Hubbell Inc Q1 FY2026 Earnings Call

Good day, and thank you for standing by. Welcome to the first quarter, 2026 Hubble Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 11 on your telephone. You will then hear a message advising your hand is raised. To withdraw the question, simply press star 1-1 again. Please see advice that today's conference is being recorded. Now, it's my pleasure to hand the conference over to the Senior Director of Investor Relations, Dan Inamorato. Please proceed.

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 2026. The press release and slides are posted to the Investor section of our website at Hubble.com. I'm joined today by our Chairman, President, and CEO, Gerben Bakker, and our CFO, Joe Cappazzoli. Please note our comments this morning may include statements related to the expected future results of our company. These are forward-looking statements defined by the Private Securities Litigation Reform Act of 1995. 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 measures. Those 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 Gervin. Great. Thanks, Dan, and good morning, everyone, and thank you for joining us to discuss Hubble's first quarter 2026 results. Hubble delivered strong financial performance to begin the year with double-digit growth in sales, adjusted operating profit, and adjusted earnings per share. Organic growth of 8% in the first quarter was driven by double-digit organic growth in our electrical solution segment, as well as our grid infrastructure businesses within the utility solution segment. Our core utility T&D markets remain strong, with highly visible load growth driving continued strong demand in transmission and substation markets, and aging infrastructure resiliency investments driving strong demand in distribution markets. Electrical solutions growth continues to be driven by strength in data center and light industrial markets, enabled by our leading brands and continued success in our strategy to compete collectively in high-growth verticals. We are raising our full-year 2026 outlook for total sales growth, organic sales growth, and adjusted earnings per share this morning, as we are confident Hubble's strong position in attractive end markets and continued execution of our long-term strategy will enable us to execute through a dynamic operating environment. Before I turn the call over to Joe to walk you through our financial performance in more detail, I would like to highlight an emerging growth opportunity for Hubble in high-voltage transmission, a long-term megatrend that sits squarely in our core, and we are demonstrating early success in a multi-year investment cycle. As background, 765 kV transmission represents one of the most efficient methods to move large amounts of power over long distances in order to accommodate accelerating electricity demand from electrification and load growth. Operating transmission lines at higher voltages enables utilities to deliver more power per line with lower losses and fewer space requirements. For Hubble, high-voltage transmission represents a significant multi-year opportunity, which is largely incremental to existing strength in traditional 345 kV transmission markets. Our leading position and strong customer relationships position us well to capture this opportunity, and we are demonstrating early success with several key project wins supporting this initial phase of high-voltage transmission build-up. Additionally, our portfolio depth and breadth positions us as a preferred partner who customers can trust to provide a full package of critical components. This solutions offering enables high service levels and reliability while driving installation efficiency and ease of doing business for our customers. We are actively investing to support future growth in this market. including development and testing of new product offerings in collaboration with major customers as well as in capacity expansion investments overall we believe 765 kV transmission represents an addressable market opportunity of approximately one and a half billion over the next ten years and we believe we are well positioned to serve this attractive long-term investment cycle with that let me turn the call over to Joe to provide more details on our

financial results. Thank you, Gervin, and good morning, everybody. I am starting my comments on slide five. Hubble's first quarter financial performance was strong, with double-digit growth across sales, adjusted operating profit, and adjusted earnings per diluted share. Net sales of $1.517 billion in the first quarter of 2026 increased by 11 percent compared to the prior year, driven by 8% organic growth and acquisitions contributing 3%. Consistent with our fourth quarter 2025 performance, both electrical solution segment and grid infrastructure products within our utility solution segment delivered double-digit organic growth in the first quarter, partially offset by anticipated softness in grid automation. Acquisitions contributed three points to growth in the first quarter, with DMC Power off to a strong start and integrating nicely within our T&D business. From an operational standpoint, Hubble generated $301 million of adjusted operating profit in the first quarter, representing 18% growth versus the prior year, with adjusted operating margins expanding 110 basis points year over year. This improvement in adjusted operating profit and adjusted operating margin was primarily driven by strong volume growth in high-margin businesses. While cost inflation accelerated against 2025 exit rates, as anticipated, our pricing and productivity actions continued to keep pace, more than offsetting those higher levels of inflation on a dollar-for-dollar basis in the first quarter. We also accelerated our investment levels in the first quarter, as previously communicated, most notably to expand capacity in high-growth areas and generate future productivity. And, as anticipated, we invested $7 million in our restructuring and related program to further streamline our operational footprint, primarily within our electrical solution segment. But just as a reminder, R&R is included in our adjusted results. Adjusted earnings per diluted share were $3.93 in the first quarter, representing a 16% increase versus the prior year, driven primarily by adjusted operating profit growth. Below the line, higher interest expense associated with borrowings from the DMC acquisition and a slightly higher year-over-year tax rate were partially offset with lower share count as a result of prior repurchase activity. Additionally, we repurchased $168 million worth of shares in the first quarter at a dollar cost average below $500 per share. We expect the net impact of these repurchases to be neutral to 2026 earnings as a lower share account will be offset by higher interest, but the repurchases of shares at attractive valuations is expected to provide us with earnings accretion in 2027. Our balance sheet remains strong and is poised to invest on behalf of our shareholders. Our primary focus remains on internal reinvestments and acquiring differentiated businesses to bolt on to attractive areas of our portfolio. The pipeline of opportunities remains healthy and active, and we continue to remain disciplined in our approach. Share repurchases represents an additional lever that we can and will utilize to return cash to shareholders over time. Turning to page six to review our performance by segment, utility solutions delivered another strong quarter with double-digit growth in sales and adjusted operating profit. First quarter performance overall reflected a continuation of the momentum we realized exiting 2025, with overall drivers very similar across end markets. Utility solutions generated net sales in the first quarter of 949 million dollars, which represented growth of 11 percent versus the prior year and includes organic growth of 7 percent and acquisitions contributing 3%. Organic growth of 7% in the first quarter was driven by 12% organic growth in our larger, higher margin grid infrastructure business, where demand strength was broad-based across T&DN markets. Utilities are investing at heavy rates, and demand for Hubble solutions to serve the expanding critical infrastructure needs of our customers is driving continued momentum in orders and providing visibility to further strength over the balance of 2026. As we will highlight in a few minutes, we now anticipate our utility solution segment to deliver high single-digit organic growth on a full-year basis. Outside of our core T&D markets, telecom and gas distribution grew attractively in the first quarter, while meters and AMI markets remained weak as anticipated. While grid automation organic sales declined 7% year-on-year in the first quarter, sales increased slightly on a sequential basis. We remain confident that meter and AMI markets have stabilized, and we anticipate easing comparisons and continued strength in protection and controls products will enable grid automation organic sales to return to slight year-over-year growth in the second quarter. Operationally, HUS delivered $207 million of adjusted operating profit in the first quarter, representing 21% growth in adjusted operating profit versus the prior year, with adjusted operating margins expanding 190 basis points year over year. Operating profit growth was primarily driven by strong volumes in high-margin grid infrastructure products, favorable price cost productivity, and acquisitions, which were partially offset by grid automation volume decline. Moving to page 7, electrical solution results were also strong in the quarter, with double-digit growth in net sales and adjusted operating profit. For the first quarter, electrical solutions generated sales of $568 million, which represented growth of 12% versus the prior year. Organic growth of 11% was again driven by strength in data center and light industrial markets, as well as solid non-residential growth, partially offset by softer heavy industrial markets. The electrical solution segment achieved approximately 40% growth in data center markets in the first quarter, driven by strength in both balance of system component demand, as well as sales of our modular power distribution skids. Data center order activity remained robust in the first quarter as build-out activity continues to accelerate across hyperscaler and co-location customers, providing enhanced visibility for us to increase our full-year outlook in data center markets to more than 25%. Broader light industrial markets remain healthy as solid U.S. manufacturing activity generated demand for electrical components, and our strategy to compete collectively in vertical markets continues to drive out growth. Operationally, HES delivered $93 million of adjusted operating profit in the first quarter, representing 10% growth in adjusted operating profit versus the prior year, reflecting strong volume growth. Adjusted operating margins of 16.4% were down 30 basis points versus the prior year, as benefits from volume growth and the associated operating leverage were offset by higher investments in restructuring and growth initiatives. As you'll see in our press release financials, within the electrical solution segment, we invested $6 million in restructuring initiatives in the first quarter of 2026 versus only $2 million in the prior year, which impacted year-over-year margins by approximately 80 basis points as we execute on footprint optimization projects which we are confident will continue to drive long-term productivity and margin expansion. Price realization remains strong which combined with productivity more than offset cost inflation on a dollar-for-dollar basis in the first quarter. Turning to page eight to discuss our full-year outlook, we are raising our full-year sales growth outlook to 8% to 11% and or organic sales growth outlook to 6% to 9%. This represents an increase of one point to the lower end and two points to the higher end of our prior full-year outlook and is driven by both incremental price realization to offset increased inflation relative to our initial outlook, as well as enhanced visibility to continued demand strength in our T&D and data center end markets. Operationally, we anticipate double-digit growth and adjusted operating profit at the midpoint of our guidance range for 2026. driven primarily by strong sales growth in high-margin areas of our portfolio. We remain confident in managing price-cost productivity to neutral or better on a dollar-for-dollar basis over the full year. So the math on higher inflation, as well as planned investments to support accelerated growth initiatives, results in a slightly more modest outlook for the full-year margin expansion versus our initial outlook. Below the line, we anticipate that lower share count of 53.1 million shares on a full-year basis will be fully offset by higher net interest, while our assumptions for the other expense and tax rate remain unchanged. Overall, we continue to anticipate at least 90% free cash flow conversion on adjusted net income in 2026, and we are raising our full-year adjusted earnings per diluted share outlook to $19.30 to $19.85 per share. Now let me turn the call back over to Girvin to give you some more color on our confidence to deliver on this increased full-year outlook as we continue to navigate a dynamic macroeconomic

and geopolitical environment. Okay, thanks, Joe. Turning to page nine, then, and concluding our prepared remarks, while the current operating environment poses macroeconomic and geopolitical uncertainty, as well as dynamic inflationary and supply chain conditions, we are confident in our ability to deliver on an increased organic growth outlook while continuing to manage price and productivity in 26 and beyond. From an end market standpoint, our largest and most profitable businesses are exposed to end markets such as utility T&D and data center CapEx, where secular growth is being driven by long-term investment cycles. Our recent order patterns and key project wins, along with customer conversations around long-term investment planning, are providing us enhanced visibility to continued strength in these end markets. From a price-cost standpoint, while inflation has increased relative to our initial full-year outlook, we have implemented additional price and productivity actions, which we are confident will offset, and we anticipate that recent updates to various tariff frameworks are largely neutral to our existing tariff cost structure. Overall, we have demonstrated our ability to manage through an inflationary environment successfully over the last several years, and we are confident in our ability to continue to do so in 2026 and beyond. While we are closely monitoring macroeconomic and geopolitical conditions, our short cycle demand is holding up solidly, and price and productivity actions are being realized. Hubble's portfolio is well positioned with more than 90% sales exposure to the U.S. and over two-thirds of our portfolio exposed to secular growth markets in data center and utility, which we anticipate will continue to perform well through a broad range of economic environments. In short, we are confident that Hubble's leading position in attractive end markets, as well as continued execution on our long-term strategy, will enable us to deliver attractive financial performance over both the near-term and long-term. With that, let's turn the call over to Q&A.

Operator?

Thank you, sir. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To remove yourself, press Start 1-1 again. We ask that you please limit yourself to one question and one follow-up. One moment for our first question. It comes from Jeffrey Sprague with Vertical Research. Please proceed.

Hey, thank you. Good morning, everyone. I just wonder if you could provide a little more color on the high-voltage transmission outlook. Just the level of project rollout there, how you see that pacing in, you gave a little bit of color there, obviously. And is that $1.5 billion cam all incremental relative to your prior view on the market? Maybe we could start there.

Yeah, maybe I'll start overall, Jeff, with transmission and then substation I'd probably to categorize in that same area is that's continued to do really well for us. You know, we're, you know, communicated high single-digit growth there, and certainly I would say we're off to a very good start against that background. Particularly, the comments are on 765. It's the ability for utilities to bring more bulk power into areas where they need it. It's a very efficient way to do that. We have some lines in the U.S. that were built, I think, over 20 years ago that were 765. There just wasn't a need for it. And I think that's becoming very clear right now, that the ability to drive more bulk power is actually a very efficient way to do so. we are very well positioned um you know we have products today that can serve it already uh we've won a couple of uh uh orders already in this we're continuing to develop products and these are you know just taking it to the next higher voltages you know we were able to do that with our capabilities certainly with our labs um so i'd say very well positioned and we look at this truthfully as incremental Jeff we see this as upside to what's already needed you know anytime you have a 765 you need off ramps for that right where you take the power down think highways and you know offshoots of that off ramps with substations and then you step the voltages down so we think it's an upside for us and we think it can drive a point of growth above what we're currently projecting with transmission already.

And it sounds like you don't see this squeezing out spending elsewhere. There's obviously been a little bit of concern that all the generation spending may eat in the T&D spending. You call it kind of the core distribution side of the business also growing at a stable rate?

Yeah, you need it both, Jeff. That's why we don't see it growing out. Certainly, we're not seeing that in the projects that are ahead of us, the orders that we're winning. I mean, it's a logical question certainly to ask is, you know, how far can budgets flex up? But you see, too, that utilities are continually increasing their CapEx budgets. And I think that's a reflection of acknowledging and realizing that you really need to spend it on all these areas to get the outcome you need.

Okay, great. I'll leave it there.

Our next question comes from Julian Mitchell with Barclays. Please proceed.

Maybe just a question, please, around how we should think about operating margins through the balance of the year and the operating leverage kind of cadence, if that's changed at all versus prior thinking, please.

Good morning, Julian. Yeah, as far as the operating margin goes for the year, we're really looking at the full year with a 20 basis point margin expansion. And that's going to lean a little heavier towards utility with more expansion and about flattish on electrical. As the year progresses, I think we see the utility side of margin expansion being pretty consistent. And certainly on the electrical side, we see a little bit of headwind just on the year-over-year comp from last year's second quarter and electrical and the back half probably flattish. So that's kind of how we're thinking about margin for this year. Keep in mind, there's a lot of inflation that's come on. And as we cover that inflation with price and productivity, that is certainly margin dilutive. So in our 20 basis point of margin expansion at the midpoint of the guide, there's about a point of dilution

just from that price cost math. That's helpful. Thank you. And then maybe just my follow-up on the thoughts on sort of first half and sort of second quarter. Maybe I missed it, but did you clarify the sort of share of earnings in the first half? Is it still mid-high 40s? And so we're looking at kind of a 520-ish EPS for Q2. Any pointers on second quarter or halves phasing,

please? Thank you. Yeah, so second quarter, so we would think about normal seasonal setup for this year, and let's think about that on the sequential. So typically, with our strong orders coming through first quarter, what we would anticipate a second quarter step up, like we would normally see high single digits organic growth. And add to that, we're looking at price cost productivity at about neutral on the dollars. And so that's really the constructive way to think about 2Q. That's great.

Thank you. Thank you. Our next question is from Tommy Mall with Stephens. Please proceed. Good morning

and thanks for taking my questions. Hi, Tommy. Hey, Tommy. Sounds like versus last quarter, we're expecting more pricing for the year, perhaps also better volumes than originally expected. So I was hoping you could unpack that six to nine organic for us. How much of that is price versus volume and how do those compare to what you

provided last quarter? Thank you. So coming into the year, we were anticipating about two points of price, and the majority of that was coming from wraparound, from actions that we had implemented last year. And as we saw some of that inflation, mostly on the metals side, copper, aluminum, steel in the first quarter, we went out with price actions in the second quarter, and that added about a point to our full year price outlook. So our full year six to nine percent organic has about three points price, but with the rest being volume. If you think, Tommy, about the way that that price rolled on last year, the year over years are going to start to wrap here, 2Q, 3Q. So we would anticipate that our contribution from price fades as the year progresses, and our contribution from volume growth kind of increases as we step through the

here sequentially. Thank you. That's very helpful. I wanted to follow up on DMC. What update can you provide for us there? And in particular, are there any elements that you're seeing unfold better

versus worse than the original plan? Thank you. Yeah, I'd say, Tommy, DMC, as we stated, I think, in our last calls off to a really good start. I mean, this is squarely in the area of where the highest investment is going on in the utility, which is transmission, and particularly this is a substation application. So I would say so far it's meeting and even exceeding a little bit our expectations. It's also an area where we're really focused in adding capacity. I think our ability to get more out of that factory this year and next year is perhaps more a function of our ability to get capacity in place because orders are really supportive. So we're very, very pleased with it. And, you know, as we are with the systems control was another acquisition we did last year, also in this space and with very similar dynamics of of good demand and need to add capacity. We're very pleased with them.

Thank you, Gerben. I'll turn it back.

Thank you. Our next question comes from Nigel Koh with Wolf. Please proceed.

I just want to go back to the margins. Good morning. How are the Section 232 tariffs changing the landscape? and maybe talk about both businesses. And I believe that you were utilizing U.S. steel down in Mexico. Any more color there would be helpful, and any thoughts on how to think about margins by segment as well?

Sure. So starting with the tariff, I'd probably start just answering it maybe more broadly with the events of tariff changes in the first quarter, of which, yes, 232 was a piece of what changed. We also saw the repeal of IEPA. We saw 122 come online, and we saw some of those changes in 232. The sum of all of that is about neutral to us for the year, so that impact was not significant. We were paying $232,000 going back to Liberation Day, so $232,000 with product lines that would have had U.S. melted steel, the changes there were entirely offset by some other impacts on some other product lines. So overall, not significant. in. On your question about margins, you know, quarter to quarter, we have that 20 basis points of expansion embedded in the guide at the midpoint for the full year. The margin expansion is going to lean more heavy towards utility, and that utility is looking at margin expansion pretty rattably across each of the four quarters. Electrical is a little bit of headwind on the margin in the first half of the year, and that normalizes in the second half of the year to get to about flattish on the full-year margin for electrical. So that's how we see that.

Yeah, that's great, Connor. Thanks. Thank you. And then just a quick follow-on, maybe on the back of Jeff's question on transmission. Obviously, very healthy growth, very sort of vibrant end market. Some of the big plays in that space, you know, G even over the world are growing strong double digits in transmission, group transmission. So I'm just wondering, do you see scope for that to, you know, for this, for your business to get up to those kinds of levels and is the scope of your content increasing with time?

Yeah, I would say maybe on the first one on the scope, you know, so we continue to develop products. We continue to do acquisitions and, you know, both the DMC and system control are two examples where scope is increasing if you have additional product lines. But also, as you look at where the voltages go, so, you know, when we talk about 765, our content on that per mile would also go up slightly from the lower voltages. So I think in net, both on what we're adding to the portfolio and kind of where the investment's going in, it does increase our content a little bit. You know, so certainly what we're seeing is double-digit growth. Our scope is broad. You know, and we serve the majority of, right, if you think about a transmission line, you know, 85% to 90% of the material that goes up on that, we serve. So I would say we're going to get a fair share of that growth, specifically how many generator assets short term. It may be a little harder for me to comment on that dynamic. But I would certainly say we will participate and get our fair share of the build-out.

Okay, thanks, Kevin. That's great.

Thank you. Our next question comes from Joe Odia with Wells Fargo. Please proceed.

Hi, good morning. Just wanted to touch on grid infrastructure growth expectations throughout the year. Is it reasonable to see something like low double-digit organic through the first few quarters of the year? I think, you know, the comp gets a little bit tougher as you get into the end of the year. So maybe that's more mid-single, high single-digit. And along with that, just any color on electrical distribution. You know, understandably, the transmission and substation sort of driving strength, but just what you're seeing on the distribution side.

Yeah, good morning, Joe. I'll take the first part of that question on the utility organic, and you are thinking about it the right way in terms of mid- to high single-digit organic growth as the year progresses, and that we're anticipating is going to be pretty consistent, 1Q, 2Q, 3Q, 4Q.

So, yeah, maybe on the distribution side of it, you know, we've been talking for this for quite some time now is what's driving the need to invest there. And a lot of it is driven by, you know, just upgrading and resiliency of the grid. We dealt last year and the last couple of years, really, with the destock where we talked about that underlying demand was still solid, but we're dealing with something very specific. So I think that's proving out now with the destocking behind us that we're actually seeing the underlying demand and the drivers of it are really continued hardening. You know, I think it is slightly lower than the transmission and substation for the reasons that we talked of, you know, getting that power that's so needed in data centers and other areas. But we're very optimistic. And there, too, you know, if we think about the start to the year, it's not just off to a good start in transmission and substation, but distribution as well.

And then just on the timing of pricing and the impact on demand, I think that the price announcements in the quarter were those in place middle of the quarter, in place kind of beginning of the second quarter, and really just around any influence on demand pull forward. It sounds like no incremental pricing required to tariffs. I think over the course of kind of what we're hearing through reporting season right now, there's some debate on what kind of pull forward dynamics there were, but broadly across industrials. But the degree to which you saw any of that in the quarter, it doesn't sound like much sort of carryover impact anticipated throughout the year.

Yeah, price increases went in for us in the beginning of the second quarter, and that typically takes, you know, 30 to 60 days to kind of work its way through the backlog and to kind of get to a point of fully realizing the run rate of that new price. So that all sets in in the course of second quarter, and we did not see any significant impacts or unusual behavior with pull forward on demand. That order momentum that we've kind of seen continue going back to the fourth quarter, throughout the first quarter, and into the second quarter here, nothing unusual in terms of how that sets up around our price increases that we have implemented. Price increases so far have been sticking. Conversations with customers have been very constructive. And the basis for our price increase has been around metals. And that metals inflation has been very visible and very well accepted in the channel.

That's helpful. Thank you.

Thank you. Our next question is from Chris Snyder with Morgan Stanley. Please proceed.

Thank you. I wanted to ask about data center, you know, obviously came through really good 40% in Q1. And you guys did raise the full-year data center guide, now I think over 25%, previously up 15. So, I guess my question is, is this new 25% plus, is that, you know, basically all of your available capacity? Or if demand strength is sustained, you know, is there an opportunity to ship more this year? Thank you.

Yeah, we spend a lot of time on – good morning, Chris – on that topic with all the activity and the significant demand that's out there in data center. You'd recall that we've got roughly half of our data center exposure is in our long cycle power distribution modular skid business, for which we've got good visibility to demand. Orders are booked out through the year, and there's little incremental capacity, And that feels pretty well situated. And that was well situated in our original guide. So no real change on how we're thinking about the long cycle piece. On the short cycle book and bill side, we do continue to see strong order demands coming through. We continue to add capacity in that space. Every quarter we're adding more and more capacity, and we continue to add inventory to every extent possible so that we've got stock on the shelf for that short cycle book and bill side of products that are needed for data centers. So we think we've got a little more capacity, and again, we continue to invest in that productive capacity coming online, and we'll continue to do that as the year unfolds so as to increase our capacity and serve that growing demand.

Thank you. I appreciate that. And then I wanted to follow up on price cost. It seems like a year ago, you guys led on price cost. And then over time into Q1, the cost inflation caught up and that was kind of maybe netting you closer to neutral. I mean, I guess let me know if that's wrong. But I guess the question is, should we expect the same thing into this next round of price increases? Like, you guys will lead a little bit off the bat because you're now FIFO, and then it catches up a little bit in maybe, you know, two, three quarters out? Thank you.

You're definitely right in your first comment in terms of how last year played out. We were ahead of price versus cost, dating back to Liberation Day tariffs and that benefit of being ahead kind of situated in the second quarter of last year. And we continue to run positive on PCP in each of the quarters of, you know, 2Q, 3Q, 4Q last year. We were positive PCP on a dollar basis to start this year. And we're anticipating to manage that equation on a dollar neutral or better basis. That does have an impact on margins, as you know that math well. So do we think we can continue to hold the line on margin neutral, on price cost? No, I think that was a little beneficial to us last year, but we're very focused on managing to positive or better and driving that double-digit operating profit growth for this year. Thank you.

Thank you. Our next question is from the line of Chad Dillard with Bernstein. Please proceed.

Hey, good morning, guys. My question for you is on Clara. Can you talk about the sales and the quarter and how that's turned in sequentially? And then just more broadly, how that business is positioned for AMI 2.0? And how do you think about when that cycle kicks off?

Yeah, and maybe I'll start. As you know, Clara is part of the grid automation business, and that business continues to inflect up. You know, we're down. The decline started to shrink. And, you know, while we still are a little bit down year over year in the first quarter, you know, as we communicated, we expect that to start turning to growth. But if you then peel that apart and specifically to your question of a Clara versus the rest, clearly a Clara had been declining higher while the other part of the business was growing. And I think, you know, what you have seen is that the Clara decline is just starting to, you know, get smaller and smaller. And, you know, we still, in the first quarter, saw a decline in that business. And, you know, as you look ahead, that is an area that's been more challenged, you know, as utility. And it maybe goes back a little bit to Jeff's very first question of how are utility managing budgets. And, you know, our view and certainly indications with conversation is that they are deselecting this a little bit over the other areas of investments while we've seen, you know, lesser projects come through. But the challenge for utility is going to be this equipment is going to fail at some point, right? The lifespan of this is not, you know, in the range of what our components, our typical components are. So, you know, what we're seeing is more projects discussions right now. We're quoting more projects. You know, we recently, you know, won a pretty nice piece of business that's multi-year. So, you know, I think from where we sit today, where this business declined, you know, we should expect going forward to start seeing, you know, this business realizing modest growth. But, you know, we feel it's been stabilized, and maybe that's another, you know, really important that we've seen the bottom. We're now starting to come up. We're not super expecting, you know, great growth rates, but, you know, the dynamics are such that this business should grow from here. That's helpful.

And then moving over to grid infrastructure, I know in the past you guys have talked about your order rates within distribution. I was hoping you could give an update on how those trended for the quarter. And then can you maybe break down, you know, how much of the demand that you're seeing is restocking the channel versus just like pure sell-through into the end market?

Yeah, maybe start with the second one. Our view is that the demand is what's going up on infrastructure and not going to stock. And, you know, we talked we're off to a good start on revenue, and that's, of course, driven by order rates. And that's on both the electrical and utility side, but particularly to T&D, also up, you know, nicely in the quarter. And for us, I mean, we generally don't talk about book and bill a lot because it's about order rates because we're a more short cycle business. You know, our orders were up, you know, over one. That's not atypical in the first quarter where, you know, people are starting to get their orders in to get ready for construction season. And that's typically a little bit over one. We're up stronger over that. We're, you know, closer to 1.2 to start off the quarter. I'd say that's both a mix of short cycle or book and bill that was solid, as well as projects. We talked a little bit earlier about some of these projects. So we feel really good about the start to the year, and it's what's driven us to raise our organic guidance. I realize there's a piece of that that's price, but there's a piece of that that's volume as well. So, we feel really good about how we started the year, and, you know, we don't see, as a matter of fact, we see a continuation, certainly, of this. So, nothing unusual in it.

Great. Thank you.

Thank you. Our next question comes from the line of Scott Graham with Seaport Research Partners. Please proceed.

Yeah, hi. Good morning. Thank you for taking my question. I was just wondering, you've got a global manufacturing footprint, global company. You know, with inflation higher, with some of the geopolitical uncertainties, how is your supply chain behaving? Are you getting what you need? Are you getting any pushback in any corners? I think I heard Joe say no, not yet, on pricing, but we are starting to hear, you know, enough is enough. Some corners are pushing back on pricing in different markets. How is your supply chain behaving overall? And then I'm hoping to the follow-up would be, how is your acquisition pipeline? Is there anything? It looks like your pretty balance sheet is very lean right now and is just wondering what the outlook was for 2026. Anything you can say?

Good morning, Scott. Maybe I'll take the first one and I'll hand it to Gerben for the second. So on the supply chain front, so we're not seeing any significant impacts or constraints on the supply chain side. I'd say what would be more noteworthy is over the course of the last couple of months with some of the disruption over in the Middle East. We did have a little bit of aluminum that we were purchasing out of that region would be a noteworthy area. We do have other qualified sources of supply around the globe. we were able to move that to other suppliers, and we weren't, at the end of the day, impacted by that, but it was something we had to address. We're not seeing constraints in other areas yet, chips or metals or component parts of any substance. So, I would say the supply chain, as we see it right now, is holding up well and supporting what we need to do to service our

customer demand. And let me take the second one on M&A. You're right to point out that our balance sheet certainly supports doing acquisitions at larger scale than perhaps we were able to afford in the past. And maybe even before we look at the pipeline, we are focused clearly around the core areas of our business. So if you think anything in T&D, if you think about things around the data center, if you think, you know, lines around our light industrial markets, those are all areas that we find very attractive, and they're still, based on our pipeline of deals that we're looking at, plenty of opportunity to deploy our capital there. Of course, timing isn't always very predictable, but, you know, you've also seen, and Joe highlighted what we did in share buyback, you know, in the first quarter, that in periods where, you know, perhaps there is a little bit of a void in acquisition, we think, you know, utilizing our balance sheet to do buybacks is an other attractive area to deploy our capital. Of course, our highest preference goes to CapEx, and we certainly have increased that. And based on some of my comments of areas we're investing, you should expect to continue to see that elevated. The second one being M&A, and I'd say there's a good pipeline there, both of what we'd call maybe the bolt-ons, even if they're getting larger, as well as larger deal. And then, you know, we have buyback as an option. So, you know, we see within those areas that we could fully deploy our balance sheets.

Thanks a lot. Thank you. And our last question comes from the line of Neil Burke with UBS. Please proceed.

Thank you. I wanted to come back to a high-voltage opportunity through 2035. Apologies if I miss this, but it's the $1.5 billion opportunity relative to Hubble's $400 million or $500 million transmission business today. I just want to get a sense of how to think about the growth opportunity. Yeah, so if you think about

that math a little bit, I'll help you. It represents about 7,000 miles of high-voltage uh transmission how we get to the billion and a half with with our content and that's over 10 years and you know who knows if that's longer or shorter but if you use that as a basis and then you know we with with you know we're not the only participant in that so you know we we you know certainly have have you know a very good position in in that market with our customers but if you add all those things up, we believe it can drive a point of growth above the high single digits that we provided for transmission substations in the absence of it. That's helpful. And yeah,

the RCO ISO recommendation for 7,000 miles, I mean, I think there are a few hundred thousand miles of high-voltage transmission in the U.S. overall. So, I mean, could that be more market opportunity if there's increasing, you know, content of 765 kilovolts in the U.S., like on top of that 1.5 billion, or is it sort of too early to say? I think the 1.5 was related to

high-voltage transmission overall, Neil. And so, obviously, there's a baseline market of transmission that's also growing strongly, as we've said. And so, I'm not sure what the

question was driving that but no no no that's clear that's clear thank you thank you ladies

and gentlemen this concludes our q a session i will turn the call back to dan enamorato for

closing remarks uh great thanks operator thank you everyone for joining us um we'll be around

all day for follow-ups thank you thank you and this will conclude our conference thank you for participating and you may now disconnect.