All right, good morning. We'll continue with a couple. We'll be very pleased to have Gervin Bakker here, CEO of Public. Thank you very much for joining us this morning. I'm Joe O'Day. I lead the multis effort here at Wells. If over the course of the dialogue you have a question, please just raise your hand and I'll get to you so we won't interrupt it, but I'll make sure to get your question in there if you have anything. We'll jump right into it. We'd love to start on the utility side and specifically grid infrastructure, talk about demand trends that you're seeing out there, starting on the transmission and substation side of things. And so you are in a multi-year stretch of seeing solid, strong growth in both of these verticals. Talk about the pipeline, how you think about the median term growth potential that's out there for transmission and substation.

Yeah, perfect. Thanks, Joe. And thanks for the opportunity to engage here with this group. And thanks for starting off on the high point of utility, which clearly transmission and substation is for us right now. So I'd say the pipeline and the growth rates have been very good there. And certainly if you look at the order rate and backlog, it's very supportive of that. And, you know, drivers there are load growth and interconnect. And, you know, I would say these are more recent drivers on top of what has already been a long-term trend in this industry, which is grid-hardening. And I think grid-hardening is more broad and truly talking about the other parts of the businesses as well, something that utilities have been very focused on and that we've benefited on. But more recently, the load growth in Connect is part of that, is driving our book and our shipments as well. So we've talked a little bit about that business as being on the higher side of the portfolio, of high single digits. And certainly more recently, we've seen that exceeding those kind of levels. You know, we're starting to think ourselves around the framework of what's the next few years going to look. Eventually, we'll do another investor day engagement with all of your work, where new targets we'll set forward. But I would say certainly over, you know, as we look out right now, we see those growth rates, you know, exceeding those high single digits as we're realizing right now. So we're very optimistic and we're investing in this part of the business pretty aggressively to sustain those growth. But we're very optimistic about our transmission and substation future.

And what kind of visibility do you have? How far out in terms of the conversations that you're having with your customers to understand what's in their pipeline?

Yeah, I would say the conversations are longer term. Certainly, for our customers to put in a decent place takes time. They've got to go to regulators. They've got to go to approval products. So they look at their CapEx budgets. It's part of a reflection as they look out how they plan it. You've seen those goes out. Our products are highly specified. So we're actually talking and engaging with customers to select our products. the bundling of our products so I'd say it's pretty far out but that doesn't always translate into orders our products still even if you think about transmission as substations generally measured in months it furthers out maybe 6 months of lead time right now so we talk more in agreements to supply with our customers and we have long term agreement But the actual orders tend to come more as these projects happen. That's, I would say, actually a good part of our business. As we look at our business, a long backlog is actually something we try to shrink. And it's usually a reflection of our lead times going out. And we want our lead times actually much shorter so we can be responsive to our customers.

And the other part is if you get orders three years out, you either need all kinds of indexes to make sure you're protected or you may be on the wrong side of that equation three years out. So, you know, we actually don't mind that it's short of time as long as we know the commitment is made to help. And that's oftentimes how we do these.

And then also within grid infrastructure on the electrical distribution side. So the biggest kind of vertical that you're going to serve within that unit. We went through a period of stocking and then de-stocking, and so just to unpack a little bit of where you are today, when you start to lap the de-stock comps, and on the other side of that, how you think about the growth potential for the distribution side.

Yeah, yeah, and I think you're right how you kind of characterize that. We went through a period of de-stock last year that was kind of a quite lengthy process the first to channel and then the end user we we started to see us coming out of that last year the best indication of that was orders returning and and in addition to the conversations uh with our customer um you know we've seen that grow nicely here in in the first quarter our our orders continue to be supportive of certainly what what we've indicated uh for the year uh going out um Hardening is a big driver there, a big continued driver of, you know, growth in that market. And we see that, you know, again, multi-years out that I even would say probably decades out of the need to invest in that market. So, you know, I think the kind of the rates that you're seeing, there's probably a little bit of calm still. I mean, we're a little bit above that that mid single digit kind of longer term target that we've indicated. And I think that that is a little bit comp short term. But we're very, you know, confident that this mid single digit, it will be lower than the transmission and substation for the drivers there, but still very attractive growth for us.

And do you find that your utility customers are in a position where they've got to prioritize the transmission and substation spend such that it has any kind of impact on the distribution side or that they can really manage the spend independently?

Yeah, I think it's a little bit how you look at it. And maybe I'll start primarily what our customers are trying to solve for, which is providing power in a load growth environment and providing that in an efficient and and reliable way and that drives at the end why they need uh our products but then there's of course some constraints that utility customers have one is affordability they need to get you know certainly they spend through regulators oftentimes and and find support and what's the impact on on the end user there is uh labor uh constraint in the market and and then just the budgets that they operate under. So there's certainly some tension against the need to invest in this grid and how fast and at what level can they do it. I'd say perhaps less so that they're taking transmission from distribution. I think as you see the CAPEX budgets increasing, which clearly we're seeing happening right now, more of that is going to the transmission and substation. So I think it's less about that is being taken away from distribution is that more of the incremental investment that we're seeing is going to transmission and substitute and why we argue is that the growth rate of that is going to be above that of distribution. But maybe the other thing to highlight here is we look at our portfolio. We are equally strong in transmission and substation as we are in distribution. About 80 to 90% of of the components of the hardware of the of the materials that you need to build that grid hubble makes and that's both in the transmission and the substation so i would say if a utility makes a choice to spend the next dollar from distribution on on transmission we would benefit equally or vice versa so we're a little bit agnostic of where the next dollar comes but but our view is that more of it is being directed now uh to transmission this is why we're investing So what does matter is do you have the capacity to serve when they move that dollar? And, you know, we're being pretty aggressive in our investment in that area.

And then rounding out the growth infrastructure side of things, when we think about gas distribution and telecom, there's a period of time where you saw some pressure on the telecom side of things. But just help us understand where you are in the demand patterns there, how you think about that moving forward.

Yeah, I think it's a little lower level of growth than what we're seeing in T&D, but still, you know, attractive GDP plus. And if you look at some of the drivers of their growth, certainly in our gas business, it's to a certain extent very similar to electric, very aged infrastructure that needs to be upgraded with our components and on the communications side of the business. we, you know, we saw the big decline a couple of years ago, that's, that's returned to growth. Right now, there's still, you know, a lot of fiber going in. So, so I'd say, you know, those are GDP plus businesses going forward with, with, you know, again, attractive dynamics of what we serve with, with our critical components.

And then the other part of, of utility on grid automation, and specifically on meters and AMI, six or seven quarters into seeing declines and that's in that business, what you view in terms of the outlook there when that business shifts to starting to see some growth?

Yeah, you have to certainly have faced some challenges that we've talked about quite a bit here. You know, that grid automation business, and that's kind of how we look at it holistically, will return to slight growth here in the second quarter after, are, you know, some periods of decline, primarily driven by by the meters and AMI business and we'll continue to see growth there in into the second half as well. If you talk specifically about our AMI and meter business and maybe just to put it in perspective, it's represents represents about 10% of the revenue of utility but less than 5% of the operating profit of Hubble. So it's quite a small contribution to the overall portfolio of what Hubble does. we've you know addressed the cost side of that business you know we were investing quite heavily to drive new technologies in there we've refocused that business to areas where where we've traditionally done very well and you know certainly our expectation and the headwinds are behind us right now of the decline of that business so you know our viewers as that business now grows and and it'll grow, you know, more modestly, we'll see the margins improve. Those margins are below the average of our portfolio. Our expectations are for higher margin for the business. But after the work we have done and, you know, with some modest growth, we can improve those margins.

What about its value to the broader utility business? And so when you think about lower growth, lower margin, but is there synergy value that it brings into your overall offering that winds up having more value than what we see just in its independent business.

Yeah, it certainly serves the same customer base that we serve, and it's with critical products as well. It's clearly helped us build more of this grid automation business, and it's how we look at it. There's a lot of parts that are actually very attractive and growing, have been growing really attractive for this you know we looked at our business a number of years ago we were primarily a hardware business and as we looked about what the grid of the future looked like we started to see control on the grid and sensing on the grid and and we just didn't have that capability and this was our way to build scale into that and we've really really benefited from that but but we still measure our businesses in the pieces as well it's it's what we do on our whole portfolio how we look at the business and and this business has room to improve and I think with what I've told you with the cost that we've taken out and with modest growth our expectation is that this business will will show a better margin profile going forward and then within the the grid automation piece half of it is the grid protection and controls what about the margin profile there yeah and the growth yeah yes and then that's actually the part that I said that that, you know, we've really build up and it was a capability that, that, you know, eight, nine years ago, we really didn't have. And it's really hard for a company that's, that's, you know, what we call heat and beat, we're doing forging and stampings and plating as a core company. And that's still a hugely important part of our portfolio. But as we looked at what the future of the grid, it that's a hard pivot for companies to do. And I think we've done that very successfully and if you look at the other half of the grid automation business it's an indication of what we've done there both in on organic road as well as acquisitions we've grown that that's that's growing high single digits and you know there's period that is actually above that as well margin profile that are very similar to the tnd business examples of new products that we've we've we've brought in more recently that have done really well is for example our line defender it's a distribution product that actually helps with faults further down the line these are very expensive faults to to correct truck rolls is one of the highest cost the utility will have and to the extent that you can have self correcting and identifying where where faults on and this is one of those products and and taken off really nicely another one is is a power quality measurement it's an it's another vision that we actually acquired that sits in that uh serves not only utilities but serves data centers power quality and data centers is very very important doing really well so i'd say that business overall um is attractive margins high growth we just need to get that that one piece that we just talked about in a better and but it's a very nice segment and then shifting

to the electrical side and kind of the non data center piece of electrical if if we start there in an environment where you know non-res activity has been has been challenged yeah but but but what you're seeing with respect to interest rates and inflation as as overhangs versus say just duration of a challenged market that starts to give way to to some green shops kind of what you're seeing out there in non-res yeah yeah non-res is uh you know it's just become a smaller part of our portfolio as as you know we've certainly grown grown the company uh we saw some um modest improvements uh early uh in the year in that area um and i'd say as we

see the current situation that that has persisted modest you know we believe driven by by you know short cycle activity around these markets and you know and you know if you think about the some of the electrification and the reshoring that's happening and you know some of the activity that that's happening around that on on the non-res site. Interestingly enough too that that's it's not consistent throughout the region and we see a lot where data centers are going in. We see more activity around other non-res activity so it's not broad in the market. It's it's coming off a low it's been kind of slow so you know I characterize it as okay perhaps and we have seen modest growth this year that we see sustaining.

And then on the data center side if you could just size your revenue for us and explain the different ways that you're serving the data centers both through the the legacy side of the business as well as the M&A that you've done in PCX and in DMC.

Yeah so data centers I mean we often talk about data centers on the electrical side of the business but actually the larger exposure indirect of data centers and a utility business and I'll talk a little bit about both of those here on on the electrical side about 10% of our revenues come out of data center and that's split between the balances systems and then what we call the PCX business which is the power skid business and on the balance of systems components we have a very strong position these are products that are sold in bless you that are sold in general industrial application if you think about a burn the grounding if you think about a wiring devices pin and sleeve products these are you know anchor brands and products that that we sell in in data centers as well actually a lot of organic growth there as well and if you think about as data centers are are ever increasing the capacities of both amperages and different voltages we're adapting our products to that we just introduced a very innovative we call power gain product in a pin and sleeve and a pin and sleeve is a is a it's literally an industrial application that we've used for decades it's a big bulky round uh connector that that have done very well in data centers but as the amperage have gone up and we've redesigned that product we've actually made the shape of it such that you can fit it much easier behind the rack space constraints is a big deal for data so actually working with the data center operators to to bring new innovation into the market it's it's uh how we've continued to adapt uh that business but then if we look at uh the utility side of of the business as well um you know a lot of the the transmission and substation uh work that's happening there is is you know and we even if it's utility work that's happening it's to support uh those data centers and it's our position there is is is very strong you know we and certainly benefit from from serving those markets as far as acquisitions that you mentioned you know the DMC systems control acquisition and even the one that we recently announced with NSI has you know about 10% of their their revenues also going to data centers is adding to the portfolio of products that not only serve attractive core markets that we serve today, but data centers as well.

And then as we think about kind of behind the meter powering of data centers, just what that means for you from a revenue content, think about it, you know, versus in front behind how the content opportunity changes for you.

Yeah, yeah. And the reason this is actually happening is because data centers need power. And I think if you ask most, if not all data center operators, how they would prefer to have their power, it would be to rely on the utilities. But there's some challenges with with that right now, I would say it's very early in in that process. And you know, we're having some discussions through the EPCs that are helping or the the IPPs that are involved in in this. in you know what those solutions are and for us the gear the equipment that we serve is very similar these need substations and and you know if they put their own generation source behind it they're still going to put a substation still with with equipment that that's the equipment that we sell to utility companies so so you know if they stay disconnected from the grid which you know our view is that that they're probably going to want to interconnect at some point but if they didn't you'd lose that interconnection piece I'd say it's a smaller piece truthfully of that but our view is that they probably want to interconnect but but very importantly is utilities are trying to solve for this our conversation with utility customers is you how they're adding capacity how they're adding this is the whole load growth so you know if some of this is going to happen it's probably going to be incremental growth over this period where you know utilities are trying to solve for it and if we need to ramp up quicker and data center are able to solve for that we'll probably see higher growth rates for for a period of time as a result of that so we see it as incremental but our content is fairly similar then you you mentioned nsi let's talk about that a little bit more i think three billion dollar deal the largest in the company's history um you know the the fit within the business just explain to us what what nsi is going to bring to you yeah yeah and and first it's it maybe i'll talk a little bit about our capital allocation it's it's an important thing that that we do we've got you know obviously a strong history of of of adding quality businesses uh to the portfolio So, you know, we've talked a lot about our balance sheet getting larger and larger, and that's, you know, very positive, but how do you deploy that capital? And, you know, we've indicated that we're going to remain disciplined in the types of businesses that we're going to add, and in periods where we, you know, don't have a business to add, but still have, you know, a strong balance sheet, you know, we see buyback as a very attractive alternative. have well we've done some of that earlier this year so the point of that is while the balance sheet is getting bigger we're going to remain disciplined on on where and how we invest our capital so as we screen that and a lot of our businesses are are coming out of of a lot of acquisitions come out of our pnls and we still run our business by pnl we have gms that manage it's it's a way to really stay close to the customer as we get bigger and a lot of that that development of businesses goes through those GM and then we have a an enterprise resource group to help you know execute on those so very few deals will come through if any that we don't have visibility and it's it's we don't always you know want to acquire these businesses we're not always successful and acquire these business but it's rare that a property would come to market that that we don't have inside and nsi uh was no different but but one of the things as we have broader part of the organization looking for deals we would have a screener and what we call it's the corners of of deals and we put them through a screen and it's more than these five but these are the the main ones is does it serve the same customer set that we have does it go through the same channel that we serve are the products complementary to what we do and then what's the growth rate of the business and what's the margin profile of the business and the last two or more a reflection of the market and the customers that we serve and and the strength of the brand and then we rate those things of the businesses and sometimes they're squarely down the middles and sometimes they go in one of the categories a little bit out of it it and it doesn't mean that if it goes out and what we won't acquire it but it's eyes open on I'd say NSI hits all those boxes right right down the middle it's customers that we serve today it's through the same channel that that we serve it today very complementary product basket to what we have these are anchor brands this is like burndy and wiring is is is bridgeport fitting and polaris you kind of use those in those same range um which which brings to it you know a preference and a margin profile. So when we see that, we, you know, certainly lean in more to want to have decent portfolio while we remain disciplined, I would say. So multiples of businesses have gone up, but so have margin profiles and growth rates. But, you know, we see this business fitting extremely well within the Hubble portfolio. This will be, you know, we talk about this like when we acquired Bernie and what that has done for us that that's how we see this company coming really what we would say right down right down the fairway and then this comes in expected to close middle of the year margin accretive to HES you know our math on it is it could be 15 or 20 cents kind of lift yeah that sound reasonable yeah yeah I think you know certainly once once we close it we'll come back with depending on the timing on what it is but I think you're pretty good at math so I think you're people are in the ballpark of what you just indicated yeah and margin accretive to its

earnings accretive certainly a margin accretive to the company yep something you brought up on on the most recent earnings call is the the high voltage opportunity out there when we talk about 765 KV. You sized it as a 1.5 billion, sort of 10-year market opportunity. Just unpack it a little bit for us in terms of the timeline that you're looking at to start generating revenue there, what that ramp could look like.

Yeah, and 765, even though there's a lot of activity and discussion about it 765 actually has been around for for 20 plus years you know at the time some infrastructure was put in and and where where where 765 really helped it for bulk load transfer and for um clearing capacity for for for load really and if you get load constrained on the grid if you want need a lot of power and then it's trying to go to the infrastructure that you have and that's constrained think about if it's a pipe and water and also then you need a lot more pressure going to that that pipe's going to burst and that's kind of the infrastructure so if you need more bulk transport it's very efficient and in a load growth environment it's actually a very efficient uh infrastructure uh to deploy so we've been actually working with with some of our customers and that's again the value that we have is we are a leading prominent supplier of T&D materials with with with the largest installed base so as we talk about you know new things coming coming up again we've been working with our customers for some time already on this. you know earlier this year for first fairly large scale 765 was awarded and we were fortunate to be the recipient of that award that and that was a culmination of actually working and designing inspecting that product with our customer we'll start to see that start shaping in the early part of next so i'd say it's early still in the cycle of of 765 there's more projects that we're certainly working on and um you know really it's it's it's incremental to to what's still needing to be done in interconnection and hardening and by the way when you put 765 in you need off ramps of those. So you need 345 kV, you need substations to go along with that. So it's, it's additive to to the growth of the grid is how we look in the network, we kind of sized it and, you know, it's not precise and the timing can vary a little bit, you need to get these things to approval, but there's a real need for there's a there's a good case for it.

And we believe it's actually incremental to the investment that's already happened why we call that we think this could add a point of of growth to what we've already indicated and then shifting to the the price cost side of things uh when we think about uh some of the inflationary pressures over the course of the year you saw commodity inflation inflation to start the year um you know tariffs and whatever impact that could have had in kind of april um just explain what what you've done on the pricing side of things any quantification of you've had to do out there for for pricing here to date yeah yeah and we've been uh you know over the last few years certainly more much more um aggressive proactive and better organized it's

actually one of the benefits of having gone to to more of an operating company that we've put capabilities in place across the enterprise and pricing was was one of them that that we've moved from you know product and there's nothing against product managers but they're probably not the best pricers and to really do it scientifically and it's just a muscle that we've built that that has really benefited us so for us continuing to be price cost neutral what we call it price cost productivity neutral or better positive and we've been to the positive side of that is our thought process there and so we've seen more inflation the the a couple of things happened here recently which the tariff regime continues to change and this latest one is actually neutral to hubble there's some pluses and minuses in that uh but but not a lot uh of impact there but we have seen inflation we came out with price uh earlier this year and and that's going in and and you know i would say as inflation continues to happen we'll continue to to respond to that with price and productivity to manage that to the net neutral or positive and in longer term i think the margins will come that's the other thing that we've proven over time that that while we manage short term this to neutral or positive over the cycle with volume growth with with you know as commodities maybe come down or we find more productivity we actually see see the margins go back or actually up because you know certainly dollar for dollar price and cost would decrease your margin load, that's just math, but we've actually proven to be able to recover that and then actually expand margins, and that's how we view it.

And so pricing that would have gone in place, I think around February, you haven't had to do additional pricing beyond- Yeah, we had some that went in effective April, right, Dan?

Yeah, and that'll come, but there's still inflation happening, and so our view is as that happens, we'll continue the price for it.

And then the margin dynamic and the seasonality, we see volume being the biggest kind of component of that, just seasonal in the middle of the year.

Correct. Volume and then longer term productivity. We're still driving a lot, right? If you think about the efforts that we're doing in the electrical and if we're doing the restructuring programs that we're still doing, that has productivity. So I think that's another adder over the longer term to find margin expansion. on on that productivity front and one of the initiatives is around within electrical the unification and simplification and so um you know that was a function of footprint rationalization skew reduction um you know where where are you in that process yeah i'd say yeah i'd say really good uh early success in that and you can see that certainly by the margin of the electrical segment that we've continued to to expand after we we shed our our lighting business and a reflection of of that effort I'd say over the last uh couple of years we've been very busy with supply chain uh challenges both you know during the covert period and and more recently with with just inflation so I'd say um there's still opportunity there going forward of of refocusing on that and doing more so to expect more work there and and and more margin expansion as a result of it but i would say we're maybe middle innings a little past the middle innings on that work okay um terrific well i think that that brings us to the end of our time so thank you very much really appreciate you being here thanks for the discussion thank you joe thank you all