Thank you for standing by and welcome to the Hubble Incorporated second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. We ask that in the interest of time, then you please limit yourself to one question and one follow-up. You may get back in the queue as time allows. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Dan Imerato, Vice President, Investor Relations. Please go ahead, sir.

Thanks, Operator. Good morning, everyone, and thank you for joining us. Earlier this morning, we issued a press release announcing our results for the second quarter of 2026. The press release and slides are supposed 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 as 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 into this call. Additionally, comments may also include non-GAAP financial measures. Those measures are reconciled to the comparable gap measures which are included in the press release and slides.

Now let me turn the call over to Gervin. Great. Thanks, Dan. Good morning, and thank you for joining us to discuss Hubble's second quarter 2026 results. Hubble delivered strong financial performance with double-digit growth in sales, adjusted operating profit, and adjusted earnings per share in the second quarter, as well as year-to-date through the first half of 2026. Our strong positions in attractive end markets, as well as continued execution on our strategy, are demonstrated by our first-half performance. As megatrends continue to accelerate, most notably in data center markets and load-growth-related investment in utility T&D markets, we are seeing continued strength in our order book, which gives us increased visibility to our second-half outlook. operationally we are managing inflation effectively through price and productivity actions investing in capacity expansion to serve our customers in high growth areas and deploying capital to further upgrade our portfolio in high growth and margin areas within our core we are raising our full year 2026 guidance this morning to reflect double digit growth in organic sales, adjusted operating profit, and adjusted earnings per share at the midpoint of our range. Turning to page four, we're pleased to have closed on the previously announced acquisition of NSI in early June. NSI is a business we know very well and have followed for a long time. It operates in the same end markets with common customers, similar manufacturing processes, and a broad portfolio of critical electrical components with low cost of ownership and high cost of failure. The acquisition of NSI fits squarely within our overall strategy and enables us to double down on our attractive core while adding another high-growth, high-margin business to our portfolio. Strategically acquiring a leading electrical fittings brand in Bridgeport Fittings fills a key product line gap in our HES segment in a high-value niche, while the Polaris brand complements our leading Burndy brand in electrical grounding and connectors, and NSI's exposure in network infrastructure provides opportunity to further penetrate datacom, broadband, and data center markets. We're also confident that the addition of NSI will further accelerate our successful HES segment unification journey, which has resulted in market outgrowth and significant margin expansion over the last several years. Our recent sales force realignment and vertical market investment will enable enhanced cross-selling and deeper penetration into high-growth verticals, while the leverage of scale and best practices across the two strong businesses will drive long-term productivity and cost savings, enhanced service, and optimization of capacity and manufacturing processes. Now let me turn the call over to Joe to give you some more details on the financial impact of the NSI acquisition as well as our second quarter results.

Thank you, Gerben, and good morning everyone. From a financial standpoint, we anticipate NSI to be accretive to both the electrical solution segment and total Hubble's growth and margin profile, and we expect the acquisition to add adjusted earnings accretion of approximately 20 cents in 2026 and approximately 80 cents in 2027. Looking further ahead, we are targeting attractive revenue and cost synergies over the next three years, including two to three percent sales synergies from increased channel and vertical market penetration, as well as approximately 3% to 5% cost synergies from leveraging the combined scale of our respective operations, supply chains, IT systems, and back office capabilities. The $3 billion purchase price was financed with a combination of term loan, a bond offering, and commercial paper. and our pro forma leverage moves to approximately 2.9 times net debt to EBITDA following the acquisition. As we continue to generate strong free cash flow in the second half of 2026 and beyond, we intend to continue aggressively investing in high return CapEx to drive further growth and productivity while also returning cash to shareholders through dividend growth and modest share repurchases. We also intend to pay down significant portions of debt and deleverage our balance sheet over the next 24 to 30 months, which will drive strong adjusted EPS accretion in 2027 and position our strong balance sheet for further accretive M&A investment over the next several years. Moving to the second quarter results on slide five, Hubble's second quarter financial performance was strong with double-digit growth across sales, adjusted operating profit, and adjusted earnings per diluted share. Net sales of $1.712 billion in the second quarter of 2026 increased by 15% as compared to the prior year. Organic growth of 10% was driven by 6% organic growth in utility solutions and 18% organic growth in electrical solutions. acceleration relative to our prior quarters, driven primarily by strong performance in electric distribution and data center markets, supported by capacity expansion investments and incremental price realization. Acquisitions contributed five points to growth in the second quarter, driven primarily by DMC power and a partial month of contribution from NSI. Both high growth and high margin businesses, which are off to strong starts and integrating nicely within our utility solutions and electrical solutions segments. From an operational standpoint, Hubble generated $409 million of adjusted operating profit in the second quarter, representing 13% growth versus the prior year, with adjusted operating margins of 23.9%, representing modest contraction relative to a strong comparison in a prior year. Growth in adjusted operating profit was primarily driven by strong volume growth in high margin areas, as well as the impact of acquisitions. While cost inflation continues to increase, our pricing and productivity actions are keeping pace, and we are confident in our ability to continue to manage this equation throughout the second half of 2026, just as we have demonstrated very successfully over the past several years. We also continued to invest in our business throughout the second quarter to expand capacity in high-growth areas and generate future productivity. Adjusted earnings per diluted share were $5.52 in the second quarter, representing a 12% increase versus the prior year, driven primarily by adjusted operating profit growth. Below the line, higher interest expense associated with the recent borrowings for the NSI acquisition were largely offset by a lower year-over-year tax rate and a lower share count as a result of share repurchase investments made in the first half of 2026. While second quarter free cash flow of $213 million was down relative to the prior year on working capital timing and acquisition costs, first half year-to-date free cash flow of $259 million was up 12% year-on-year. On a full-year basis, we are on track to deliver approximately 90% conversion of free cash flow to adjusted net income, which absorbs the impact of increased capital expenditures and acquisition costs. 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. Utility solutions generated net sales in the second quarter of $1.026 billion, which represented growth of 10% versus the prior year and includes organic growth of 6% and acquisitions that contributed 4%. Our larger, higher-margin grid infrastructure business grew 7% organically in the second quarter, driven by strong double-digit growth in distribution markets. Transmission and substation growth was solid in the second quarter, and we continue to expect double-digit growth on a full-year basis in these markets as large projects ramp up in the second half and capacity investments come online. In grid automation, we were pleased to return to year-over-year growth in the second quarter as anticipated, with continued strong growth in protection and controls, most notably in our substation switching products, while meters in AMI revenue grew sequentially and delivered strong orders that position us for continued recovery in the second half of 2026 and into 2027. As Gerben highlighted in his opening remarks, orders were strong in the first half, and while we're not typically a backlog-driven business, our first-half book-to-bill ratio of approximately 1.2 times for utility solutions is strong and provides high visibility to our second-half outlook, where we expect organic growth to improve modestly relative to first-half performance. This demand is broad-based across T&D markets, but with particular strength in orders and quoting activity for transmission and substation projects driven by load growth and data center build-outs. We continue to believe utility T&D markets are in the early stages of a multi-year investment cycle, and we are investing proactively in additional capacity to serve the long-term needs of our customers. Operationally, the utility solution segment delivered $263 million of adjusted operating profit in the second quarter, representing 10% growth in adjusted operating profit versus the prior year, with adjusted operating margins up slightly year over year on a difficult prior year comparison. Operating profit growth was primarily driven by strong volume growth and acquisitions, while we continued to drive price and productivity actions to mitigate increased cost inflation. Moving to page seven, electrical solution results were also strong in the quarter. On the top line, electrical solutions generated net sales of $686 million, which represented growth of 25% versus the prior year. Organic growth of 18% was driven by strength in data center, light industrial, and non-residential markets. Data center sales were up approximately 65% in the quarter as capacity additions, new product introductions, and content gains drove outgrowth in a strong underlying market. Our vertical market strategy and sales force alignment initiatives continue to drive commercial success in the data markets and other high growth areas of our electrical solutions portfolio. The acquisition of NSI contributed $35 million of sales for the partial month of June, representing approximately seven points of sales growth at accretive adjusted operating margins. in line with our expectations. Our integration efforts are off to strong starts, early order activity has been favorable, and customer response has been positive. As Gerben noted earlier, NSI is a strong strategic fit within our electrical solutions portfolio, and we are confident that this business will drive near-term and long-term value creation for our shareholders. operators. Operationally, the electrical solution segment delivered $146 million of adjusted operating profit in the second quarter, representing 18% growth versus the prior year. Strong volume growth, strong price and productivity realization, and attractive profit contributions from NSI were partially offset by higher cost inflation and increased year-over-year restructuring and related investments within the quarter. Adjusted operating margins of 21.2% were down 130 basis points versus a difficult comparison in the prior year, largely driven by the net margin impact of price cost productivity, as well as approximately 60 basis points of higher restructuring investment. However, we have continued to take increasing pricing and productivity actions throughout the second quarter, and we are confident that the electrical solution segment will return to adjusted operating margin expansion in the second half of 2026. Turning to page 8 to discuss our full year outlook, we are raising our 2026 outlook for sales growth, adjusted operating profit growth, adjusted operating margin, and adjusted earnings per share. On sales, we are raising our growth outlook from plus 8 to 11 percent to plus 16 to 18 percent, reflecting an additional five points of acquisition contribution from NSI, as well as an increased organic growth outlook from plus 6 to 9 percent to plus 9 to 11 percent. We are raising our utility solutions Organic Growth Outlook to plus 7 to 9 percent, largely reflecting strong visibility in T&D as a result of first-half orders, and we are raising our Electrical Solutions Organic Growth Outlook to plus 12 to 14 percent, driven by our increased expectations for data center growth of approximately 50 percent for the full year, as well as stronger non-residential and light industrial markets. Our organic growth raise is primarily driven by stronger volumes, along with modest incremental price realization relative to our prior outlook in both segments to offset increased inflation. Operationally, we anticipate adjusted operating margins of 23.1% to 23.4%, representing 40 to 70 basis points of year-over-year expansion. This outlook includes margin accretion from NSI, accelerated investments in service and capacity expansion to support customer needs in high-growth areas of our portfolio, and increased full-year restructuring investment. Additionally, we anticipate an improvement in price-cost productivity relative to our prior outlook, driven by anticipated net benefit of $20 million in the quarter, largely as a result of IEPA refunds, net of potential customer considerations, and a slight increase in underlying tariff costs from recent changes to the Section 301 tariff framework. Below the line, increased net interest expense of $170 million is driven by borrowings for the NSI acquisition. We expect a full-year adjusted tax rate of 22.0 to 22.5%, though we anticipate a higher tax rate of approximately 24% in the third quarter, driven by timing of discrete items. We are raising our full-year outlook for adjusted earnings per share from a range of $19.30 to $19.85 to a range of $20.25 to $20.55, which represents an increase of approximately 4% at the midpoint and a range of 11% to 13% growth year-over-year. We anticipate approximately 90% free cash flow conversion on adjusted net income in 2026, which reflects the impact of increased year-over-year spending on capital expenditures and NSI acquisition costs. Finally, I'll highlight that our full-year outlook reflects approximately 20% adjusted operating profit growth at the midpoint of our range, reflecting highly attractive underlying operating performance. Now, let me turn the call back over to Gerben to provide some concluding remarks. Great.

Thanks, Joe. We are confident in our ability to execute over the second half to deliver on a strong 2026 financial outlook. In the near term, we are focused on driving outgrowth in our attractive end markets through product and service differentiation, executing on investments to support customer needs, and continuing to effectively manage price and productivity in an inflationary environment. Longer term, we continue to believe that our utility and electrical end markets are in the early stages of a highly attractive multi-year investment cycle, and we look forward to sharing more details with you on our long-term strategy and outlook in our next Investor Day, which we plan to host at our Utility Solutions Training Center in Centralia, Missouri on March 4, 2027. With that, let me turn the call over to Q&A.

And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. And we ask that you please limit yourself to one question and one follow-up. Our first question comes from the line of Jeffrey Sprague from Vertical Research. Your question, please. Jeffrey Sprague, your line is open.

Sorry about that. Looks like I was muted. Good morning, everyone. Hi, Jeff. Irvin, can we just dial a little bit more into the machinations that cyperated the structure? You know, the strength in distribution, I thought, was notable. So, kind of wondering there if there's some inventory restock after kind of destock we've gone through for a while there. And then, you know, on the transmission and substation side, it sounds like, you know, it wasn't particularly strong on the top line in the quarter, but obviously you have all these orders. Was there some sort of timing benefit that impacted that part of the business in Q2 that, you know, is that fortifying your fuel on the second half?

Yeah, Jeff, thanks for the question. And certainly, you know, strong order rates, as we mentioned, up, you know, 1.2x in the quarter. pretty broad based across our business, both from grid infrastructure as well as grid automation and within grid infrastructure also, you know, broad between distribution and transmission. So, you know, certainly with distribution up double digits, transmission and substation also growing very nicely in the quarter and accelerating in the second half. And that comes through the visibility that we have with the orders and the backlog. You know, the pipeline certainly and the quoting activity continues to accelerate. So when we look ahead at the multi-year investment cycle, we see strong momentum. You know, long-term growth supported by data center and utility capex and our position. A position in this market is really a leading position with, you know, with the installed base, with the back position, with a reputation. So we feel really good. But certainly, you know, as you think about transmission substation, which you point out, perhaps being a little bit lower, we're up high single digits in the first half. And we expect to be up double digits in the second half here. And I'd say there's really nothing to read into this beyond, you know, you get a little bit of project timing when sometimes these projects, so quarter to quarter may have a slight noise in it. But, again, based on what we're seeing in the market, based on our quote activity and our orders and backlog, we feel really good with the increased, you know, organic growth guidance that we're given for the year and the second half.

Right. And the size of the guide obviously conveys the confidence. Is there anything, though, like kind of the variance around that in terms of supply chain, your own capacity additions or project timing, you know, that creates sort of a variable outcome in the second half, in your opinion?

Yeah, I would say nothing really to say on the supply chain. We are continuing to add capacity in our business, our substation part of the business particularly where we're adding capacity. But, again, this is embedded in our guidance, supported by the orders and the backlog. So it's why I'm confident that we'll see growth accelerating there as we go into the second half.

And then maybe just one final one, maybe it's for Joe, but just thinking about sort of the implicit margin expansion in the back half that's part of the guide here. Would you level load that across the quarter if it's a little bit more back-loaded? I mean, I guess you've got the tariff refund in Q3, so maybe it's front-loaded Q3 to Q4. Just a little bit of color there I think would be helpful.

Yeah, you put your finger on it there, Jeff. We're anticipating it is going to be a little more front-loaded, given the nature and the timing of those IEPA tariff refunds and how they roll through, but really confident in that back-half margin expansion playing out.

All right. Thanks. I'll look at that.

Thank you. And our next question comes from the line of Chris Schneider from Morgan Stanley.

Your question, please. um thank you um you know you guys talked about in utility specifically the first half um book to bill of 1.2x gives you guys pretty good visibility into the back half um i guess my question is you know are you guys starting to build any sort of visibility into 27 um or is it still too early to see that in the order book in the backlog um and then just maybe if you can't see it there, like, how have customer conversations trended, you know, on 27? You know, does it feel like you guys could sustain maybe something at the higher end or even above the organic target? Thank you. Yeah, I would say, Chris, let me go here.

We are seeing orders starting to be booked into 2027. That's particularly on the transmission and substation side of the business. Again, if you look at what utilities are doing, they're having a plan well into the future with some of these load growth and capacity that they're bringing online. As we see higher voltage systems, those tend to book out orders. So yeah, we're seeing orders being booked in our transmission substation area into 27, and again, we feel based on both what we're seeing in the order book, the conversations we're having, and if you just think about with what's going on, right, with the data center build out and the need to add additional load in addition to what we've been talking about for years, which is, you know, a system that needs to be hardened. It's just, Just, you know, it's multi-year and utilities are starting to look further out.

Thank you. I appreciate that. And maybe if I could just follow up on price. And I don't remember a much prepared commentary on this, but if I remember correct, you guys pushed through price, I think it was in April. Can you just maybe talk about, you know, the realization of that? You know, has there been any pushback in the channel to the action? And then should we expect more price action here into the back half, just given, you know, kind of the clear inflationary pressure that's out there in the world?

Sure. Good morning, Chris. So, yeah, on the price equation, we did push price through in April. And the expectation of that price increase, which was broadly across utility and electrical, we were anticipating about a point of price to come out of that action. and at that point was raising our full-year price expectation to about three points. And since then, we've experienced a little more inflation and we've gone out with additional price in July. And our expectation for that most recent price increase is we'll see about another half a point in the back half of the year. So coming into the year, we were anticipating two points. We had the April price increase at a point, and now we're adding roughly another half a point or so. Kind of think about it like three to four points for the full year, Chris.

Thank you very much. I appreciate that.

Thank you. And our next question comes from the line of Chad Dillard from Bernstein. Your question, please.

Hey, guys. So just a question for you guys on your capacity expansion. Can you give a little bit more color? You know, what verticals are you expanding? How do you think about the revenue unlock? And when do you think that will be completed?

So good morning, Chad. So the capacity expansion story is a really important part of our growth initiatives here as we continue to service strengthening demand out of the markets. And so our CapEx investment this year, we're anticipating roughly $175 to $190 million of CapEx, and that's up from our $155 million last year. A lot of our CapEx spend is going towards adding capacity and to adding productivity initiatives, but largely focused on capacity. Over the last couple of years, we continue to bring new capacity online, and every quarter as that gets turned on, we continue to absorb new revenues into that capacity. It's hard to say exactly how much that translates to every quarter, but if you think about, on a go-forward basis, bringing on roughly $25 million in new capacity-ish, it's not always linear, but we'll continue to do that as we progress the back half to 26 and as we work our way through 27. Gotcha. That's super helpful.

And then just secondly, it sounds like you're seeing a larger slug of projects flowing through. So I'd be just curious, how does your win rate on those larger projects compare versus the corporate average? And then maybe you can talk a little bit more about your modular approach and how that helps you win.

Yeah, so maybe starting on the modular and then I'll come back to the win rate here, Tad. It's actually a trend that we're seeing broadly in our business and I think in the market. And it's a lot driven by labor availability. And by quality control of something that you can build in a, you know, factory setting versus doing it on site. So, you know, if you think about, you know, our businesses in the electrical side, like data center and the PCX business where we do power skids. Or if you think about the substation business with system control where you do the control houses and you're basically building these in a factory environment with good quality control that you then plug and play into a system. But you're also seeing it more on a skew level in component, and DMC is a really good example of a connector where you're crimping the connector onto the bus bar, and the traditional way of that would have been to do a weld in the field, and now you can do a crimp in the field with less skilled labor requirement quicker. So there's absolutely a trend going on where you're bundling more. And we have a great position. If you think about the portfolio and the breadth of our SKUs, there's a lot of opportunities for us to either bundle things together or find solutions how one component can integrate each with the other. So surely a trend in the market. As it relates to project and project flow, And I'd say this has accelerated. And if you look, for example, in our transmission and substation business, the project quotes has about doubled in the last couple of years. And that's driven in part by these higher voltage projects where utilities are just looking further out. They're planning these further out. and by, you know, the strength of our portfolio to be able to offer some of those projects. So, you know, I'd say the win rate on those is probably similar to what we've seen traditionally, but there's just more of those coming through right now.

Great. Thank you.

Thank you. And our next question comes from the line of Tommy Moyle from Stevens. Your question, please.

Good morning, and thank you for taking my questions.

Tommy. all right Gervin I wanted to start with the recent trends and distribution great to see up double digits this quarter but that's clearly above the trend line for that business so what more can you tell us about what's driving that strength and what are you embedding for your assumption in the second half there yeah thanks so distribution is is off to a good start I would say it is a reflection of the strong underlying markets, but also, if you recall, the stock of the last couple of years and in a year over, I'd say, you know, the comps are still somewhat easy to lap. You know, there's a lot of investment going on into the transmission and substation market, and that's great to see, but underlying distribution markets also remain very strong, And the foundation of that strength, and, you know, I see that as a long-term positive, is the age of that infrastructure and the need to harden and the resiliency. And that still remains, even though it's oftentimes overshadowed right now by the need for load growth, the need to – and there's, you know, a good support for that. You see that embedded in CapEx budgets as well. So, you know, we believe the underlying, we see the underlying market to be strong, but a little bit of comp gas. So, you know, longer term, we see this continue to be, you know, attractive and certainly going into the second half and going into 2027. And we continue to see over longer term for this to be a mid-single digit plus market.

Yeah. Yeah. Thank you for that context, Gerben. And I also wanted to ask about the recent trends you called out in meters and AMI. I think you said you started to see a steadily improving market there, maybe some orders suggesting continued growth second half this year, even into next year. That's a very different tone than what we've heard recently. And so any gaps you can fill in would be appreciated.

Yeah, a little bit. And if you think back on what we've said, right, so grid automation had gone through, you know, some declines for several quarters, you know, led by the Eclara business that we talked a lot about. And what we had said last quarter that we expected grid automation to return to slight growth in the second quarter. And that indeed happened. The book to bill also there was above one. And so that gives us confidence that what we also called what was to see continued growth into the second half. And this provides us certainly confidence on that. If you then go specifically, I think your question was on the Clara one. You know, we're seeing improvement in the project flow there, particularly in the muni and co-op space. And if you recall, this is really an area we refocused on last year to really, you know, pivot the investment more to that, to take some of the investments, prior investment that we're making out and right-size the business a little bit. And we're starting to see that pay off right now. So small and medium projects, some international projects that we're seeing that sets us up for growth in the second half, even in the Eclara business right now. So, yeah, it's a little bit what we expected to see here, Tommy, but, you know, we're certainly happy that it's unfolding that way.

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

Thank you. And our next question comes from the line of Christopher Glenn from Oppenheimer. Your question, please.

Yep. Thank you. Good morning, everybody. On the accelerated data center growth, you talked about the impact of the markets, capacity adds, new products, as well as content. I just want to drill into the content component there. Is that a change in the allocations you're getting for certain product categories or really an expansion of the scope of your design wins?

I would call it more of the same. And so as we continue to add capacity on core product lines that are going into the data center, what's really important in a lot of this, we call it our short cycle data center support business, is if you've got the inventory available, you know, right time, right place, they're pulling it pretty quickly. And we've been very aggressive in adding capacity and making sure we're investing in the inventory on the shelf. So that's really supporting our vertical market strategy, which is putting us in the position to swipe that business, but that's a big piece of it.

Yeah, and the only thing I would add there, as you see data centers evolve where there are certainly higher capacity data centers, we're adapting some of our products for those applications. So I'd say there's a decent bit of new product development. If you think about our new pin-and-sleeve devices that are going to higher amperage to the 800-volt infrastructure, it contributes as well.

Great. Thanks for that. And then just the seasonality at electrical was pretty pronounced. Even if you strip out NSI, it was up about 15% sequentially. I'm wondering if June was really killer, and in particular, it's often the pull factor and the seasonal strength, I think, and, you know, if the non-res acceleration, was that just kind of, you know, normalizing on project releases? Because I think the trend in those markets where project releases were just gums up, but now tariffs and different factors have become normalized in the baseline.

Yeah, I would highlight that there was nothing noteworthy of June relative to the second quarter, and that being particularly pronounced. We saw really solid growth over the course of the quarter within electrical. And then in terms of some of the products and projects that we've got slated, we see continued growth and visibility on the electrical side, although it continues to remain short cycle, a lot of book and bill, and we've got good momentum both on non-res and on data center and light industrial. I would highlight that we have seen non-res starting to click up over the last couple of quarters, and we saw that in the fourth quarter, signs of an uptick. We saw that continued in 1Q, and we really saw that gaining momentum. We're a little cautious to say that that's going to continue to accelerate, but non-res has been pretty solid. Great.

Thanks for all that color, Joe.

Thank you. And our next question comes from the line of Nigel Coe from Wolf. Your question, please.

Oh, good morning, everyone. We've got a lot of ground already, but I did want to try and unpack the 40 BIPs increase in the operating margin for the full year. My wonky math gets 30 BIPs from tariffs. I'm guessing about 40 BIPs from NSI. Maybe you can clarify that. And what I'm trying to get at here is, you know, how is the kind of the core price cost productivity kind of trended from your initial view? You talked about the price increase in the back half of the year. Just wondering how that's all playing out together.

Yeah, good morning, Nigel. Definitely, you're right on the 30 BIPs from net tariff, the 40 BIPs on NSI squares up with our math. And then we've got, we'll call it operational, which is really volume growth, which is coming primarily from the electrical side, non-res, light industrial, data center uptick. That's being partially offset by higher levels of investment that we're anticipating making back into supporting all of this growth. And so that investment, which is partially offsetting that volume growth, is really the other piece of the equation there.

Okay, understood. And then the tariff, the $20 million, does that land disproportionately within electrical versus utility? And then looking beyond 3Q and into 4Q, do you think electrical will be back to margin growth in 4Q?

So first off, the tariff, we would split that roughly half and half between electrical and utility, and that's going to be concentrated in the third quarter. And the second piece of your question around electrical margin, we do see electrical margin returning to expansion in the back half, both in 3Q and in 4Q. 3Q, we'll see the surge, you know, with that IEPA refund dynamic, but we're anticipating continued margin expansion year over year in the fourth quarter in electrical.

I'm sorry, if I'm annoying and just deduct that tariff in 3Q, would electrical still be expansion?

Yeah, I mean, that's hard to reconcile right now, Nigel. We can take that offline.

We're still dealing with the price through the years.

Great. Thank you. Thank you. And our next question comes from the line of Alexander Virgo from Evercore ISI. Your question, please.

Thanks very much. Morning, gentlemen. I appreciate you taking my call. I wonder if I could dig into the booked bill just that little bit more. So 1.2 times what to bill implies, what, about $2.4 billion in the first half. I'm guessing that not all of it is expected to be delivered in H2. So I wonder if you could just expand that a little bit for us and maybe help us with any color on duration and, I guess, any changing dynamics in terms of customer projects duration to, I guess, to keep building that into the end of the year and building up for 2027.

Yeah, thanks, Alexander. And it's hard to exactly do all the math for you, but let me try to just broadly talk about it. So, you know, we are a short cycle business. So part of that book and bill we will see in the second half. It's the reason why we're taking our organic growth guidance up for the second half. But as the question came earlier as well of, you know, are you seeing bookings into 2027? And I would say part of this is specifically, if you look at the longer cycle product lines, like in transmission and a substation, there's part of that that's booking into 2027. But I would say there too, it gives us a lot of confidence on our longer term framework that we've been talking about. The disinvestment cycle is really multi-year and, you know, that we expect to continue to have attractive performance and results longer term. So it's a little bit of both more confidence and increased expectations for the second half and a good setup for 27.

Okay, thank you. And then could I follow up with just a question on the 60 BIPs of headwinds from restructuring HES year on year? Is that something we need to think about for the second half as well, or is it more to do with the NSI acquisition and integration costs, and therefore it's more of a one-off?

Yeah, not really related to the NSI acquisition. That just is part of our ongoing electrical segment transformation program. And so we're anticipating, as our guidance implied, approximately $20 million of restructuring and related in the full year, for which roughly half of that, maybe slightly more than half, was spent in the first half, and a lot of that was in electrical. We continue to invest in that program in electrical, so we're anticipating the back half is also pretty heavily loaded with restructuring-related investments that will set us up and continue the position for efficiency and margin expansion in 27 and beyond related to that program, among other things. But I think that's the most constructive way to think about that restructuring investment in electrical. Great. Thank you very much.

Thank you. And our next question comes to the line of Neil Burke from UBS. Your question, please.

Hey, good morning. So, last quarter, you provided some commentary on the high-voltage transmission opportunity, the $1.5 billion over 10 years. And maybe this was part of some of the strengths that you saw in book-to-bill in the quarter, But any update you can provide on these projects and, you know, the size of the opportunity? I think some of these projects should be starting around now in the second half of the year.

Right. Yeah. So, indeed, you're right. It's pretty broad based, I would say. And we see it where load growth and data centers are going in. That's where the requests for interconnections are the highest. And, you know, our first 765, which we talked about winning, will start shipping in 27. We're also seeing 550 KV, which is similarly an application used for these interconnects that we're shipping this year and the second half of this year. So you're right to point out that it's, you know, about happening at later part of this year and then certainly into next year. So the quote and pipeline activity is strong. I mentioned earlier, you know, we're quoting about twice the volume that we were a couple of years ago, and a lot of this is driven by those higher KV projects. And, you know, just a reminder of our position in this market. I mean, we have the leading installed base of transmission and substation infrastructure. We have the relationships and the capabilities to innovate these higher voltage projects. We're doing this in concert with our customers specified in that process. We have a very capable lab that we use to test and inspect these products in. So it's a very attractive area, and we're well positioned. And as far as the growth rate, what we talked about, about a billion and a half opportunity over the next 10 years. And if you think about that for our business, given our position, our win rate, it's about a point of additional growth over the next several years.

Thank you. And just one follow-up question on the growth outlook for this year. In grid infrastructure, I believe you said it was expected to be up double digits in the back half of the year. Please let me know if that's correct. But, you know, the comp gets a lot harder in 4Q. So curious about how to think about revenues sequentially in the grid infrastructure business. Is there any reason, you know, revenues in this business can't be up in 4Q given the momentum you've seen in book to bill? Or is there some seasonality that will limit growth from 3Q to 4Q? Thank you.

Yeah, grid infrastructure revenue, you know, pacing around double digits for the year. we would anticipate that continues. You're right to highlight there's a tough comp in the fourth quarter, but grid infrastructure continues with its momentum. So that's about the right way to think about the back half of the year, including the fourth quarter.

Our next question comes from the line of Brent Lindsey from Mizzou. Your question, please.

Hey, good morning, all. Questions on price, cost, productivity. So the improvement, the net 20 in Q3, sounds like that's all refund. What's implied for Q4 in terms of the refund impact, if any? And then I guess is there any benefit that's more structural from the recent changes on 232 or 301 that might be embedded in the guide or potentially incremental?

Yeah, so I'll take those two. the first one on refund. The refund we're anticipating in the guide is all in the third quarter. If there's any more that's principles over, we would certainly update and be transparent about that, but it's all third quarter. And then in terms of any structural changes to 301 or 232, So I'd say over the course of this year, there's been minor changes along the way, nothing of any substance one way or another. There's been some minor pluses and minuses. And I'd say that continued right on up through last week as the 122 sunset, and we're replaced with a new framework for 301's quick assessment on our business's minor impact on a go-forward basis. So, by and large, over the course of this year, any changes in tariff have been relatively small.

That said, it's still a very inflationary environment, right? And we still see, you know, copper and aluminum and steel and, you know, all the likes inflating this year.

Okay, great. Appreciate that. I guess just on free cash flow, tracking to 90% of adjusted net this year, imagine there's some one-timers on M&A and things running through there. How are you thinking about the progression and the ability to get back to 100% plus over the next 12-plus months as maybe some of those items roll off?

Yeah, I think over the next, let's say, 12 to 24, we're anticipating continuing to pace at elevated levels of CapEx. So if CapEx, you know, used to be less than 2% of sales when we were converting at 100% of net income, we're now pacing at 2.5% to 3% of sales, which is going to have a natural, you know, headwind to that conversion rate, which is why we're anticipating kind of pacing around 90% for the next couple of years as we do continue to invest to support all of this growth that's out there in the market that we're talking about that we do need to add capacity. The other dynamic, obviously, when we've got growth ahead, we have to invest certain amounts in working capital, and that's another part of the equation, a smaller part of the equation, but that is another part of the equation there on our conversion rate. All right. Thanks.

Best of luck.

Thanks. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Dan and Maratu for any further remarks.

Great. Thanks, everyone, for joining us. We'll be around all day for calls. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.