Do you expect just been a shift in their budgets between.

Speaker Change: So I think that's what's potentially due at that price or higher you have to spend more to still get the same work done, but I'm sure there'll be some.

Gerben Bakker: And to conclude this morning's prepared remarks, and turning my comments back to all of Hubbell, we are confident in our ability to execute through near-term uncertainties and deliver on our financial commitments in 2025. We are focused as a management team to drive the needed actions to navigate this dynamic environment, and we view it as our obligation to manage the shortage. We have a demonstrated track record over the last several years of executing effectively through a wide range of macroeconomic and inflationary environments, and we will continue to do so moving forward. But we are also not losing sight of the long-term opportunities ahead of us.

Speaker Change: And volume or.

Speaker Change: Are they.

Speaker Change: Determined volumetric pleased to get.

Speaker Change: The <unk> the other thing that that utility customers because they can shift work between tap.

Speaker Change: Things done.

Speaker Change: That would suggest maybe.

Speaker Change: There is some upside here actually.

Speaker Change: Capex in OEM, they can focus on grid hardening versus expansion, so I would say.

Speaker Change: They need the volume and then we'll have to deal with the price because it is what it is.

Speaker Change: Yes, and it's probably a little of both Jeff.

Speaker Change:

Speaker Change: It's really hard to call truthfully, but but but we feel good that utilities are spending more budgets are going up.

Speaker Change: Because thats indeed attention that you have right. If you have budgets. If capex budgets are you limited by their spend and then youre going to just buy less to do with I would say on the one hand, there is pressure to do to work both on the need for hardening.

Speaker Change: And that's just good for us right and could it be better for us perhaps.

Speaker Change: Load growth to support.

Speaker Change: But we feel pretty good about utility, it's resilient and even in a.

Gerben Bakker: And we are increasingly confident that our utility and electrical customers will do significantly more business with Hubbell over the next several years. This confidence is underpinned by our unique leading positions in market supported by visible megatrends, as well as recent customer insights and orders. We anticipate that our attractive long-term growth outlook combined with structural opportunities in our operating model and capital deployment levels will continue to drive consistent shareholder value growth.

Speaker Change: So I think thats whats attention to it the price are higher you have to spend more to still get the same work done, but I'm sure there'll be some.

Speaker Change: More challenged macroeconomic environment.

Speaker Change: Environment.

Speaker Change: History, we have proven the utility of these tend to be more resilient.

Speaker Change: This Asia that the other thing that that you feel the customer because they could shift work between.

Speaker Change: Great. Thank you I'll leave it there.

Speaker Change: For our next question.

Speaker Change: Capex in OEM.

Speaker Change: Okay.

Speaker Change: <unk> focus on grid hardening versus expansion, so I would say.

Speaker Change: Our next question comes from drove Tusa with Jpmorgan. Your line is open.

Speaker Change:

Drew Tusa: Hi, good morning.

Speaker Change: It's really hard to call truthfully.

Speaker Change: Good morning, Sandeep, So I think I've got a problem with my auto fill on these registration. This morning, I got several different names called out.

Speaker Change: We feel good that utilities are spending more budgets are going up.

Operator: With that, let me turn the call over to Q&A. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered, you wish to move yourself from the queue, please press star 11 again. And we also ask that you limit yourself to one question and one follow up. We'll pause for a moment while we compile our Q&A roster.

Speaker Change: And that's <unk>.

Drew Tusa: D.

Speaker Change: Just good for us right and could it be better for us.

Drew Tusa: The pricing.

Drew Tusa: In QQ, how do you expect that to kind of feather into <unk> on the way to it being half for the year on an organic basis.

Speaker Change: Haps.

Speaker Change: But we feel pretty good about the utility it's resilient even in a.

Speaker Change: More challenged macroeconomic.

Drew Tusa: Yeah.

Speaker Change: Environment.

Drew Tusa: Yes, I think what we're expecting nice sequential price realization based on the actions we implemented I think it'll probably come a little bit quicker in electrical just given there is a.

History has proven that the utilities tend to be more resilient.

Speaker Change: Great. Thank you I'll leave it there.

Jeffrey Sprague: Our first question comes from Jeffrey Sprague with Vertical Research, your line is open. Hey, thank you. Good morning, everyone.

Speaker Change: For our next question.

Drew Tusa: Backlog, there and it's a little bit more book and ship. So I think youll see a couple of points of incremental contribution from <unk> on that.

Speaker Change: Our next question comes from Joel Tusa with Jpmorgan. Your line is open.

Jeffrey Sprague: Maybe just to start on on guidance, if we could, you know, coincidentally, your guide range is 50 cents, right? And you're talking about this 50 cent kind of sensitivity, just to be totally crystal clear. You're suggesting, you know, a negative outcome here relative to your plan is a year that looks like 1685 to 1730. 50 cents on the top and bottom. Yeah, I think that's correct, Jeff. Okay.

Speaker Change: And then I assume with your commentary around the sequential increase that you are.

Speaker Change: Yeah.

Joel Tusa: Hi, good morning.

Speaker Change: Good morning.

Drew Tusa: Seeing a pretty good April.

Speaker Change: So I think I've got from would like my auto fill on these registration. This morning, several different names called out.

Drew Tusa: Any signs of pre buys or pull forwards.

Speaker Change: D.

The pricing.

Drew Tusa: You guys have seen in your shorter cycle businesses.

Speaker Change: In <unk>, how do you expect that to kind of better into <unk> on the way to it being half for the year on an organic basis.

Speaker Change: Yes, So I think it's a good question the when we talk to our customers meaning channel customers.

Speaker Change: Yes, I think what we're expecting nice sequential price realization based on the actions we implemented I think it will probably come a little bit quicker in electrical just given there is a.

Speaker Change: Everybody has got anecdotes, where its happened here or there, but no one sees it as a trend when we talk to end customers. They tell us they're not doing it.

Jeffrey Sprague: And then.

Bill Sperry: Just on Q2, Bill, it'd be really great if you could give us some additional help here. Obviously, you don't guide quarters. Maybe this is the exception to the rule this quarter, with all this LIFO hit likely to be coming through, right, and your price action's delaying. So you told us the top line will be strong, a seasonal lift. But, you know, just help us think about really what's going to happen with the margins and sort of the cost mitigation in the quarter.

Speaker Change: Backlog, there and it's a little bit more book and ship. So I think youll see a couple of points of incremental contribution I'm going to give it to you on that.

Speaker Change: When we start slicing and dicing skewed data.

Speaker Change: And then I assume with your commentary around the sequential increase that you are.

Speaker Change: You see some volatility so I think Steve it would be logical to assume there has to be some happening, but I wouldn't say, we see evidence that it is a trend or affecting the trend.

Speaker Change: Seeing a pretty good April.

Speaker Change: Any signs of.

Speaker Change: Pre buys or pull forwards.

Speaker Change: You guys have seen in Europe shorter cycle businesses.

So that's but.

Speaker Change: Yes, So I think it's a good question the when.

Speaker Change: But logic would say there has to be some some people doing it.

Speaker Change: When we talk to our customers, meaning channel customers.

Bill Sperry: So without giving guidance, I do think we can give you some insights that we have, Jeff, that hopefully would be helpful. So, you know, on the top line, a typical seasonal Sequential, you know, would be in the high single digits. and certainly we'll have some price being pulled in there. And so, I think thinking of getting sales growth year over year, you know, in that mid-single digits range is certainly a valid, you know, expectation. I think, to your point on the LIFO lag, We're anticipating an order of magnitude of 20-ish million. Again, that's going into a recovery bucket in the second half, but the timing of that, we would have 10 million of that in the first quarter and 20 million in the second, Jeff.

Jeffrey Sprague: And then just one last thing back to Jeff's point, so basically what youre doing with the sensitivity is just saying.

Speaker Change: Everybody's got anecdotes, where its happened here or there, but no one sees it as a trend when we talk.

Jeffrey Sprague: Youre just identifying that the difference between the high and the low end of the ranges is the tariff dynamic.

Speaker Change: To end customers, they tell us they're not doing it.

Jeffrey Sprague: Is that is that basically what you're saying.

Jeffrey Sprague: No we're trying to say that the second the reciprocal tariffs.

Speaker Change: When we start slicing and dicing SKU data.

Jeffrey Sprague: No, we're going to offset and neutralize. The question is for guidance can we get all of it into 2025, and we think we can.

Speaker Change: You see some volatility so I think Steve it would be logical to assume there has to be some happening.

Speaker Change: But I wouldn't say, we see evidence that it is a trend or affecting the.

Jeffrey Sprague: So we are describing that as a target.

Jeffrey Sprague: We just have no. We just thought it was responsible to like to say that with the LIFO lag there just could be a sensitivity but were targeting to not have it.

Speaker Change: The trends.

Speaker Change: So that's but logic would say that has to be some.

Speaker Change: Some people doing it.

Speaker Change: And just one last thing back to Jeff's point, so basically what youre doing with the sensitivity is just saying.

Jeffrey Sprague: Just wanted to introduce that to you that's all.

Speaker Change: But you just identifying that the difference in the high end or low end of the ranges is the tariff dynamic.

Jeffrey Sprague: So the range reflects fundamentals and if the fundamentals are weaker than they are at the low end of the range and you can't cover this tariff than downside to the low end of the range effectively.

Speaker Change: Like is that is that basically what you're saying.

Speaker Change: No we're trying to say.

Speaker Change: The second the reciprocal tariffs.

Jeffrey Sprague: Yes, those two thing if those both of those happened you'd be below yes, yes, okay, great. Thanks, a lot guys.

Speaker Change: We know, we're going to offset and neutralize the.

Speaker Change: The question is for guidance can we get all of it into 2025, and we think we can.

Bill Sperry: So I think those are the kind of primary drivers.

Speaker Change: One moment for our next question.

Jeffrey Sprague: Yeah.

Speaker Change: Our next question comes from Nigel Coe with Wolfe Research Your line is open.

Speaker Change: So we are describing that.

Gerben Bakker: And Jeff, if I may make a comment back to your first question, I think you're correct to interpret the both sides of the guidance to be down 50 cents. I would say, though, that this at this point is merely a sensitivity analysis rather than than a guide. And the actions that we have in place are to neutralize this. And there's a lot of uncertainty still, even on the terrace. Right. There's a lot of discussions about are these tariffs going to be pulled back? We're starting to action. We're early in this action in the market, I would say, in announcing that we're going to go.

Speaker Change: Target.

Speaker Change: We just have no. We just thought it was responsible to like to say that with the LIFO lagged.

Thanks, guys.

Jeffrey Sprague: Just wanted to maybe hone in on the.

Jeffrey Sprague: The second quarter.

Speaker Change: B, a sensitivity, but we're targeting to not have it.

Speaker Change: If we're taking the $20 million of PCP headwinds in <unk> does that suggest that EPS is sort of flat to slightly down year over year Bill.

Speaker Change: We just wanted to introduce that to you, but that's all.

Speaker Change: So the range reflects fundamentals and if the fundamentals are weaker than they are at the low end of the range and you can't cover this tariff than downside to the low end of the range effectively.

Jeffrey Sprague: I think it would be.

Jeffrey Sprague: All of that played out you'd be in a comparable range I think yes.

Speaker Change: So Friday silver Olivia Okay.

Speaker Change: Yes, those two thing if those both of those happened, yes, yes, okay, great. Thanks, a lot guys.

And then how do you think about price elasticity, and maybe just broaden that out into kind of the feedback from the customers on.

Speaker Change: Yeah.

Speaker Change: For our next question.

Speaker Change: The price increases announced so far.

Gerben Bakker: But a lot can change here.

Speaker Change: Yeah.

Gerben Bakker: And this is why we wanted to merely provide. some sensitivity around it that we'll continue to update you on rather than this should be assumed in the guide at this point.

Speaker Change: Some some companies.

Speaker Change: Our next question comes from Nigel Coe with Wolfe Research Your line is open.

Speaker Change: <unk> I don't think you all but just curious what the reaction has been and then when you think about the <unk>.

Nigel Coe: Thanks, guys.

Speaker Change: So just wanted to maybe hone in on on the second quarter.

Speaker Change: Mixed between surcharges versus price increases.

Gerben Bakker: Great, I appreciate that.

Gerben Bakker: And then Gerben, just to follow up, you know, on how you're thinking about utilities. Would you expect, you know, you know, you talked about their budgets, right? Their budgets will be what they'll ultimately be. But do you expect just then a shift within their budgets between, you know, price and volume or, you know, are they, you know, determined volumetrically to get, you know, certain things done, you know, that would suggest maybe, you know, there's there's some upside here, actually, as they need the volume and then we'll have to deal with the price, because it is what it is.

Speaker Change: I think historically, you've gone with price increases, but any any sort of marathon surcharges just given the volatility in these tariffs.

Nigel Coe: If we've taken the $3 million of PTP headwinds.

Nigel Coe: <unk> does that suggest that EPS is sort of flat to slightly down year over year Bill.

Speaker Change: Yes, maybe I'll start billing the fill in I would say for the first round.

Bill: I think it would be like if all of that played out you'd be in a comparable range I think yes.

Speaker Change: <unk> this has been much more inflationary across the broader portfolio.

So Friday silver with you okay.

Bill: And then how do you think about price elasticity and I, maybe just broaden that out into kind of the feedback from customers on it on the price increases announced so far.

Speaker Change: We indicated more than half of it is actually a commodity steel copper aluminum, which is broadly used.

Speaker Change: And.

Speaker Change: Provide more broad implemented more broad pricing actions and the early evidence of that and it's early.

Bill: Some some companies or infection or 50, I don't think you all but just curious kind of what the reaction has been and then when you think about the mix between surcharge and the price increases.

Speaker Change: A couple of weeks now.

Gerben Bakker: Yeah, yeah. And it's probably a little of both, Jeff, because that that's indeed the tension that you have, right? If you have budgets, you have CAFEC budgets, are you limited by the spend, and then you're going to just buy less to do it? I would say, on the one hand, there's pressure to do the work, both on the need for hardening, load growth to support. So I think that puts the tension to it, the price are higher, you have to spend more to still get the same work done. But decisions made. The other thing that utility customers do, they can shift work between CAPEX and OEM, they can focus on, you know, grid hardening versus expansion.

Speaker Change: Looking at the order rate is that that stick and pretty good so I would say low elasticity in that.

Bill: I think historically, you've gone with price increases, but any any sort of marathon.

Speaker Change: The second round of tariffs, which is.

Bill: They're charging just given the volatility in these tariffs.

Speaker Change: All I would say primarily China driven.

Bill: Yes, maybe I'll start building the fill in I would say for the first round.

Speaker Change: That then becomes more.

Speaker Change: Targeted to certain product lines and it tastes and certain product lines, we're probably slightly disadvantaged in other product lines were slightly advantaged.

Speaker Change: Eric This has been much more inflationary across the broader portfolio.

Speaker Change: We indicated more than half of it is actually a commodity steel copper aluminum, which is a broadly used.

Speaker Change: But there too.

Speaker Change: We're not only taking price increases we're doing a lot of work negotiating with suppliers realigning supply change where.

Speaker Change: And.

Speaker Change: <unk> broad implemented more broad pricing actions and the early evidence of that and it's early.

Speaker Change: Where we can.

Gerben Bakker: So I would say... You know, it's really hard to call truthfully, but we feel good that utilities are spending more, budgets are going up. And that's just good for us, right? And could it be better for us? Or perhaps, but we feel pretty good about the utility. It's resilient. And even in a more challenged macroeconomic environment, history will have proven that utilities tend to be more resilient.

Speaker Change: A couple of weeks now.

Speaker Change: Other cost actions to offset and then.

Speaker Change: Looking at the order rate that that's that can pretty good so I would say.

Speaker Change: Of course, the magnitude of these tariffs pricing as well so.

Speaker Change: Low elasticity.

Speaker Change: <unk>.

Speaker Change: The second round of tariffs, which is.

Speaker Change: We're still planning for this and we expect.

Speaker Change: All I would say primarily China driven.

To get the price, but I'd say this one.

Speaker Change: That then becomes more.

Speaker Change: Is a little more targeted to certain product line and so.

Speaker Change: Targeted to certain product lines and I'd say, it's in certain product lines, we're probably slightly disadvantaged in other product lines were slightly advantaged.

Speaker Change: Could there be some stiff.

Speaker Change: <unk> and certain product line that there could be and we're thinking through that I would say, but I'd say overall, we're not disadvantaged.

Speaker Change: But there too.

Speaker Change: In the broad picture to throughout the year. So we believe so so I would answer Nigel that we did factor in price elasticity into this this guide.

Speaker Change: And we're not only taking price increases we're doing a lot of work and negotiating with suppliers realigning supply change where.

Jeffrey Sprague: Great, thank you. I'll leave it there.

Charles Tusa: Moment for our next Our next question comes from Charles Tusa with J.P. Morgan. Your line is open. Hey, good morning. Morning, Steve. Sorry. Sorry, I think I've got a problem with my auto-fill on these registrations this morning. I got several different names called out.

Speaker Change: Where we can.

No other cost actions to offset and then.

Speaker Change: And as <unk> said, we're not expecting a lot in the first bucket.

Speaker Change: Of course the Mag.

Speaker Change: <unk> of these tariffs.

Speaker Change: Second bucket does contemplate some and that's what's embedded in driving some of the sensitivity as far as your surcharges point.

Speaker Change: Rising as well so.

Speaker Change: We're still planning for this and we expect.

Speaker Change: I think youre right to point out that we have stayed away from that in the past and rely on price increases.

Speaker Change: To get the price, but I'd say this one is a little more targeted to certain product line and so.

Bill Sperry: The pricing in 2Q, how do you expect that to kind of feather into 2Q on the way to it being half for the year on an organic basis? Yeah, I think we're expecting nice sequential price realization based on the actions we implemented. I think it'll probably come a little bit quicker and electrical just given there's a shorter backlog there and it's a little bit more book and ship. So I think you'll see a couple points of incremental contribution from 1Q to 2Q on that.

Speaker Change: One of the reasons, we liked and I think we'd stick with that and a good example would be.

Speaker Change: Because it would be somewhat less.

Speaker Change: <unk> and sort of a product line that there could be and we're thinking through that I'd say, but I'd say overall, we're not disadvantaged.

Speaker Change: We are facing higher steel and aluminum costs, even though we're not paying tariffs.

Speaker Change: In the broad picture too quickly.

Speaker Change: And that's generally but so in a surcharge.

Nigel Coe: We believe so so I would answer Nigel.

Nigel Coe: Did factor in price elasticity into this guide.

Speaker Change: There is not a tariff there so you wouldn't get it versus can you just price for that.

Nigel Coe: And as <unk> said, we're not expecting a lot in the first bucket.

Speaker Change: Things like freight inflation wage inflation, you get you can just pick up other other drivers and so.

Bill Sperry: And then I assume with your commentary around the sequential increase that you're seeing a pretty good April, any signs of pre-buys or pull forwards? that you guys have seen in your, you know, shorter cycle businesses? Yeah, so I think it's a good question. The when we talk to our customers, meaning channel customers Everybody's got anecdotes where it's happened here or there, but no one sees it as a trend. When we talk to end customers, they tell us they're not doing it. when we, you know, start slicing and dicing skew data. You know, you see some volatility.

Nigel Coe: Second bucket does contemplate some and that's what's embedded in driving some of the sensitivity that's fighters charging point.

Speaker Change: I think we've thought of it more in the price increase then in the surcharge.

Nigel Coe: Youre right to point out that we have.

Speaker Change: Okay charged capital.

Nigel Coe: Stayed away from that in the past and rely on price increases.

Just one quick follow up to that.

Nigel Coe: One of the reasons, we liked and I think we'd stick with that and a good example would be.

Given you mentioned you don't think Youre disadvantaged.

Speaker Change: I would've thought the other way around actually so I'm, just curious, especially in electrical.

Nigel Coe: We are facing higher steel and aluminum costs, even though we're not paying tariffs.

Speaker Change: Skus I would think that you're still seeing.

And that's generally but so in a surcharge.

Speaker Change: A lot of imported products.

Speaker Change: Some of the more I don't know lower valley Commoditized Skus. So I'm just curious if you see opportunity to gain share from some of that and pull it apart.

Nigel Coe: Theres not a tariff there so you wouldn't get it versus can you just price for that.

Nigel Coe: Things like freight inflation wage inflation, you get you can just pick up.

Speaker Change: Yeah, I'd say broadly probably not.

Bill Sperry: So I think, Steve, it would be logical to assume there has to be some happening, but I wouldn't say we see evidence that it's a trend or affecting the trend. So that's, but logic would say there has to be some, you know, some.

Nigel Coe: Are there other drivers and so.

Speaker Change: <unk>.

Speaker Change: Certainly we noted some product lines, where we are.

Nigel Coe: I think we've we've thought of it more in the price increase and the surcharge.

Speaker Change: And that's also something we're considering in this whole we're thinking around how to mitigate this not only by the specific product line, but broadly by by action across the portfolio, but I Wouldnt say broadly.

Nigel Coe: Okay charged capital.

Nigel Coe: Just one quick follow up to that.

unknown: Kevin You mentioned, you don't think you're.

Speaker Change: I would've thought the other way around actually so I'm, just curious, especially in electrical.

Bill Sperry: And just one last thing back to Jeff's point. So basically, what you're doing with the sensitivity is just saying But you're just identifying that the difference between the high and the low end of the range is the tariff dynamic. Like, is that is that basically what you're saying? No, we're trying to say that the second the reciprocal tariffs, we know we're going to offset and neutralize. The question is for guidance, can we get all of it into 2025, and we think we can. So we're describing that as target. We just have no, we just thought it was responsible to say that with the lipo lag, there just could be a sensitivity, but we're targeting to not have it.

Speaker Change: As a company I would say we are relatively in line with what our exposure is too.

Speaker Change: Skus I would think you're still seeing.

Speaker Change: Two.

Speaker Change: A lot of imported products and.

Speaker Change: Offshore supply chains, but there's pockets so.

Speaker Change: Some of the more I don't know lower valleys, Florida.

Speaker Change: Very interesting.

Speaker Change: Skus. So I'm just curious if you see opportunity to gain share from some of that and put our parks.

Speaker Change: Okay. Thanks, Kevin.

Speaker Change: Yeah.

One moment for our next question.

Speaker Change: Yeah, I'd say broadly.

Speaker Change: Our next question comes from Chris Snyder with Morgan Stanley. Your line is open.

Raleigh not.

Speaker Change: Certainly we noted some product lines, where we are.

Speaker Change: Thank you I just wanted to ask about the price cost dynamics. So it seems like in the first half of the year the company will be about $30 million price cost negative.

Speaker Change: And that's also something we're considering in this whole.

Speaker Change: Thinking around.

Speaker Change: How to mitigate as not only by the specific product line, but broadly by by action across the portfolio.

Speaker Change: And it seems like you guys see a chance to be price cost neutral for the year.

Speaker Change: I Wouldnt say broadly.

Speaker Change: As a company I would say we are relatively in line with what others are.

Bill Sperry: And we just wanted to introduce that. Right, so the range reflects fundamentals, and if the fundamentals are weaker and they're at the lower end of the range, and you can't cover this tariff, then that's downside to the lower end of the range, effectively. Yeah, those two things. If those both of those happen, you'd be below. Yes. Yeah.

Speaker Change: Zero of that 50 sensitivity come through.

Speaker Change: So.

Speaker Change: So is that implying that you guys are actually price cost positive in the back half to offset the negative $30 million in the first half and what would that mean about the exit rates as we kind of think about that into 26. Thank you.

Speaker Change: Do you know.

Speaker Change: Offshore supply chains, but there's there's pockets so.

Speaker Change: Okay.

Speaker Change: Okay. Thanks, Kevin.

Speaker Change: One moment for our next question.

Speaker Change: Yes.

Chris Snyder: Yes, Chris you've got that correct, we're anticipating having a.

Bill Sperry: Okay, great. Thanks a lot, guys.

Speaker Change: Our next question comes from Chris Schneider with Morgan Stanley. Your line is open.

Nigel Coe: One moment for our next question. Our next question comes from Nigel Coe with Wolf Research. Thanks, guys. So just wanted to maybe home in on on the second quarter. If we're taking the $20 million of PCP headwinds in 2Q, does that suggest that EPS is sort of flat or slightly down year over year, Bill? I think it would be, if all that played out, you'd be in a comparable range, I think, yeah. So Fradish overall. Yeah, okay.

Speaker Change: Surplus that offsets the deficit.

Speaker Change: Thank you I just wanted to ask about the price cost dynamics. So it seems like in the first half of the year the company will be about $30 million price cost negative.

Chris Snyder: The second half versus the first.

Speaker Change: Sure.

Speaker Change: As <unk> seen us come through inflationary environments before.

Speaker Change: As the LIFO reporter you tend to have this lag period, where it's in your headwind for a couple of quarters and then I think what you are suggesting is.

Speaker Change:

Speaker Change: And it seems like you guys see a chance to be price cost neutral for the year.

Speaker Change: Zero of that 50 sensitivity come through.

Speaker Change: Get the advantage of a tailwind.

Speaker Change: I mean is that implying that you guys are actually price cost positive in the back half to offset the negative $30 million in the first half and what would that mean about the exit rate. So as we kind of think about that into 26. Thank you.

Speaker Change: As that moderates out and we would agree with that analysis.

Speaker Change: Thank you I appreciate that.

Gerben Bakker: And then how do you think about price elasticity? And maybe just broaden that out into kind of the feedback from the customers on the price increases announced so far. You know, some companies are factoring in elasticity. I don't think you are, but just curious what the reaction has been. And then when you think about, you know, the mix between surcharging versus price increases, I think historically you've gone with price increases, but any, any sort of merit on surcharging, just given the volatility in these tariffs?

Speaker Change: I guess, maybe just on the second point.

Speaker Change: I feel like there is confusion in the market around who you guys are competing against so could you maybe kind of talk about.

Speaker Change: Yes, Chris you've got that correct, we're anticipating having a <unk>.

Speaker Change: Surplus that often offsets the deficit.

Speaker Change: Who are the main competitors, whether it's electric utility T&D I guess, most specifically, but anything else just to call out on just who is the competitive base here.

Speaker Change: The second half versus the first.

Speaker Change: Uh huh.

Speaker Change: As <unk> seen us come through inflationary environments before.

Speaker Change: The reporting it.

Speaker Change: Okay.

Speaker Change: Yes, I would say Chris.

Speaker Change: Yes.

Speaker Change: Korean we're at 10 years, it's a headwind for a couple of quarters and then I think what you're suggesting is you get the advantage of a tailwind.

Speaker Change: In terms of utility T&D.

Speaker Change: The Cooper Division of Eaton is a head to head competitor.

Gerben Bakker: Yeah, maybe I'll start Bill and fill in I would say for the first round of Terra. This has been much more inflationary across the broader portfolio. you indicated more than half of it is actually the commodity steel, copper, aluminum, which is more broadly used. And, you know, we provide more broad, implemented more broad pricing actions and the early evidence of that, and it's early, as in a couple of weeks now, looking at the order rate is that that's sticking pretty good. So I would say, you know, low elasticity in that. The second round of tariffs, which is you know, all primarily, primarily China driven, that then becomes more targeted to certain product lines.

Speaker Change: As that moderates out and we would agree with that analysis.

Speaker Change: Thomas and Betts, which is now inside of ABB as a direct competitor.

Speaker Change: Thank you I appreciate that.

Speaker Change: I guess, maybe just on the second point.

Speaker Change: Those are the big private sorry public company players.

Speaker Change: Sometimes I feel like there is confusion in the market around who you guys are competing against so could you just maybe kind of talk about.

Speaker Change: Company in Chicago called.

Speaker Change: Mcclain power systems.

Speaker Change: Who are the main competitors, whether it's electric utility T&D I guess, most specifically, but anything else just to call out on just who is the competitive base here.

Speaker Change: I'd say those are the main.

Speaker Change: T&D competitors.

Speaker Change: Thank you I appreciate that.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Our next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker Change: Yes, I would say Chris.

Speaker Change: In terms of utility T&D.

Julian Mitchell: Hi, good morning.

Speaker Change: I guess I wanted to.

Speaker Change: Okay.

Speaker Change: Just wanted to push a little bit more on the sort of volume assumption.

Okay.

Speaker Change: Is a head to head competitor.

Speaker Change: Into the organic sales guide for the year.

Speaker Change: Thomas and Betts, which is now inside of ABB as a direct competitor.

Gerben Bakker: And I'd say certain product lines were probably slightly disadvantaged and other product lines were slightly advantaged. But there too, we're, and we're not only taking price increases, we're doing a lot of work negotiating with suppliers realigning supply chains where, where we can, you know, other cost actions to offset. And then, you know, of course, at the magnitude of these tariffs, pricing as well. So, you know, we're still planning for this, and we expect to get the price, but I'd say this one is a little more targeted to certain product line. And so You know, could there be some elasticity in certain product line that there could be?

Speaker Change: So it looks like on slide eight you've got sort of.

Speaker Change: Those are the big private sorry public company players.

Speaker Change: 3% plus.

Speaker Change: Volumes growth dialed in for the year.

Speaker Change: But company in Chicago called.

Speaker Change: And it seems like the first half is sort of guided for flattish volume down a bit Q1 off a bit Q2.

Speaker Change: Mcclain power systems.

Speaker Change: Say those are the main.

Speaker Change: T&D competitors.

Speaker Change: Thank you I appreciate that.

Speaker Change: So it's a pretty strong volume growth in the second half.

Speaker Change: One moment for our next question.

Speaker Change: And so just maybe help us understand that a little bit there is some elasticity aspect that you mentioned already but also easier comps. So maybe help us understand the confidence in that volume acceleration. Please.

Speaker Change: Yeah.

Operator: Our next question comes from Julian Mitchell with Barclays. Your line is open.

Speaker Change: Hi, good morning.

Speaker Change: I guess I wanted to.

Speaker Change: Just wanted to push a little bit more on the sort of volume assumption.

Speaker Change: Dialed into the organic sales guide for the year.

Julian Mitchell: Yes, I think youre pointing out Julian the intersection between kind of sequential and VP why analysis right. So if we start with the sequential.

Speaker Change: So it looks like on slide eight you've got sort of.

Gerben Bakker: And we're thinking through that, I'd say, but I'd say overall, we're not disadvantaged. in the broad picture to our peers we believe. So I would answer, Nigel, that we did factor in price elasticity into this guide. As Gerben said, we're not expecting a lot in the first bucket. Second bucket does contemplate some, and that's what's embedded in driving some of the sensitivity. As far as your surcharging point, I think you're right to point out that we have stayed away from that in the past and relied on price increases.

Speaker Change: 3% plus volumes growth dialed in for the year.

Speaker Change: And look at orders.

Speaker Change: And it seems like the first half is sort of guided for flattish volume down a bit Q1 up a bit Q2.

Speaker Change:

Speaker Change: We think that kind of indicates where the volume will be and when you do it again. So so first of all we agree with your first half analysis that youre talking about and so you've got to get double the three to four basically in the second half.

Speaker Change: So it's a pretty strong volume growth in the second half.

Speaker Change: And so just maybe help us understand that a little bit there is some elasticity aspect that you mentioned already but also easier comps. So maybe help us understand the confidence in that volume acceleration. Please.

It's driven by strong order book.

Supporting strong seasonal ramp.

Speaker Change: And having easier comps allow that sort of.

Gerben Bakker: One of the reasons we like and I think we'd stick with that and a good example would be. We're facing higher steel and aluminum costs, even though we're not paying tariffs. and that's Jim. But so in a surcharge. It's not a tariff there, so you wouldn't get it versus can you just price for that, you know, things like freight inflation, wage inflation, you get, you can just pick up other, other drivers and so. And I think we've we've thought of it more in the price increase than in the surcharge. Okay.

Speaker Change: Yes, I think youre pointing out Julian the intersection between kind of sequential and VP why analysis right. So if we start with the sequential.

Speaker Change: Mid to higher single digit growth rates in the back half.

Mike: That's helpful. Thank you and then just Mike maybe.

Speaker Change: And look at orders.

Speaker Change: Maybe just.

Speaker Change: Yes, maybe to just there are a couple of inflection points that really helped this too right. So the distribution side of T&D.

Speaker Change: We think that kind of indicates where the volume will be and when you do it again. So so first of all we agree with your first half analysis that you're talking about.

Speaker Change: Has returned to growth so them.

Speaker Change: And so you've got to get double the three to four basically in the second half.

Speaker Change: They really start to help.

Speaker Change: And as well the absence.

Speaker Change: It's driven by strong order book.

Speaker Change: I hate to bring it up again, but the telecom and closure declines.

Speaker Change: Porting strong seasonal ramp.

Speaker Change: Uh huh.

Gerben Bakker: And just one quick follow-up there. Gerben, you mentioned you don't think you're disadvantaged. I would have thought the other way around, actually. So I'm just curious, especially in the electrical SKUs, I would think you're still seeing a lot of imported products, some of the more, I don't know, lower value commoditized SKUs. So I'm just curious if you see opportunity to gain share from some of that imported product. Yeah, I'd say broadly, probably not. You know, we certainly we know some product lines where we are. And, you know, that's also something we're considering in this whole, you know, we're thinking around how to mitigate this, not only by the specific product line, but broadly by action across the portfolio.

Speaker Change: Turning from contraction to growth so there's a couple of products in there.

Speaker Change: Having easier comps allow that sort of.

Speaker Change: Mid to higher single digit growth rates in the back half.

Speaker Change: That they are inflicting up that also just help with what feels like a back half loaded.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: That's helpful. Thank you and then just my second one.

Speaker Change: Chi I might be skeptical of that when you just turn it into math.

Speaker Change: Maybe just.

Speaker Change: Yes, maybe to just there are a couple of inflection points that really helped this too right. So the distribution side of T&D.

Speaker Change: You realize that's going to be what happens.

Speaker Change: That's great. Thank you and just a follow up around the adjusted sort of margin outlook. So I think in the sort of prime or initial guide construct for the year. It looks like you had sort of maybe flat to slightly up operating margin dialed into the <unk>.

Speaker Change: Has returned to growth so them.

Speaker Change: They really start to help.

Speaker Change: And as well the absence.

Speaker Change: I hate to bring it up again.

Speaker Change: Calm and closure declines.

Speaker Change: I'd midpoint.

Speaker Change: Turning from contraction to grow so there's a couple of products in there.

Speaker Change: Is it now sort of down call. It on a few tens of basis points for the year kind of similar to the Q1.

Gerben Bakker: But I wouldn't say broadly, as a company, I'd say we're relatively in line with others what our exposure is to, you know, offshore supply chains. But there's pockets of... Okay.

Speaker Change: That they are inflicting up that also helped.

Speaker Change: Help with what feels like a back half loaded.

Speaker Change: <unk> margin progression in any sort of big divergence across the two segments you'd highlight on margins. So so you're right that in the original guide.

Speaker Change: Chi I might be skeptical of that when you just turn it into math.

Speaker Change: <unk>, that's going to be what happens.

Gerben Bakker: Thanks, Kevin. Cheers.

Speaker Change: It was up a little bit.

Speaker Change: That's great. Thank you and just a follow up around the adjusted sort of.

Chris Snyder: One moment for a. Our next question comes from Chris Snyder with Morgan Stanley, your line is open. Thank you. I just wanted to ask about the price-cost dynamics. So it seems like in the first half of the year the company will be about 30 million dollars price cost negative. And it seems like you guys see a chance to be price cost neutral for the year, you know, if zero of that $0.50 sensitivity comes through. So, I mean, is that implying that you guys are actually price cost positive in the back half to offset the negative $30 million in the first half?

Speaker Change: <unk>.

Speaker Change: And what happens when you.

Speaker Change: Margin outlook, so I think in the sort of prime or initial guide construct for the year. It looked like you had sort of maybe flat to slightly up operating margin dialed into the guide midpoint.

Speaker Change: You add price.

Speaker Change: All across in the 3% to 4% range.

Speaker Change: But hold <unk> dollars flat.

Speaker Change: In other words, if all you do is capture.

Speaker Change: Back through price it does it does create a slightly dilutive effect.

Speaker Change: Is it now sort of down call. It I don't know a few tens of basis points for the year kind of similar to the Q1.

Speaker Change: And but the underlying.

Speaker Change: Gross product line profitability is kind of the same so, but I think youre right to point out.

Margin progression.

Any sort of big divergence across the two segments you'd highlight on margins. So so you're right that in the original guide.

Speaker Change: Causes a slight headwind to the op margins when you do that.

Bill Sperry: And what would that mean about the exit rates as we kind of think about that into 26? Thank you. Yeah, Chris, you've got that correct. You know, we're anticipating having a surplus that often offsets the deficit in the second half versus the first. And, you know, as, as you've seen us come through inflationary environments before As the LIFO reporter, you tend to have this lag period where it's in your headwind for a couple of quarters and then I think what you're suggesting You get the advantage of a tailwind as that moderates out and we would agree with that now.

Speaker Change: It was up a little bit.

Speaker Change: Great. Thank you.

Speaker Change: One moment for our next question.

Speaker Change: And what happens when.

Speaker Change: Okay.

Speaker Change: You add price you know across in the 3% to 4% range.

Speaker Change: Our next question comes from Tommy Moll with Stephens. Your line is open.

Tommy Moll: Good morning, and thank you for taking my questions.

Speaker Change: But hold <unk> dollars flat.

Speaker Change: Morning, Tommy.

Speaker Change: I appreciated the insight and commentary on the long range outlook.

Speaker Change: In other words, if all you do is capture.

Speaker Change: <unk> back through price it does it does create a slightly dilutive effect.

Speaker Change: Outlooks for the Big IOU budget.

Speaker Change: And to some extent the message there could it could be characterized as reaffirming what we've all.

Speaker Change: And but the underlying.

Speaker Change: No.

Speaker Change: Most product line profitability is kind of the same so, but I think youre right to point out.

Speaker Change: Kind of known and heard from you for a while but but my question today is whether any.

Speaker Change: Causes a slight headwind to the op margins would you do that.

Speaker Change: Anything has changed or whether you're learning anything so ideas that come to mind would just be.

Chris Snyder: Thank you. I appreciate that.

Chris Snyder: Um, I guess maybe just on a second point, um, sometimes I feel like there's confusion in the market around who you guys are competing against. Um, so could you just maybe kind of talk about, um, you know, who are the main competitors, whether it's, um, you know, electric, uh, utility T and D, um, I guess most specifically, but, but, but anything else, just to call out on just, you know, who, who is the competitive, uh, base here. Yeah, I would say, Chris, in terms of utility T&D, you know, the Cooper division of Eden is a head to head competitor.

Speaker Change: Great. Thank you.

Speaker Change: What are you hearing on the relative priorities across.

Speaker Change: One moment for our next question.

Speaker Change: Submission versus distribution versus generation even.

Okay.

Tommy Moll: Our next question comes from Tommy Moll with Stephens. Your line is open.

Speaker Change: What are you hearing about.

Speaker Change: The step up into the latter part of the decade or we are we pulling forward some of the dollars pushing out some of the dollars I think it's a five year range of Dave.

Tommy Moll: Good morning, and thank you for taking my questions.

Speaker Change: Morning, Tommy.

Speaker Change: I appreciated the insight and commentary on the long range outlook.

Speaker Change: Outlooks for the Big IOU budget.

Speaker Change: So there is some flex there or just anything else that does seem different now whether it's better or worse.

Speaker Change: And to some extent the message there could could be characterized as reaffirming what we've all.

Bill Sperry: Maybe I will start and bill.

Speaker Change: Kind of known and heard from you for a while but but my question today is whether any.

Bill Sperry: Feel free to chime in but I would say, it's definitely encouraging that the budgets are going up and again, what we provided for you was what's been large but they represent a good portion.

Chris Snyder: Thomas and Betts, which is now inside of ABB, is a direct competitor. And those are the big private, sorry, public company players. There's a private company in Chicago called McLean Power Systems. And I would say those are the big players. Thank you. I appreciate it.

Speaker Change: Anything has changed or whether you're learning anything so ideas that come to mind would just be.

Speaker Change: What are you hearing on the relative priorities across transmission versus distribution versus generation even.

Bill Sperry: Further spread geographically.

Bill Sperry: So we believe this is representative of what we're seeing.

Speaker Change: What are you hearing about.

Bill Sperry: Certainly as we've communicated I'd say transmission and substation, particularly strong we continued to see that both with the.

Speaker Change: The step up into the latter part of the decade.

Speaker Change: Are we pulling forward some of the dollars pushing out some of the dollars I think at the five year range you gave.

Bill Sperry: Interconnections that are being made as well as new substations that are supporting.

Julian Mitchell: One moment for our next question.

Speaker Change: So there is some flex there or just anything else that does seem different now whether it's better or worse.

Bill Sperry: Data centers and other low that's.

Julian Mitchell: Our next question comes from Julian Mitchell of Barclays, your line is open. Hi, good morning. I just wanted to, good morning, just wanted to push a little bit more on the sort of volume assumption dialed into the organic sales guide for the year. So it looks like on slide eight, you've got sort of 3% plus volumes growth dialed in for the year. And it seems like the first half is sort of guided for flattish volume, down a bit Q1, up a bit Q2. So it's a pretty strong volume growth in the second half. So just maybe help us understand that a little bit, you know, there is some elasticity aspect that you mentioned already, but also easier comps.

Bill Sperry: Coming up but the distribution is in our view also AC hardening projects.

Speaker Change: Maybe I will start and bill.

Feel free to chime in but I would say, it's definitely encouraging that the budgets are going up and again, what we provided for you was what's been large but they represent a good portion.

Bill Sperry: And then within that step up.

Bill Sperry: Happening as well as far as the timing and what we tend to see with this volume we saw this in transmission spend as well that you see.

Speaker Change: For the spread geographically.

Bill Sperry: A few years, where it shows up and then it kind of flattens and you even see it come down.

Speaker Change: So we believe this is representative of what we're seeing certainly as we've communicated I'd say transmission and substation, particularly strong we continued to see that both with the.

Bill Sperry: Our experience in transmission at least was that as these budgets get revised every few years.

Bill Sperry: That tends to continue to move through the right. So that in essence don't see that decline in transmission actually we started to see this and.

Speaker Change: Interconnections that are being made as well as new substations that are supporting.

Speaker Change: Data centers and other low that's.

Bill Sperry: In 2012 or something it still continued to ramp this long and it really shows the need to invest in this infrastructure. So we're encouraged that it's elevated we're encouraging that they are increasing it.

Speaker Change: Coming up but distribution is just in.

In our view also AC hardening projects within within that step up.

Julian Mitchell: So maybe help us understand the confidence in that volume acceleration, please. Yeah, I think you're pointing out, Julian, the intersection between kind of sequential and VPY analysis, right? So if we start with the sequential and look at orders um We think that kind of indicates where the volume will be and when you do it again. So first of all, we agree with your first half analysis that you're talking about. And so you've got to get, you know, double the three to four basically in the second half. It's driven by strong order books. Reporting, Strong Seasonal Ramp.

Speaker Change: Happening as well as far as the <unk>.

Bill Sperry: Other thing I would say, whether they shift that a little bit between one and the other our portfolio broadly supports the.

Speaker Change: And what we tend to see with this brand and we saw this in transmission spend as well that you see.

Speaker Change: A few years, where it shows up and then it kind of flattens and you even see it come down and are experiencing transmission at least was that as these budgets get revised every few years that tends to if they had to.

Bill Sperry: The spend wherever they may take it so I think we're good well positioned either way.

Speaker Change: Thank you Gordon and Bill I wanted to talk about the M&A environment here, you reminded us of the.

Speaker Change: I move to the right so that in essence.

Bill Sperry: <unk>.

Bill Sperry: That you established I think it was at the Investor Day last Investor day, So a lot of dollars to deploy their your preference is clearly M&A.

Speaker Change: I don't see that decline in transmission actually we started to see this in in.

Speaker Change: In 2012 or something then that's still continue to ramp this long and it really shows the need to invest in this infrastructure. So we're encouraged that it's elevated we're encouraging that they're increasing it and the other thing I would say, whether they shift out a little bit between one and the other our portfolio broadly.

Bill Sperry: But in this particular environment.

Bill Sperry: Just curious what your discussions look like given the uncertainty.

Julian Mitchell: uh and and having easier comps that allow that sort of mid to higher single-digit growth rates in the back half.

Yes, it's interesting Tommy.

Bill Sperry: I'd say the pipeline is reasonably active.

Bill Sperry: And.

Speaker Change: Supports.

Speaker Change: The spend wherever they may be taken so I think we're good well positioned either way.

Bill Sperry: We continue to pursue actively a number of situations.

Julian Mitchell: That's helpful. Thank you. And then just my maybe just, yeah, maybe to just just there are a couple of inflection points that really helped this to, right. So the distribution side of T and D you know, has returned to growth. So them. You know, they really start to help. And as well, the absence, and I, I hate to bring it up again, but the telecom and closure you know, turning from contraction to growth. So there's a couple of products in there. that they're inflecting up that also just help with what feels like a back half loaded.

Bill Sperry: Each one is different and.

Speaker Change: Thank you Gordon and Bill I wanted to talk about the M&A environment here, you reminded us of the.

Bill Sperry: There is an interesting.

Speaker Change: <unk>.

Bill Sperry: Question of.

Speaker Change: That you established I think it was at the Investor Day last Investor day, So a lot of dollars to deploy their your preference is clearly M&A.

Bill Sperry:

Speaker Change: These long term trends, which as you said, we're just reminding each other of.

Speaker Change: Versus is there.

Speaker Change: But in this particular environment.

Speaker Change: General.

Speaker Change: Volatility around higher interest rates and potential inflation.

Speaker Change: Just curious what your discussions look like given the uncertainty.

Tommy Moll: Yes, it's interesting Tommy.

Speaker Change: The news of our first quarter contraction in GDP and.

Tommy Moll: I'd say the pipeline is reasonably active.

Speaker Change: Oh.

Speaker Change: We're not sort of feeling.

Tommy Moll: And.

Tommy Moll: We continue to pursue actively a number of situations.

Speaker Change: Certainty.

Julian Mitchell: Gee, I might be skeptical of that when you just turn it into math. realize that's going to be what happens. That's great. Thank you.

Speaker Change: I don't see it hasnt been creating any chill.

Speaker Change: And our type of M&A market, I think maybe large scale public to public.

Tommy Moll: There is an interesting.

Tommy Moll: Question of <unk>.

Julian Mitchell: And just a follow up around the adjusted sort of margin outlook. So I think in the sort of prior or initial guide construct for the year. It looked like you had sort of maybe flat, slightly up operating margin dialed into the guide midpoint. Is it now sort of down, call it a few tens of basis points for the year, kind of similar to the Q1 margin progression and any sort of big divergence across the two segments you'd highlight on margins? Yeah, so, so you're right that in the original guide it was up a little bit.

Speaker Change: Yeah.

Speaker Change: MMO type stuff that probably does.

Tommy Moll:

Speaker Change: These long term trends, which as you said, we're just reminding each other of.

Speaker Change: But in sort of these.

Speaker Change: These kind of things that we're looking at.

Tommy Moll: Versus is there.

Tommy Moll: I think Tommy.

Tommy Moll: General.

Tommy Moll: A lot of conversations are continuing actually.

Tommy Moll: Great. Thank you Bill I'll turn it back.

Tommy Moll: The news of our first quarter contraction in GDP.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Joe <unk> with Wells Fargo. Your line is open.

Tommy Moll: Oh, we're not sort of feeling.

Tommy Moll: Certainty.

Joe: Hi, good morning.

Tommy Moll: I don't see it hasnt been creating any chill.

Speaker Change: I wanted to start on kind of first half second half organic growth dynamic.

Tommy Moll: And our type of M&A market, I think maybe large scale public to public.

Joe: Just in terms of.

Joe: It seems like for the total company that might be kind of around 10% growth in the back half of the year, but when you see a little bit more of the tariff pressure tied to the utility side.

Tommy Moll: Yeah.

Julian Mitchell: And what happens when you add price, you know, across in the three to 4% range. but hold okie dollars flat. In other words, if all you do is capture dollars back through price, it does, it does create a slightly dilutive and but the underlying. Gross, you know, product line profitability is kind of the same. So, but you're, I think you're right to point out. causes a slight headwind to the O.P. Great, thank you.

Tommy Moll: MMO type stuff that probably does.

Tommy Moll: But in sort of these.

Tommy Moll: These kind of things that we're looking at.

Tommy Moll: I think Tommy lot of conversations are continuing actually.

Joe: Just any color on how we think about that between the segments and whether that would be low double digits utility in the back half in high single digits, electrical or if the spread might be.

Tommy Moll: Yeah.

Tommy Moll: Great. Thank you Bill I'll turn it back.

Tommy Moll: One moment for our next question.

Joe: Or based on that tariff exposure.

Speaker Change: Our next question comes from Joe O'dea with Wells Fargo. Your line is open.

Joe: Yeah, I think the math youre doing would imply a ramp up in the second half certainly Joe and part of that's again price realization kicking in and again that takes a little bit longer on the utility side, just given the backlog.

Joe O'dea: Hi, good morning wanted.

Joe O'dea: I wanted to start on kind of first half second half organic growth dynamic.

Joe O'dea: Just in terms of.

Joe: Say the tariff exposure is more utility weighted notes, probably a little bit more electrical weighted.

Joe O'dea: It seems like for the total company that might be kind of around 10% growth in the back half of the year, but when you see a little bit more of the tariff pressure tied to the utility side.

Tommy Moll: One moment for our next question.

Joe: When you look at it that way so I think both sides will start to see a similar kind of price contribution.

Tommy Moll: Our next question comes from Tommy Moll with Stevens, your line is open. Good morning and thank you for taking my question. Morning, Tommy. I appreciated the insight and commentary on the long range outlooks for the big IOU budget. And to some extent, the message there could could be characterized as reaffirming what we've all kind of known and heard from you for a while.

Joe: And therefore.

Joe O'dea: Just any color on how we think about that between our segments and whether that would be low double digits utility in the back half in high single digits, electrical or if the spread might be wider based on that tariff exposure.

Joe: Somewhat similar back half of the year organic growth rates based on the framework you have.

Joe: Yes, I mean again volume will be a little bit different that that sort of ramps up as utility progressive throughout the year.

Joe: Okay got it and then.

Speaker Change: Could you expand a little on the sourcing from China in terms of I don't know if it includes any raws or if it's all components you know what.

Tommy Moll: But, but my question today is whether any Anything has changed or whether you're learning anything. So ideas that come to mind would just be What are you hearing on the relative priorities across transmission versus distribution versus generation, even? What are you hearing about? the the step ups into the latter part of the decade are we pulling forward some of the dollars, pushing out some of the dollars, I think it's a five-year range you gave. There's some flex there. Or is there anything else that does seem different now, whether better or worse?

Speaker Change: Verticals, you would be sort of sourcing in terms of the end markets that you serve and where China would be a good source today, and then whats youre evaluating in terms of that mid single digit exposure and how you think about that moving forward in alternatives.

Joe O'dea: Do you look at it that way so I think both sides.

Joe O'dea: See a similar kind of price contribution.

Joe O'dea: And therefore.

Joan: Yes, Joan and I think.

Joe O'dea: Somewhat similar back half of the year organic growth rates based on the framework you have.

Joan: I'm glad you kind of asked about how we think about it going forward. So.

Joe O'dea: Yeah, I mean, again volume will be a little bit different that that sort of ramps up as utility progressive throughout the year.

Joan: It's worth noting probably.

Joan: We've cut our exposure to China in <unk>.

Joan: <unk> have over the last several years.

Gerben Bakker: Maybe I'll start and feel free to chime in. But I would say it's it's definitely encouraging that the budgets are going up. And again, what we provided for you was was 10 large, but they represent a good portion, and they're pretty spread geographically. And so we believe this is representative of what we're seeing. Certainly, as we've communicated, I'd say transmission and substation particularly strong. We continue to see that both with the interconnections that are being made, as well as, you know, new substations that are supporting, you know, data centers and other load that's coming up.

Joe O'dea: Okay got it and then.

Joan: And that's been a function of.

Speaker Change: Could you expand a little on the sourcing from China in terms of I don't know if it includes any raws or if it's all components, what kind of verticals you would be sort of sourcing in terms of the end markets that you serve and where China would be a good source today and then what youre evaluating in terms of that mid single digit exposure.

Joan: A couple of businesses that we sold.

Joan: And as well.

Joan: Some onshoring or re shoring.

Supply chain redundancy work that we have done.

Joan: And I wouldn't be surprised.

Joe O'dea: And how do you think about that moving forward in alternatives.

Joan: Is that exposure continues to.

Speaker Change: Yes, Joe and I think.

Joan: Get managed downward.

Speaker Change: I'm glad you kind of asked about how we think about it going forward. So.

Joan:

Joan: Right now there is.

Joan: We get some <unk>.

Speaker Change: It's worth noting probably that.

Joan: Components.

Joan: So there's not a lot of.

Speaker Change: We've cut our exposure to China and about half over the last several years.

Joan: Not a lot of <unk>, but mostly more components and things coming in.

Gerben Bakker: But the distribution is, in our view, also good. You see, you know, hardening projects within that step up happening as well. As far as the timing and what we tend to see with these, and we saw this in transmission spent as well, that you see, you know, a few years where it shows up, and then it kind of flattens and you even, you know, see it come down. So, you know, we're encouraged that it's elevated. We're encouraging that they're increasing it. And the other thing I would say, whether they shift that a little bit between one and the other, our portfolio broadly supports that.

Joan: Can figure out I think over time kind of diversify that supply chain ultimately, yes, Tim maybe the only thing I would add it's mostly component and then we do some manufacturing in China as well so.

Speaker Change: And that's been a function of.

Speaker Change: A couple of businesses that we sold.

Speaker Change: And as well.

Speaker Change: Some onshoring or re shoring.

Joan: The actions again that we're taking is negotiating with suppliers right now as cost sharing.

Speaker Change: Supply chain redundancy work that we have done.

Speaker Change: And I wouldn't be surprised.

Joan: We're working with some of our supplier partners who are moved.

Speaker Change: Is that exposure continues to.

Joan: Moving the.

Speaker Change: Get managed downward.

Joan: Their production out of China to other areas, we've moved some of.

Speaker Change:

Speaker Change: Right now there is.

Speaker Change: We get some <unk>.

As a source in particular are doing Covid, we worked a lot on the resiliency back then for a different reason to create mulch.

Speaker Change: So there's not a lot of.

Speaker Change: Not a lot of <unk>, mostly more components and things coming in.

Joan: Multiple suppliers and we are.

Joan: We're doing work right now to move.

Speaker Change: Can figure out I think over time kind of diversify that supply chain ultimately, yes, Tim maybe the only thing I would add it's mostly component and then we do some manufacturing in China as well so.

Joan: More of that volume to where it's.

Joan: Most beneficial.

Joan: So theres plenty of action Bacon, but again reminding you that at the end still a very small percentage of our overall.

Speaker Change: The actions again.

Speaker Change: Taking is negotiating with suppliers right now as cost sharing.

Joan: Cost of goods sold.

Gerben Bakker: to spend wherever they may take it, so I think we're good, well-positioned either way.

Joan: Manageable.

Joan: Thank you.

Speaker Change: We're working with some of our supplier partners who are move.

One moment for our next question.

Speaker Change: Moving the.

Bill Sperry: Thank you, Gerben.

Bill Sperry: And Bill, I wanted to talk about the M&A environment here. You reminded us of the upsized budget that you've established. The Investor Day, last Investor Day. So a lot of dollars to deploy there. Your preference is clearly M&A. But in this particular environment, I'm just curious what your discussion...

Speaker Change: Our next question comes from Nicole <unk> with Deutsche Bank. Your line is open.

Speaker Change: Their production out of China to other areas, we've moved some of.

Nicole: Yes, thanks, good morning, guys.

Speaker Change: Good morning Joel.

Speaker Change: Just kind of piggybacking on I think it was julians question earlier about margin sorry for the phone doesn't asking you guys kind of acknowledged probably down year on year is that the case in both segments. Because you know electrical still fall a little bit of margin expansion in the first quarter. Despite the tariff headwind curious if that can kind of continue throughout the year. Thank you.

Speaker Change: Suppliers and we're.

Speaker Change: We're doing work right now to move.

Speaker Change: More of that volume to where it's.

Speaker Change: Most beneficial.

Bill Sperry: Blake. Given the Yeah, it's interesting, Tommy, the I'd say the pipeline is reasonably active. and... You know, we continue to pursue actively a number of situations. Each one is different and. There's, there is an interesting question of You know, these long-term trends, which as you said, we're just reminding each other of. versus is there. some general volatility around higher interest rates. Potential Inflation. News of a first quarter contraction in GDP and You know, we're not sort of feeling. that uncertainty. I don't see it. It hasn't been creating any chill. in our type of M&A. I think maybe large-scale public-to-public.

Speaker Change: Theres plenty of action taken but again reminding you that at the end still a very small percentage of our overall.

Speaker Change: Yes, I think the call because the.

Speaker Change: You are right to say underlying the margins going up but this is the effect of having price.

Speaker Change: Cost of goods sold.

Speaker Change: So a manageable.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Really just offsetting cost is what.

Speaker Change: Yeah.

Is what would create a headwind and I think electrical with experience that as well.

Speaker Change: Our next question comes from Nicole <unk> with Deutsche Bank. Your line is open.

Nicole: Yes, thanks, good morning, guys.

Speaker Change: Okay understood and then I know, it's small part of the business, but obviously pretty volatile in recent years. What are you guys seeing in telecom now how does that actually improve to growth or is that something that you'd expect to see as we kind of move through the year.

Speaker Change: Good morning.

Just kind of piggybacking on I think it was julians question earlier about margins for the full business and you guys kind of acknowledged.

Speaker Change: <unk> year on year is that the case in both segments, because you know electrical still fall a little bit of margin expansion in the first quarter. Despite the tariff headwind curious if that can kind of continue throughout the year. Thank you.

Speaker Change: Yes, we are seeing.

Speaker Change: We're seeing the sales decline flatten and the order book growing.

Speaker Change: Yes, I think the call because the.

Speaker Change: And the compares getting.

Easier to grow against and so.

Speaker Change: You are right to say underlying the margins going up but this is.

Speaker Change: That actually.

Speaker Change: This effect of having price.

Speaker Change: <unk> feel like it feels like it's inflected to us.

Speaker Change: Basically just offsetting cost is what.

Is what would create a headwind and I think electrical would experience that as well.

Speaker Change: Thank you I'll pass it on.

Speaker Change: One moment for our next question.

Speaker Change: Okay understood and then I know, it's small part of the business, but obviously pretty volatile in recent years. What are you guys seeing in telecom now how does that actually improve to grow with or is that something that you expect to see as we kind of move through the year.

Bill Sperry: and M.O.E. type stuff it probably does, but in sort of these... I think Tommy, a lot of conversations are continuing. Great.

Speaker Change: Next question comes from Brett Linzey with Mizuho. Your line is open.

Brett Linzey: Hey, good morning, all.

Speaker Change: Good morning.

Speaker Change: Hey wanted to come back to grid automation, so down 15% I guess, how did that track versus the internal expectation and then implicitly the utility meters business was down much more than that you had guided that business down high singles for the year, how has the outlook changed.

Speaker Change: Yes, we're seeing we're.

Speaker Change: We're seeing the se.

Speaker Change: Sales decline flatten and the order book growing.

Bill Sperry: Thank you, Bill. I'll turn it back.

Operator: One moment for our next.

Speaker Change: And the compares getting.

Speaker Change: You know, it's easier to grow against and so.

Joe O'Day: Our next question comes from Joe O'Day with Wells Fargo, your line is open. Hi, good morning. I wanted to start on the first half, second half organic growth dynamic, just in terms of it, it seems like for the total company that might be around 10% growth in the back half of the year. But when you see a little bit more of the tariff pressure tied to the utility side, just any color on on how we think about that between the segments and whether that Low double digits utility in the back half and high single digits electrical or if the spread might Wider, based on that.

Speaker Change: Relative to the original expectation.

Speaker Change: Actually on the call feel like it feels like it's inflected to us.

Speaker Change: Yes, so I'd say that quarter four that was softer than we had anticipated.

Speaker Change: Thank you I'll pass it on.

Speaker Change: Next question.

Speaker Change: And.

Speaker Change: But I do think there's encouraging signs of.

Speaker Change: The next question comes from Brett Linzey with Mizuho. Your line is open.

Speaker Change: Smaller project wins and the MRO.

Brett Linzey: Hey, good morning, all.

Speaker Change: A portion of the business is starting to create Brett.

Good morning.

Brett Linzey: Hey wanted to come back to grid automation, so so down 15% I guess, how did that track versus the internal expectation and then implicitly the utility meters business was down much more than that you had guided that business down high singles for the year, how has the outlook changed.

Floor.

Speaker Change: There they can kind of operate.

Speaker Change: At a level now and not be.

Speaker Change: For example, some kind of falling knife and so we're actually encouraged as thinking about the sequential is actually flattening now and being able to kind of run it.

Bill Sperry: Yeah, I think the math you're doing would imply a ramp up in the second half, certainly, Joe. And part of that's, again, price realization kicking in. And again, that takes a little bit longer on the utility side, just given the backlog. I wouldn't say the tariff exposure is more utility weighted, though it's probably a little bit more electrical weighted when you look at it that way. So I think both sides will sort of see a similar kind of price And therefore, somewhat similar back half of the year organic growth rates based on the framework you have.

Brett Linzey: Relative to the original expectation.

Speaker Change: From here, but.

Brett Linzey: Yes, so I'd say the quarter four that was softer than we had anticipated.

Speaker Change: A little more modest probably than we originally thought as the year started.

Speaker Change: The additional context on that as Bill said low softer but.

Brett Linzey: And.

Brett Linzey: But I do think there's encouraging signs of <unk>.

Speaker Change: Offset by.

Speaker Change: Stronger T&D than we had initially anticipated and these both of these are embedded in our in our guidance for the full year.

Brett Linzey: Smaller project wins and the MRO.

Brett Linzey: A portion of the business is starting to create Brett.

Speaker Change: Alright Thats helpful. Thanks, and then just one more on utility distribution. So the strong orders.

Brett Linzey: A floor, where they can kind of operate.

Brett Linzey: At a level now.

Speaker Change: Up double digits I guess are there any other indicators are anecdotes from large utilities or inventory data from distributors that gives you more confidence that the destocking has really run its course here.

Brett Linzey: B.

Brett Linzey: For example, some kind of falling knife and so we're actually encouraged as thinking about the sequential is actually flattening now and being able to kind of run it.

Bill Sperry: Yeah, I mean, again, volume will be a little bit different, that sort of ramps up as utility progresses throughout the Okay, got it.

Gerben Bakker: And then, um, could you expand a little on on the sourcing from China in terms of, I don't know if it includes any raws or if it's all components, you know, what kind of verticals you would be sort of sourcing in terms of the end markets that you serve and where China would be a good source today. And then, you know, what you're evaluating in terms of, you know, that mid single digit exposure. about that moving forward. Yeah, Joe, and I think glad you kind of asked about how we think about it going forward. So It's worth noting probably that we've cut our exposure to China in about half over the last several years.

Brett Linzey: From a year, but a little more modest probably than we originally saw as the year started.

Speaker Change: Yes, I would say all the above certainly dialogue with distributor customers dialogue with end customers. It does suggest that.

Speaker Change: Maybe they've got the additional context on that as Bill said low softer but.

Offset by.

Speaker Change: Inventories are much more in line with the originally targeted I mean.

Speaker Change: Stronger <unk> than we had initially anticipated and these both of these are embedded in our in our guidance for the full year.

Speaker Change: It's a slightly.

Speaker Change: The topic has some tenant calls theres lots of skus lots of customers lots of geographies.

Speaker Change: Alright Thats helpful. Thanks, and then just one more on utility distribution. So the strong orders.

Speaker Change: So there could be some pocket.

Speaker Change: Up double digits I guess are there any other indicators are anecdotes from large utilities or inventory data from distributors that gives you more confidence that the destocking has really run its course here.

Speaker Change: And a geography with a customer of a skew where they still want to work it down.

Speaker Change: But we would argue that you won't see it we'll be able to grow.

Speaker Change: Now to the extent and we just.

Gerben Bakker: and that's been a function of. couple of businesses that we sold. and as well some on-shoring or re-shoring. Supply Chain, kind of redundancy work that we have done. And I wouldn't be surprised. If that exposure continues to get managed downward. Right now there's, you know, we get some components. There's not a lot of not a lot of PFR, but mostly more components. We can figure out, I think, over time, how to diversify that supply. Yeah, so maybe the only thing I'd add, it's mostly components, and then we do some manufacturing. China as well. So, you know, the actions again that we're taking is negotiating with suppliers right now, it's cost sharing.

Speaker Change: Those little small things will be not visible and we're we feel we're I mean I know we've been begging your patients probably for the last.

Speaker Change: Yes, I would say all of the above certainly dialogue with distributor customers dialogue with end customers. It does suggest that.

Speaker Change: Five quarters or so, but we think we are here now and ready ready to grow D and that's that's fantastic news.

Speaker Change: Inventories are much more in line with the originally targeted I mean.

Speaker Change: I appreciate the insight.

Speaker Change: It's a slightly.

Speaker Change: The topic has some tenant calls theres lots of skus lots of customers lots of geographies.

Speaker Change: And im not showing any further questions at this time I'd like to turn the call back over to Dan for any closing remarks.

Dan: Great. Thanks, operator, and thanks, everybody for joining us.

Speaker Change: So there could be some pocket.

Speaker Change: In a geography with a customer of a skew where they still want to work it down.

Speaker Change: <unk> around all day for follow ups.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: But we would argue that you won't see it we'll be able to grow.

Speaker Change: Now to the extent and we just.

Speaker Change: Those little small things will be not visible and we're we.

Speaker Change: We feel I mean, I know we've been begging your patients probably for the last.

Speaker Change: Five quarters or so, but we think we are here now and ready ready to grow and that's that's fantastic news.

Gerben Bakker: We're working with some of our supplier partners who are, you know, moving the air production out of China to other areas. We've moved some of the source in particular during COVID. We worked a lot on resiliency back then for a different reason, to create multiple suppliers. And we're doing work right now to move more of that volume to where it's most beneficial. So there's plenty of action taken. But again, reminding you that it's at the end still a very small percentage of our overall cost of goods sold. for Manageable.

Speaker Change: I appreciate the insight.

Speaker Change: Okay.

Speaker Change: And im not showing any further questions at this time I'd like to turn the call back over to Dan for any closing remarks.

Speaker Change: Great. Thanks, operator, and thanks, everybody for joining us I'll be around all day for follow ups.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Nicole DeBlase: One moment for our next.

Nicole DeBlase: Our next question comes from Nicole DeBlase with Deutsche Bank. Your line is open. Yeah, thanks. Good morning, guys.

Nicole DeBlase: UNKNOWN Just kind of piggybacking on, I think it was Julian's question earlier about margins for the full business, and you guys kind of acknowledge, like, probably down year on year. Is that the case in both segments? Because, you know, electrical still saw a little bit of margin expansion in the first quarter, despite the tariff headwinds. Curious if that can kind of continue throughout the year. Thank you. Yeah, I think Nicole, because the, you know, you're right to say underlying the margins going up, but this, this effect of having price basically just offsetting costs is what we're is what would create FADWIN and I think Electrical would experience that as well.

Gerben Bakker: Okay, understood. And then I know it's a small part of the business, but obviously pretty volatile in recent years. What are you guys seeing in telecom now? Has that actually improved to growth? Or is that something that you expect to see as we kind of move through the year? Yeah, we're seeing we're seeing the sales decline flatten and the order book growing and the compares getting you know, easier to grow against. And so that actually, you know, Nicole feel like it feels like it's inflected. Thank you.

Brett Linzey: I'll pass it on.

Bill Sperry: Hey, good morning, all. I wanted to come back to grid automation. So down 15%, I guess, how did that track versus the internal expectation? And then implicitly, the utility meters business was down much more than that. You had guided that business down high singles for the year. How has the outlook changed relative to the original expectation? Yeah, so I'd say the quarter for that was was softer than we had anticipated. And, but I do think there's encouraging signs of Smaller Project, Gwynn. And the MRO portion of the business is starting to create, Brett, a floor where they can kind of operate at a level now and not be, for example, some kind of falling knife.

Bill Sperry: And so we're actually encouraged as thinking about the sequentials actually flattening now and being able to kind of run it from here, but a little more modest probably than we originally thought as the year started. Yeah, maybe the additional context on that is, as Bill said, a little softer, but offset by stronger T and D than we had initially anticipated. And both of these are embedded in our guide for the full year.

Bill Sperry: Yeah, that's helpful. Thanks.

Bill Sperry: And then just one more on utility distribution. So the strong orders up double digits, I guess, are there any other indicators or anecdotes from large utilities or inventory data from distributors that gives you more confidence that the stocking is really run its course here? Yeah, I would say all the above. Certainly dialogue with Distributor of Customers, Dialogue with End Customers. It does suggest that inventories are much more in line with originally targeted, I mean, it's a slightly. You know, the topic has some tentacles. There's lots of SKUs, lots of customers, lots of geographies. So it could be some pocket.

Bill Sperry: in a geography with a customer of a SKU where they still want to work it down. But we would argue that you won't see it, you know, we'll be able to grow now to the extent and we just, those little small things will be not visible. And we're, we feel we're, I mean, I know we've been begging your patience probably for the last five quarters or so, but we think we're here now and ready, ready to grow D and that's, that's Appreciate the insight.

Operator: And I'm not showing any further questions at this time.

Daniel Innamorato: I'd like to turn the call back over to Dan for any closing. Great. Thanks, operator. Thanks, everybody, for joining us. I'll be around all day for follow-up. Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a