Q1 2025 NPK International Inc Earnings Call
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Speaker Change: William Dezellem, Amit Dayal, Gerard Sweeney, Alexander Rygiel, Gregg Piontek, William Dezellem, Amit Dayal, Gerard Sweeney
After the Speakers' prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time. Please press star followed by one on your telephone keypad. Thank you I'd now like to hand, the call over to Gregg Piontek. Please go ahead.
Gregg Piontek: Thank you operator, I'd like to welcome everyone to the M. P. K International first quarter 2025 conference call.
Speaker Change: Joining me today is Matthew Lanigan, our president and Chief Executive Officer.
Speaker Change: Before handing over to Matthew I'd like to highlight that today's discussion contains forward looking statements regarding future business and financial expectations.
Speaker Change: Actual results may differ significantly from those projected in today's forward looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC.
Speaker Change: Except as required by law, we undertake no obligation to update our forward looking statements.
Speaker Change: Our comments on today's call May also include certain non-GAAP financial measures additional details and reconciliation to the most directly comparable GAAP financial measures are included in our quarterly earnings release, which can be found on our corporate website.
Speaker Change: There will be a replay of today's call and it will be available by webcast within the Investor Relations section of our website at <unk> Dot com.
Speaker Change: Please note that the information disclosed on today's call is current as of May 2025.
Speaker Change: At the conclusion of our prepared remarks, we will open the line for questions.
Speaker Change: And with that I would like to turn the call over to our president and CEO Matthew Lanigan.
Speaker Change: Thanks, Greg and welcome to everyone joining us on today's call.
Speaker Change: We are very pleased with our execution in the first quarter, which continued to validate our long term growth strategy and the strength of our unique value proposition.
Speaker Change: We believe our commitment to style geographic expansion and unique product and service quality is being increasingly recognized by our customers.
Speaker Change: Investments in our commercial capabilities, our rental fleet expansion continued to provide tangible benefits as demonstrated by our strong first quarter results.
Speaker Change: And through 2025 as the positive momentum from the fourth quarter carried over to the new year and as the quarter progressed, we saw demand on both rentals and product sales accelerate leading to a very strong finish to the first quarter.
Speaker Change: Total first quarter revenue increased 32% year over year to $65 million supported by meaningful growth in both rental and product sales.
Speaker Change: Rental revenue also increased by 32% year over year, reaching get another single quarter record supported by a growing demand across our core utilities transmission and critical infrastructure customers.
Speaker Change: Product sales increased 55% year over year, reflecting both continued water composite mat conversion, both great operators supporting utilities and critical infrastructure end markets and timing of customer projects.
Speaker Change: Gross margin increased by 300 basis points to 39%, while adjusted EBITDA improved to $19 $7 million in the first quarter, an increase of 59% versus the prior year.
Speaker Change: These improvements were driven by a combination of higher revenue a stronger sales mix and improved operating leverage.
Speaker Change: Given the continued positive demand across our served markets. We maintained our commitment to invest in the expansion of our rental fleet investing in that.
Speaker Change: In the first quarter strengthening our style customer responsiveness and ability to serve the needs of the largest critical infrastructure projects.
Speaker Change: Also consistent with our plan as discussed in our February call, whereas in to our return of capital program using $11 million of cash in the first quarter to 32% of our outstanding shares with an additional one purchases in April.
Speaker Change: In support of our program our board of Directors has increased the remaining share repurchase authorization to $100 million as of April 30.
Speaker Change: As we enter 2025, we noted that the secular megatrends underpinning investment in critical infrastructure remained robust despite uncertainties being created by the realignment of federal government priorities, including the imposition of tariffs and reassessment of the IH II and III programs.
Speaker Change: While the industry continues to wait for clarity on government actions. We are encouraged by feedback from our customers and broker market participants during the quarter with a 2025 priorities remain relatively unchanged, indicating a continued robust growth in their capex plans.
Speaker Change: Given that feedback in combination with our strong performance in Q1 and the continued strength. We see early in Q2, we have raised our full year revenue and EBITDA expectations for 2025.
Greg: With that I'll turn the call to Greg for his prepared remarks.
Greg: Thanks Matthew.
Greg: I'll begin with a more detailed discussion of our first quarter results then provide an update on our outlook for 2025 and capital allocation priorities.
Greg: As Matthew touched on first quarter revenues benefited from continued robust rental demand along with elevated product sales.
Greg: Total rental and service revenues improved 4% sequentially and 23% year over year to $43 million in the first quarter.
Revenues from product sales also improved 36% sequentially and 55% year over year coming in at $21 million for the first quarter.
Greg: The industry, our year over year growth in rental and service revenues was primarily driven by the powertrain admission sector and increased pipeline activity somewhat offset by a lower contribution from the oil and gas sector.
Greg: While product sales continue to be heavily directed to powertrains mission.
Greg: Reflecting on the trailing 12 month period through Q1, our trailing 12 month revenue improved to $233 million.
Greg: Reflecting 16% year over year growth over the previous 12 month period.
Greg: This improvement includes a 53% increase in product sales and a 15% increase in rental revenues.
Greg: Somewhat offset by lower service revenues.
Greg: Now turning to gross profit the first quarter improved $3 million sequentially and $8 million year over year, largely reflecting the impact of higher revenues along with the benefits of the associated operating leverage and a stronger sales mix.
Greg: With the continued strength in sales mix, we delivered a 39% gross margin in the first quarter, a 300 basis point improvement from the first quarter of 2024.
Greg: SG&A expenses increased by $1 million from the fourth quarter to $11 $7 million, which was slightly higher than the first quarter of 2024 and in line with our expectations as we absorbed certain fixed overhead costs that were historically carried by fluids.
Greg: As a percentage of revenues in the first quarter SG&A was 18, 1% of revenues, reflecting a 50 basis point improvement from the prior quarter and a 550 basis point improvement from Q1 of last year.
Greg: FX gains provided a modest tailwind to the first quarter.
Greg: Driven by U S dollar to British pound currency fluctuations.
Greg: Income tax expense was $3 5 million in the first quarter, reflecting an effective tax rate of 25%.
Greg: Adjusted EPS from continuing operations was <unk> 12 per diluted share in the first quarter compared to eight in the fourth quarter and five in the first quarter of last year.
Greg: Turning to cash flows operating cash flow generated $9 million in the first quarter, including $19 million from net income adjusted for noncash expenses, partially offset by $10 million of net cash used to fund growth in working capital.
Greg: Total investing activities provided $5 million of cash which includes $11 million of additional proceeds from last year's divestiture offset by $8 million of net capex substantially all of which was invested into fleet expansion growing our composite mat rental fleet by approximately 2% from the.
Greg: End of 2024.
Speaker Change: Additionally, as Matthew touched on we resumed share repurchases under our return of capital program using $11 million to purchase $1 8 million shares, reflecting an average purchase price of $5 94 per share.
Speaker Change: We ended the quarter with total cash of $21 million and total debt of $8 million.
Speaker Change: Our net cash position of $13 million.
Speaker Change: Additionally, we have $66 million of availability under our U S. ABL facility, which currently has no outstanding borrowings.
Speaker Change: At the end of the quarter, we have roughly $7 million of net assets related to the fluid sale with.
Speaker Change: With substantially all of the receivables bearing interest at 12, 5% per annum.
Speaker Change: Also as we discussed last quarter, we have significant U S. Federal net operating loss and other tax credit carryforwards that we expect will limit our cash tax obligations over the next few years.
Speaker Change: Now turning to our business outlook.
Speaker Change: Despite some uncertainty that Matthew touched on our customers continue to remain highly constructive on the near term and longer term outlook, particularly for utility spending.
Speaker Change: As disclosed in yesterday's press release in light of the strong start to the year. We have increased our full year 2025 expectations with total anticipated revenues now on the $240 million to $252 million range, and adjusted EBITDA of $64 million to $72 million.
Speaker Change: The midpoint of our 2025 range reflects 13% revenue growth and 24% adjusted EBITDA growth over 2024.
Speaker Change: Breaking our full year revenue expectation down further we expect total rental and service revenues will grow roughly 15% to 20% over 2024, while product sales, which are more difficult to predict are expected to remain somewhat in line with 2024 levels.
Speaker Change: Our net capex expectation remains unchanged at $35 million to $40 million, which includes roughly $8 million to $10 million of maintenance capital.
Speaker Change: As for the near term outlook, we expect to see Q2 rental volume to run at a similar level to Q1 with the quarter starting out above Q1 average monthly run rates and expect it to taper off as we head into the seasonally slower summer months.
Speaker Change: On the product sales side, we expect Q2 volumes will pull back into the mid teens range. Following the strong Q1 result.
Speaker Change: In terms of SG&A as discussed last quarter, we expect Q1 will reflect the high point of our quarterly spending.
Speaker Change: At this point the majority of our post sale administrative support obligations to the fluids business have been completed and we are actively working to streamline our overhead structure for the simplified business build a meaningful improvements are expected to be realized late in the year.
Speaker Change: In terms of capital allocation strategy, our priorities remain unchanged, we continue to prioritize investments in the organic growth of our rental fleet.
Speaker Change: And also expect to continue returning a portion of free cash flow generation to shareholders through our programmatic share repurchase program.
Speaker Change: We're also currently in the process of evaluating alternative revolving credit facilities that can provide us with greater liquidity to support our strategic growth plans.
Matthew Lanigan: And with that I'd like to turn the call back over to Matthew for his concluding remarks.
Matthew Lanigan: Thanks, Greg.
Matthew Lanigan: Very pleased with our strong performance over the past few quarters, which we believe continues to validate <unk> unique value proposition and growth outlook.
Matthew Lanigan: As discussed last quarter, our strategy for 2025 remains focused on three foundational elements to drive long term shareholder value creation through scale enhancement operating efficiency and return of capital optimization.
Matthew Lanigan: Our primary focus remains the acceleration of revenue growth through the expansion of our high return rental business, which includes a combination of geographic expansion within the U S. While also expanding our customer market share within our currently served markets.
Matthew Lanigan: Following our efforts in 2023, and 2024 to expand our sales team and enhance our sales force effectiveness capabilities. We are very pleased with the results being delivered.
Matthew Lanigan: Consistent with prior quarters, our quarter volume continues to grow meaningfully year over year, while Wolverine remains in line with historical levels.
Matthew Lanigan: As a result in the first quarter, we delivered 32% year over year growth in rental revenues, which follows a 28% year over year increase in the fourth quarter of 2024 and has greater framed up we expect to once again achieved double digit year over year rental growth in the second quarter and the full year.
Matthew Lanigan: To support this growth we expanded our composite mat rental fleet by approximately 13% in 2020 for an additional 2% in the first quarter of 2025, as we continue to build on our leading position within the composite rental market.
Matthew Lanigan: As the largest U S based manufacturer and regular fleet operator of composite matting. We are insulated from any currently non tariff impacts of 100% of our raw materials are sourced within the U S.
Matthew Lanigan: This allows us to maintain a competitive offering and make industry growth expectations moving forward, which is good for both our customers and our shareholders.
Matthew Lanigan: Our second focus area is on driving further organizational efficiencies across every aspect of our business with SG&A improving to 18, 1% of revenues in the first quarter of 2025.
Matthew Lanigan: We continue to evaluate and execute actions intended to streamline the organization and our cost structure and remain focused on our target of SG&A as a percentage of revenue in the mid teens range by early 2026 as outlined in previous earnings calls.
Matthew Lanigan: And our final priority is the allocation of capital beyond our organic requirements to optimize return of capital to shareholders.
Matthew Lanigan: With a strong balance sheet and a disciplined approach, we will thoughtfully evaluate strategic inorganic opportunities that increase our value and relevance to customers and key critical infrastructure markets, while enhancing return on capital deployed.
Matthew Lanigan: We also look to balance these inorganic opportunities against our return of capital program and remain committed to continuing our share repurchases building upon the 2 million shares purchased through April.
Matthew Lanigan: In closing I want to thank our shareholders for their ongoing support our employees for their dedication to the business, including our commitment to safety and compliance and our customers for their ongoing partnership.
Matthew Lanigan: And with that we'll open the call for questions.
Speaker Change: We are now opening the floor for question and answer session. If you'd like to ask a question. Please press star followed by one on your telephone Keypad Star followed by one on your telephone Keypad. Your first question comes from Aaron Michaela Craig Hayman. Your line is now open.
Speaker Change: Yes, good morning, Mathew and Greg Thanks for taking the questions.
Speaker Change: Hey, Eric.
Matthew Lanigan: Hello.
Speaker Change: First for me you talked a little bit on the sales additions and kind of quotes and order rates and positive trends. There can you just maybe give a little more detail on just how that the pipeline growth looks kind of year over year, and just how youre thinking about growth it sounds like you're talking about continued double digit.
Speaker Change: <unk> growth, but just wanted to unpack that a little bit more.
Speaker Change: Yeah, absolutely. Thanks, Erik Yes, I think it's fair to say when you look at the growth rate in our rental.
Speaker Change: Over the last couple of quarters, our pipeline growth is keeping pace with that which is obviously the fuel for that so we're pretty pretty happy that we're getting productivity out of the new reps and that it continues.
Speaker Change: To build in that book.
Speaker Change: Magnitude.
Speaker Change: Given that when you look at the various timings of the projects and when they will fall and so on and so forth. So that's why we're conoco in Q2.
Speaker Change: The way, we told at the full year double digits, yes.
Speaker Change: I think the other thing to add there is.
Speaker Change: Something we've talked about in the past is that we are seeing a greater proportion of our.
Speaker Change: With <unk> coming from those larger scale longer term projects, which also helps with not only the volume but that consistency.
Okay.
Speaker Change: Got it thanks for that and then maybe second you talked about the continued shift in the market from from wood to composite can you just give a little more detail on where that's at today.
Speaker Change: Think that could trend in the coming years, and just what that could mean for your business and just kind of the value proposition behind that shift.
Speaker Change: Yes, I think as we both touched on on the call.
Speaker Change: Preponderance of this island in Q1 was two people who had operating team in place in the past. So we are encouraged by the fact that we're seeing.
Speaker Change: The option of historical timber fleet operators to composite so that trend continues from previous quarters, which is encouraging obviously for us.
Speaker Change: That is a that bodes well with the largest composite slate operator in the country and also have the manufacturing capacity to keep pace with those demand. So hello, encouraging in terms of our focus.
Speaker Change: Alright, and then just maybe one last one can you give an update on just M&A and you know.
Speaker Change: How are you kind of currently thinking about this geographic expansion and kind of focus on wallet share expansion. What's the pipeline look like there and just how are you thinking about kind of make versus buy as you look to expand the business.
Speaker Change: Yeah, Thanks, Karen I'm, obviously, not going to get into specifics other than to say, it's an active work stream on <unk>, but I think you touched on the relevant point there as we look at these things it's always referenced against that make versus buy decision. We know the economics of what we do.
Speaker Change: And we've got to make sure that we evaluate those on.
Speaker Change: On a return basis, so keeping shareholder return front and center in those decisions.
Speaker Change: Alright that sounds good thanks for taking the questions I appreciate it you bet. Thanks Sarah.
Speaker Change: Your next question comes from the line of Amit Dayal of each key Wainwright. Your line is now open.
Amit Dayal: Thank you and good morning, everyone.
Speaker Change: Okay.
Speaker Change: Congratulations on a really strong quarter in a very timely execution on share repurchases in a really good to see that.
Speaker Change: Yes.
Speaker Change: Question around the rental business. It looks like that is mainly the driver for the near term are you potentially fully utilized it looks like you are.
Speaker Change: And how should we think about growth in 2026 from the rental side.
Speaker Change: Like maybe a majority of the Capex is going towards the rental business.
Speaker Change: But are there any other drivers that can support.
Speaker Change: Yeah.
Speaker Change: That trend.
Speaker Change: And I guess generally reducing a lot of demand on the rental side.
Speaker Change: Yes.
Speaker Change: If you look at the industry Capex spend particularly around the utility's transmission spin Amit we look at that in the forward forecast that are all positive in terms of the growth through therefore cost period, which includes 26, which you touched on so we feel good that the demand from the industry is and where it needs to be done and obviously we have.
Speaker Change: The capacity with our manufacturing footprint to flex out fleet to meet those demands.
Speaker Change: I think it's really as simple.
Speaker Change: As the utilities continue to spend more money on their transmission network and require more square footage of mining that we're there to provide it for them, which will drive the growth in the period you mentioned that in terms of the Capex I think it's really.
Speaker Change: We are committed to continuing to invest in our fleet as warranted to support the revenue growth that we're seeing in the demand growth that we're seeing in the market itself.
Speaker Change: Understood.
Speaker Change: Adjacent to that I mean.
Speaker Change: It doesn't look like we're close to peaking right in terms of.
Speaker Change: The investments in the expansion going on with respect to just getting the power infrastructure in place.
Speaker Change: Any any color on sort of you know.
Speaker Change: Where we are in that cycle.
Speaker Change: In terms of <unk>.
Speaker Change: Although these investments and projects being deployed at this point.
Speaker Change: Yes.
Speaker Change: Depending on who you talk to I mean, I think we're pretty early innings on that.
Speaker Change: Our revised outlook for the industry. If you look at the industry average.
Speaker Change: More recent history the growth rates on demand as being kind of low single digits and now we're calling with whether its onshore whether it's AI, whether whatever the demand driver is the meaningful uptick in demand, which obviously drives the need to have robust reliable infrastructure to deliver that.
Speaker Change: I think as long as I can drive as a reminder, the uptick in activity will also remind but I also call out. The fact that the industry has grown its capex at a meaningful rate despite.
Speaker Change: Its historical growth right. So even independent of this surge in demand it remains a very very fruitful market for us.
Speaker Change: I mean a mistake.
Speaker Change: And you mentioned you know you may have some further cost savings from sort of the post divestiture.
Speaker Change: Expenses being removed how big would that be on an annual basis going forward.
Speaker Change: Yes.
Speaker Change: And that goes back to our <unk>.
Speaker Change: Previous commentary and in terms of the SG&A reductions is really in the SG&A side that we see that we're running on an annualized basis in the mid Forty's and we talked about getting that down closer to the 40 level.
Speaker Change: Early 2026, there is a few big pieces in that.
Speaker Change: One of which is really our it systems and and moving to a more fit for purpose system, which is obviously a project that takes several quarters. So that's why the timing of where we see some of these improvements is really later in the year and into early 2026.
Speaker Change: Understood. That's all that matters. Thank you so much thanks.
Matt: Thanks, Matt.
Speaker Change: Your next question comes from the line of Gerry Sweeney of Roth Capital. Your line is now open.
Gerry Sweeney: Good morning, Matthew Greg Thanks for taking my call.
Speaker Change: You bet Jerry.
Speaker Change: A lot of questions have been asked only have one or two sort of questions maybe to dig a little deeper but.
Speaker Change: It's more on sort of sales investment in opportunities.
Speaker Change: Around investment for growth.
Speaker Change: Much more of an opportunity is there you obviously said.
Speaker Change: In our prepared remarks.
Speaker Change: <unk> sales were happy with that.
Speaker Change: Productivity coming out of some of the new reps et cetera.
Speaker Change: What should we be thinking about.
Speaker Change: From <unk>.
Speaker Change: <unk> investment on a go forward basis, there is still a pretty good opportunity out there.
Speaker Change: Organically.
Speaker Change: Yes, I mean, if you look at our footprint from our perspective, Jerry we think that we have got some more to go there.
Speaker Change: Again, I think carefully.
Speaker Change: We're probably looking at a few heads here and there around the country. So nothing that I would describe as very significant investments and that really comes out of productivity.
Speaker Change: And how much we get out of each of our sales territories, and whether or not we need to.
Speaker Change: Handset coverage, a little bit there, which we're constantly looking at as we look at the productivity and the activity levels in those markets. So I think there's more to come particularly as they are.
Speaker Change: It gets more comfortable and get more tenured with us and understand their value prop deeper.
Speaker Change: So I think from that side, there's more to come from that is if I've answered your question correctly.
Speaker Change: Yes, just curious and then also.
Speaker Change: Any more.
Speaker Change: Any low hanging fruit, maybe some of your larger customers pushing you into regions that youre not necessarily in quite yet or are we sort of a little bit further into the game ball game per se, maybe a little bit later innings.
Speaker Change: Yes, I don't have it in a call it a low hanging fruit Jerry when we look at when we when we look at our share of wallet with our more established areas that we're bringing in we still have ground to make up with the customers. The waiver more recently penetrated based on our sales expansion sites.
Speaker Change: I don't want diminish the way from the sales team and the operations team to win the drops to the customers to gain a bigger share of wallet.
Speaker Change: That's going to be a real focus area, which I kind of previously described the sales productivity side.
Speaker Change: It's not low hanging but definitely opportunity.
Speaker Change: Got it okay.
Speaker Change: That is it for me great.
Speaker Change: Great quarter and congratulations.
Speaker Change: Thanks Derek.
Speaker Change: Your next question comes.
Speaker Change: It comes from the line of Laura May here.
Speaker Change: B Riley Securities. Your line is now open.
Speaker Change: Hi, Matthew and Greg. Thank you for taking the question, Yes, you bet.
Speaker Change: So my question is what would influence credits more would it be share gain growth against timber or geographic expansion and then how would that tie into your investment in <unk>.
Speaker Change: Yeah, Great question actually.
Speaker Change: Ultimately, we still see timber is the predominant technology in the market. So I'd have to say share growth against that would be more meaningful.
Speaker Change: When you look at the market coverage timber has traditionally enjoyed versus sort of calling out any specific region.
Speaker Change: I would think.
Speaker Change: And the continued conversion of the home timber to composites is a more meaningful driver.
Speaker Change: And in terms of those investments again there.
Speaker Change: Goes back to we will with having the.
Speaker Change: Vertical integration here in the manufacturing side.
Speaker Change: We are feeding the fleet as needed to support our growth and as Matthew touched on expanded the fleet, 13% last year another 2% here in Q1, and obviously the returns on those investments.
Speaker Change: Established as a very high ROI. So we will continue to do that.
Speaker Change: Okay. Thank you I'll pass it on.
Speaker Change: Thanks, Laura.
Speaker Change: Your final question comes from the line of Joanne.
Speaker Change: Capital.
Speaker Change: Thank you.
Speaker Change: Thank you I have actually a group of questions. So if I go too long this cut me off and we can take it offline.
Speaker Change: Okay, Let me follow up on the on the last question. Please.
Speaker Change: Clearly the providers of wood Mac.
Speaker Change: <unk> are working to.
Speaker Change: Save their business.
Speaker Change: Any.
Speaker Change: Opportunity or any interest from some of the wood competitors to buy to.
Speaker Change: To buy backs from us so that they can then supply was traditionally been there their customer base, where their salespeople have relationships.
Speaker Change: Yes.
Speaker Change: Absolutely what's happening.
Speaker Change: We have developed a bit of an echo.
Speaker Change: Yes, that's absolutely what's happening when you look at it al styles. The preponderance of those styles has been.
Speaker Change: Two customers, who traditionally have rented timber products Suzanne customers asking them to provide composites. So.
Speaker Change: That's exactly what's happening and really it comes back to that issue.
Speaker Change: Longer term economics, obviously, the wood Mac is a lower cost product with a short life, but when you look at it over the term of our life.
Speaker Change: Yes, we have.
Speaker Change: But the cost advantages, while the economics has that advantage as well so.
Speaker Change: Okay, that's helpful and actually I'll use that as a segue to just this week.
Speaker Change: I was driving by our site and so on that.
Speaker Change: That was in place.
Speaker Change: And it was.
Speaker Change: I could say beat up for really well used one or two so would you walk through what the replacement cycle is I don't think I.
Speaker Change: Really.
Speaker Change: Thought about.
The sales that you are making that eventually.
Speaker Change: Those ultimately will be repurchased or purchased again to replace.
Speaker Change: Those were al or a broken et cetera, what's your what's your history and what are you anticipating.
Speaker Change: There's a lifecycle to match to be.
Speaker Change: Yes.
Speaker Change: We have Mexican escalator or 20 years.
Speaker Change: If you look at what the average is we kind of stick to those things as a 15 year after that 12 to 15 year asset when its well looked after.
Speaker Change: From that perspective, that's the lifecycle that we weigh up right I don't know what I can say is if like anything in the world. If you don't look after you can break it out.
Speaker Change: There are operators out there who might be a little hotter.
Speaker Change: On the mountain bike it earlier than that but you're definitely right. There is a there is a return of lifecycle on these products on what we've called out in the past is that our manufacturing process.
Speaker Change: The big components of that math, a fully recyclable. So we can take that math, we can run it back through our process and produce it at the end of our plan as a brand new Mac. Once it gets to end of life, which is really where the economic stuff.
Speaker Change: Got to add up here on the Recyclability of those products and we do offer that to our customers who operate flights of composite as well.
Speaker Change: I think looking at it if you look at the mass, it's probably 12 to 15 year cycle on that.
Speaker Change: And following up on that how how often are the mats looked after versus how often are there.
Speaker Change: Okay.
Speaker Change: Treat treat it like if you will.
Speaker Change: Yeah look I can't speak for everybody in the market real I can only speak for us and what I'd say is we're very motivated to look after them, which is why you see the economic value that we're able to extract from them.
Speaker Change: Yes.
Speaker Change: Alright, thank you.
Speaker Change: Switch to the New administration has has.
Speaker Change: <unk> or anybody in the width in the administration.
Speaker Change: Ed or put any initiatives in place that are reducing the incentives that utilities had or REIT or reducing dollars that were provided to.
Speaker Change: As to the industry four <unk>.
Speaker Change: Core expansion.
Speaker Change: Yes, I think I would describe that is evolving I think obviously offshore.
Speaker Change: Offshore wind is taking a bit of a pause there where that ends up we'll find out.
Speaker Change: And I think the question is how many of these things again a stake in the long term bill versus Bay, because just highlighted in the immediate time, what I can say is that.
Speaker Change: If you look at the industry participants the utilities outcome.
Speaker Change: Our customers who have just all reported.
Speaker Change: Fairly advanced in their in their supply chain initiatives to offset any tariff impacts we are seeing the tariff impacts flow through was very low single digit expectations from them. So that would not have a meaningful impact on their capex.
Speaker Change: As we see it now thats really why it sort of underpins our confidence for the full year.
Speaker Change: There's a lot of moving parts, but net net the industry still feels very robust.
Speaker Change: And that's why we're encouraged by that.
Speaker Change: Great. Thank you and then two additional questions. Please first of all you had referenced in your opening remarks that.
Speaker Change: Rentals and sales in both accelerated at the at the end of the quarter and therefore, starting strong.
Speaker Change: Early in the second quarter would you walk through the dynamics that are taking place there or is that simply normal seasonality I was sensing that you were you were highlighting something more than that.
Michael: Yes, Michael.
Michael: Because I think they differ DNS Io was always going to be project timing dependent on our customers and when they want to make that investment as we have said on a number of calls with people purchase maps I don't want to move them to <unk>.
Michael: Holding pattern and then put them on a job they want to move them directly to the job to minimize the transportation expense.
Michael: We have a lot of dependency on project timing when it comes to the actual timing of those styles. When you look at Rancho.
Speaker Change: As I think we touched on on the call Bill just sustaining.
Speaker Change: Assigning demand for that product right now, which is underpinning our confidence in obviously to by about a full year guide.
Speaker Change: So calling what we said around the Q2 results our expectation I should say Jonathan.
Speaker Change: Outside of the industry took a pause in the second half we saw that second half 'twenty four it was pretty pronounced in Q3 for us.
Speaker Change: We are now organized and ready to go.
Speaker Change: Yes.
Speaker Change: In terms of effort that monthly stream their March was the strongest rental activity month for us as we said that continued into early April but again. It is important to note that as you head into the summer months, you do expect things to slow down as we go through the summer heat as we usually see.
Speaker Change: Alright, Thank you and would you. Please correct me if this is wrong, but I think of the fourth quarter.
Speaker Change: Seasonally strong quarter when it comes to purchases.
Speaker Change: And yet.
Speaker Change: The first quarter here was very strong on the purchase front. So first of all is my memory correct Q4, a seasonally strong strongest and if that's the case then.
Speaker Change: How is it that we're seeing such strength here in Q1 that succeed before.
Speaker Change: Yes.
Got it.
Speaker Change: I think the traditionally strong Q4 seasonality it was direct from utilities.
Speaker Change: And so what we're seeing now is a broader population of participants on the purchase side.
Speaker Change: Doug necessarily have that and if you use it or lose it capex kind of crunch and so I think what we're seeing now is a spread which is more related to project activity early in the year, but we also do expect that.
Speaker Change: Utilities come to the table when utilities come to the table Q4 traditionally paid a bigger quarter. So you are correct, but I think there is a different dynamic in our sales pipeline than perhaps historically.
Speaker Change: Okay.
Speaker Change: Matt is that does that mean that it was.
Speaker Change: And industry or industries other than utilities that led to the strength in the alright.
Speaker Change: Alright and the.
Speaker Change: Using <unk>.
Speaker Change: It was a utility participants, but it wasn't directly utilities themselves.
Speaker Change: Great. Thank you both and congratulations on a really excellent quarter.
Speaker Change: Thank you I appreciate it.
Gregg Piontek: I would now like to hand, the call back to Gregg for final remarks.
Gregg Piontek: All right that concludes our call today should you have any questions or requests please reach out to us using our E mail at investors <unk> and PKI Dot com and we look forward to hosting you again next quarter.
Gregg Piontek: Good day.
Gregg Piontek: Thank you for attending today's call you may now disconnect Goodbye.
Gregg Piontek: Yeah.
Gregg Piontek: [music].
Gregg Piontek: Okay.