Advanced Drainage Systems Inc (WMS) 2025 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Advanced Drainage Systems' second-quarter of fiscal year 2025 results conference call. My name is Regina, and I am your operator for today's call. (Operator Instructions).

早安，女士們、先生們，歡迎參加 Advanced Drainage Systems 2025 財年第二季業績電話會議。我叫雷吉娜，今天是電話的接線生。（操作員說明）。

I would now like to turn the presentation over to your host for today's call, Michael Higgins, Vice President of Investor Relations and Corporate Strategy. Sir, you may begin.

現在我想將演講交給今天電話會議的主持人、投資者關係和企業策略副總裁 Michael Higgins。先生，您可以開始了。

Good morning, everyone. I'm here with Scott Barbour, our President and Chief Executive Officer; and Scott Cottrill, our Chief Financial Officer. I would also like to remind you that we will discuss forward-looking statements. Actual results may differ materially from those forward-looking statements because of various factors, including those discussed in our press release and the risk factors identified in our Form 10-K filed with the SEC.

大家早安。我和我們的總裁兼執行長 Scott Barbour 一起來到這裡。以及我們的財務長 Scott Cottrill。我還想提醒您，我們將討論前瞻性陳述。由於各種因素，包括我們新聞稿中討論的因素以及我們向 SEC 提交的 10-K 表格中確定的風險因素，實際結果可能與這些前瞻性陳述有重大差異。

While we may update forward-looking statements in the future, we disclaim any obligation to do so. You should not place undue reliance on these forward-looking statements, all of which speak only as of today. Lastly, the press release we issued earlier this morning is posted on the Investor Relations section of our website. A copy of that release has also been included in an 8-K submitted to the SEC. We will make a replay of the conference call available via webcast on the company website.

雖然我們將來可能會更新前瞻性陳述，但我們不承擔任何這樣做的義務。您不應過度依賴這些前瞻性陳述，所有這些陳述僅代表今天的情況。最後，我們今天早上早些時候發布的新聞稿已發佈在我們網站的投資者關係部分。新聞稿的副本也包含在提交給 SEC 的 8-K 中。我們將透過公司網站上的網路廣播重播電話會議。

With that, I'll turn the call over to Scott Barbour.

這樣，我會將電話轉給史考特·巴伯。

Thank you, Mike. And good morning, everyone. Thank you all for joining us on today's call. One of our Board members summarized the second-quarter environment very well. In a demand environment challenged by economic and political conditions plus severe weather events, some friction has developed versus our expectations. ADS is addressing the current environment by making high-quality decisions day by day with an eye on the long-term objectives of the company and what is needed from an investment and resource perspective to achieve those objectives.

謝謝你，麥克。大家早安。感謝大家參加今天的電話會議。我們的一位董事會成員很好地總結了第二季的環境。在受到經濟和政治條件以及惡劣天氣事件挑戰的需求環境中，出現了一些超出我們預期的摩擦。ADS 透過每天制定高品質決策來應對當前環境，著眼於公司的長期目標以及從投資和資源角度實現這些目標所需的條件。

We are doing this while also enhancing safety, improving delivery and operational execution, and wisely investing capital. Additionally, we continue to return capital to our shareholders and have maintained an adjusted EBITDA margin of over 30%. So I think about the current environment in terms of what's good and what's not so good. Let's start with the good.

我們在這樣做的同時，也提高了安全性，改善了交付和營運執行，並明智地投資了資本。此外，我們繼續向股東返還資本，並將調整後的 EBITDA 利潤率維持在 30% 以上。所以我覺得現在的環境有什麼好，什麼不好。讓我們從好的方面開始。

ADS' residential and infrastructure end markets continue to grow. Sales in the residential end market increased 6%, driven by the infiltrator growth of 11% and as well as 8% growth in the legacy ADS sales that go in at the land development stage of the residential cycle. Residential market sales are benefiting from previous investments and programs to help strengthen our partnerships with large national and regional homebuilders, solid market penetration, and favorable supply-demand dynamics due to the longer undersupply of housing.

ADS 的住宅和基礎設施終端市場持續成長。在滲透者成長 11% 以及住宅週期土地開發階段的傳統 ADS 銷售成長 8% 的推動下，住宅終端市場的銷售額成長了 6%。住宅市場銷售受益於先前的投資和計劃，這些投資和計劃有助於加強我們與大型國家和地區住宅建築商的合作關係、穩固的市場滲透率以及由於住房供應長期不足而帶來的有利的供需動態。

Infiltrator continues to perform well as revenue growth was driven by 14% growth in tanks and 40% growth in advanced treatment products as well as additional distribution and a strong residential demand backdrop. We remain excited about this offering. And with the addition of Orenco Systems, we will continue to grow our portfolio in wastewater and advanced treatment.

Infiltrator 繼續表現良好，收入成長的推動因素包括儲罐成長 14%、高級處理產品成長 40%、額外分銷和強勁的住宅需求背景。我們對這項產品仍然感到興奮。隨著 Orenco Systems 的加入，我們將繼續擴大廢水和深度處理領域的產品組合。

The infrastructure market sales increased 7% in the quarter due to continued strength in roadway and airport projects aided by funds allocated under the IIJA and other publicly funded projects. This is a segment where ADS historically under participated, but we are now positioned well following the investments in go-to-market resources and capacity in key geographies. Our outlook remains favorable to this market.

由於公路和機場項目在 IIJA 和其他公共資助項目下分配的資金的幫助下持續強勁，基礎設施市場銷售額在本季度增長了 7%。這是 ADS 歷來參與較少的細分市場，但隨著對關鍵地區的上市資源和產能的投資，我們現在處於有利地位。我們對這個市場的前景仍然看好。

Profitability remained strong, demonstrating the resiliency of the ADS business model, and we are consistently posting adjusted EBITDA margins around or above 30%. Capital spending, deployment, and the return on previous investments remains favorable. We have steadily increased capital expenditures over the last several years, and we are seeing those investments pay off. Infiltrator is an excellent example.

獲利能力依然強勁，證明了 ADS 業務模式的彈性，而且我們的調整後 EBITDA 利潤率始終保持在 30% 左右或以上。資本支出、部署和先前投資的回報仍然有利。過去幾年我們穩定增加資本支出，我們看到這些投資得到了回報。滲透者就是一個很好的例子。

Adjusted gross margin increased -- adjusted gross profit increased 17% over the prior year, and they are performing well across the platform. These results are fueled by the capital, new products, and resource investments made since we acquired them in 2019. At ADS, the capital investments in the pipe network are improving downtime, efficiency, safety, and scrap performance. All these measures improved in the second quarter.

調整後毛利率上升－調整後毛利較上年增長17%，並且在整個平台上表現良好。這些成果是由我們自 2019 年收購以來進行的資本、新產品和資源投資所推動的。在 ADS，管網的資本投資正在改善停機時間、效率、安全性和報廢性能。所有這些措施在第二季度都有所改善。

In addition, delivery performance also continues to improve, driven by the higher inventory levels as well as new distribution and automation investments being made to further improve the customer experience. From a capital allocation perspective, in the first half of this year, CapEx increased 36%, the dividend is up 17%, and we dialed back our share repurchase program to allocate capital to the Orenco acquisition, which closed October 1. Between those four priorities, we have doubled the amount of capital, we either reinvested in the business, or returned to shareholders thus far in this fiscal year.

此外，在更高的庫存水準以及為進一步改善客戶體驗而進行的新的配送和自動化投資的推動下，交付績效也持續改善。從資本配置的角度來看，今年上半年，資本支出增加了 36%，股息增加了 17%，我們取消了股票回購計劃，將資本分配給 10 月 1 日完成的 Orenco 收購。在這四個優先事項之間，我們將資本增加了一倍，我們要么對業務進行再投資，要么在本財年迄今為止返還給股東。

Now moving to what's not so good, demand. Demand in ADS' largest market, non-residential construction, which is about 45% of the sales, this demand was choppy by segment and geography. The impact manifests itself in two ways for ADS. Non-residential construction is our single largest market for pipe products and two-thirds of our allied product sales.

現在轉向不太好的需求。ADS 最大的市場非住宅建築的需求約佔銷售額的 45%，但該需求會按細分市場和地理位置波動。對 ADS 來說，影響體現在兩個方面。非住宅建築是我們管道產品的最大單一市場，占我們相關產品銷售額的三分之二。

We adjusted expectations for the non-residential market from low single-digit growth to flat for fiscal '25 and reducing our revenue outlook by approximately $40 million for the year. Second, weather played a factor in both our second quarter and the start of the third quarter in key geographies. I don't like to talk about weather on these calls, but due to the severity and intensity of various well-documented storms, it would be imprudent not to mention their impact on ADS results. Accordingly, we reduced revenue outlook due to weather by an additional $40 million.

我們將 25 財年非住宅市場的預期從低個位數成長調整為持平，並將今年的營收預期下調約 4,000 萬美元。其次，天氣在關鍵地區的第二季和第三季初都發揮了影響力。我不喜歡在這些電話中談論天氣，但由於各種有據可查的風暴的嚴重性和強度，不提及它們對 ADS 結果的影響是不謹慎的。因此，由於天氣原因，我們將收入預期額外下調了 4000 萬美元。

The ADS and Infiltrator employees in the Southeast are accounted for and safe after the hurricanes in September and October. We had a few property -- a few with property damage, and most had disruption to their lives, and we've provided support to those than needed assistance. Our five facilities in the Southeast were up and running again shortly after the hurricanes and suffered no damage.

9 月和 10 月的颶風過後，東南部的 ADS 和 Infiltrator 員工都已安全。我們有一些財產——一些財產受損，大多數人的生活受到干擾，我們為那些不需要的人提供了支持。我們在東南部的五個設施在颶風過後不久就重新啟動並運行，沒有任何損壞。

The ADS Foundation also contributed to Florida and North Carolina organizations, assisting those most affected in the region by these hurricanes. These weather events are typically disruptive in the (technical difficulty) [longer term]. In the short term, shipments slowed down significantly as products are not able to be brought on to job sites. Then in the recovery phase, it is excavation contractors. They clean up the sites, which further delays installations. We do a lot to make emergency shipments with our fleet in these situations, but this does not overcome the slowdown in overall installation activity.

ADS 基金會也向佛羅裡達州和北卡羅來納州的組織捐款，幫助該地區受颶風影響最嚴重的人。這些天氣事件通常會造成破壞（技術難度）[長期]。短期內，由於產品無法運抵工作現場，出貨量大幅放緩。然後在恢復階段，就是挖掘承包商。他們清理現場，這進一步推遲了安裝。在這些情況下，我們做了很多工作來利用我們的車隊進行緊急發貨，但這並不能克服整體安裝活動放緩的問題。

Over the medium term, we typically see a favorable impact from the catch-up in repair. And over the longer term, new projects and regulations are designed and constructed to handle increased volumes of storm water. So these events cause short-term pain that create medium- and long-term tailwinds to the ADS demand profile.

從中期來看，我們通常會看到修復趕上帶來的有利影響。從長遠來看，新的項目和法規的設計和建造是為了處理不斷增加的雨水量。因此，這些事件會造成短期痛苦，但會為 ADS 需求狀況帶來中長期的利多。

Lastly, you can see in the EBITDA bridge, the price material cost and mix remained a challenge as we knew it would. We've been able to offset the negative impact with volume growth and improved execution in manufacturing and transportation. However, material costs are moving more unfavorably than we expected, which is also reflected in today's updated guidance.

最後，您可以在 EBITDA 橋中看到，正如我們所知，價格材料成本和組合仍然是一個挑戰。我們已經能夠透過產量成長以及製造和運輸方面執行力的提高來抵消負面影響。然而，材料成本的變化比我們預期的更加不利，這也反映在今天更新的指導中。

As I think about this bridge and how we manage the company, it's about the day-to-day decisions on profitability and market participation in the context of the ADS value proposition at a very local level balanced with the overall objectives of the company. As you know, ADS is a great value proposition for our customers and the regulatory work we do to gain approval for the use of our products, the breadth of our pipe product lines, the full package we provide with the allied products and solutions we offer to the engineering, distribution, and contractor communities.

當我思考這座橋樑以及我們如何管理公司時，它涉及在 ADS 價值主張背景下的盈利能力和市場參與的日常決策，在本地層面與公司的總體目標相平衡。如您所知，ADS 對我們的客戶以及我們為獲得使用我們產品的批准而進行的監管工作、我們管道產品線的廣度、我們提供的聯合產品和解決方案的全套服務來說是一個巨大的價值主張工程、分銷和承包商社區。

We stack on top of this the breadth of our network, the inventory we hold locally for superior delivery, and the specialized trucking fleet we operate to deliver to the job site. We remain one of a kind in our industry, and we'll continue to invest in the ADS value proposition to further serve our customers.

除此之外，我們還擁有廣泛的網路、我們在當地擁有的庫存以實現卓越的交付，以及我們運營的專業卡車車隊，以將貨物運送到工作現場。我們仍然是業界的佼佼者，我們將繼續投資於 ADS 價值主張，以進一步為我們的客戶提供服務。

The hurricanes in the second and third quarter affected several important states in the Southern Crescent such as Florida, North Carolina, South Carolina, and Texas. These events often encourage municipalities and other regulators to reevaluate their water infrastructure needs, which presents a long-term opportunity for ADS to provide communities with more resilient water management solutions.

第二季和第三季的颶風影響了南新月區的幾個重要州，如佛羅裡達州、北卡羅來納州、南卡羅來納州和德克薩斯州。這些事件通常會鼓勵市政當局和其他監管機構重新評估其水基礎設施需求，這為 ADS 提供了為社區提供更具彈性的水管理解決方案的長期機會。

In April, the EPA delivered the 2022 Clean Watershed Needs Survey results to Congress. This report assesses the capital investments needed to meet the water quality goals of the Clean Water Act over the next 20 years. The Clean Water Act is designed to prevent, reduce, and eliminate pollution in the nation's water sources to restore and maintain its chemical, physical, and biological integrity.

4 月，EPA 向國會提交了 2022 年清潔流域需求調查結果。本報告評估了未來 20 年實現《清潔水法》水質目標所需的資本投資。《清潔水法》旨在預防、減少和消除國家水源的污染，以恢復和維持其化學、物理和生物完整性。

The EPA estimates $630 billion of investments will be needed over the next 20 years, citing an aging infrastructure and climate change as an ongoing challenge to clean water infrastructure nationwide. The storm water management category was estimated to need $115 billion in funding, an increase of $91 million or 35% and since the previous survey in 2012.

美國環保署估計，未來 20 年將需要 6,300 億美元的投資，理由是基礎設施老化和氣候變遷是全國清潔水基礎設施面臨的持續挑戰。雨水管理類別預計需要 1,150 億美元的資金，比 2012 年上次調查增加了 9,100 萬美元，即 35%。

The increase is due to a variety of factors, including changing regulatory requirements, the increase in frequency and intensity of heavy precipitation events, and an increase in Impervious surfaces; in addition, decentralized wastewater treatment systems where Infiltrator participates need an estimated $75 billion to rehabilitate, replace, or install new systems, an increase of $47 billion or 172% since 2012.

增加的原因有很多，包括監管要求的變化、強降水事件頻率和強度的增加以及不透水錶面的增加；此外，Infiltrator 參與的分散式廢水處理系統估計需要 750 億美元來修復、更換或安裝新系統，自 2012 年以來增加了 470 億美元，即 172%。

To that end, this quarter, we announced the acquisition of Orenco Systems, a leader in advanced treatment for on-site septic wastewater management. Orenco is a great strategic fit for Infiltrator, and we are busy integrating the two businesses. We first started talking publicly about the need for advanced treatment solutions in 2022 at our Investor Day and market demand has continued to grow since then.

為此，本季度，我們宣布收購 Orenco Systems，這是現場化糞池廢水管理高階處理的領導者。Orenco 非常適合 Infiltrator，我們正忙於整合這兩項業務。我們在 2022 年投資者日首次開始公開討論對先進治療解決方案的需求，此後市場需求持續成長。

Infiltrator's organic advanced treatment products are already growing double digits consistently, and this acquisition accelerates the company's growth in a highly fragmented and fast-growing segment of wastewater. The enhanced portfolio of complementary solutions combined with a broader sales force, geographic reach, and distribution footprint will drive further penetration in this attractive segment. Craig Taylor and the team and Infiltrator are already working with the Orenco team to continue building on both companies' strengths to deliver exceptional products and services to customers.

Infiltrator 的有機深度處理產品已持續實現兩位數成長，此次收購加速了該公司在高度分散且快速成長的廢水領域的成長。增強的補充解決方案組合加上更廣泛的銷售團隊、地理覆蓋範圍和分銷足跡將進一步推動這個有吸引力的細分市場的滲透。Craig Taylor 及其團隊和 Infiltrator 已經與 Orenco 團隊合作，繼續發揮兩家公司的優勢，為客戶提供卓越的產品和服務。

In October, we hosted the grand opening of ADS' Engineering and Technology Center, the world's largest and most advanced storm water research and engineering center. This facility brings the talent and tools in one purpose-built facility that allows the ADS teams to collaborate on material science, product design, tooling design, and manufacturing process engineering.

10月，我們主辦了全球最大、最先進的雨水研究和工程中心ADS工程技術中心的隆重開幕。該設施將人才和工具集中在一個專用設施中，使 ADS 團隊能夠在材料科學、產品設計、工具設計和製造流程工程方面進行協作。

This facility will help to bring new products to market faster, drive the industry forward with new innovation, and solidify our leadership position and scale in storm water management with highly engineered innovative solutions. Just to give you a few examples of what we will be working on, this facility is equipped to open new streams of recycled plastic material and enhance the resins that will divert more plastic waste from landfills and improve the performance of the stormwater products.

該工廠將有助於更快地將新產品推向市場，透過新的創新推動產業向前發展，並透過精心設計的創新解決方案鞏固我們在雨水管理方面的領導地位和規模。僅舉幾個我們將要進行的工作的例子，該設施能夠開闢新的回收塑膠材料流，並增強樹脂，從而將更多的塑膠廢物從垃圾掩埋場轉移出來，並提高雨水產品的性能。

We will also be utilizing over 90,000 gallons of recycled water in a closed-loop system to test storm water products under precisely controlled real-world conditions. We couldn't be more excited about the new opportunities and solutions ADS will create in this center. This type of investment is one example of what sets ADS apart from competitors. We have the ability and capital to invest in advancing products, manufacturing processes, and material science that are unmatched in this industry.

我們還將在閉環系統中利用超過 90,000 加侖的再生水，在精確控制的現實條件下測試雨水產品。我們對 ADS 將在該中心創造的新機會和解決方案感到非常興奮。這種類型的投資是 ADS 有別於競爭對手的一個例子。我們有能力和資本投資於該行業無與倫比的先進產品、製造流程和材料科學。

In summary, the second-quarter results reflect strong demand in Infiltrator as well as the ADS residential and infrastructure end markets, which drove the fourth consecutive quarter of construction market volume growth. In spite of continued choppiness in the non-residential end market, coupled with the short-term disruption of significant storm events, we achieved an adjusted EBITDA margin of 31.4%, underscoring the resiliency of the ADS business model.

總而言之，第二季業績反映了 Infiltrator 以及 ADS 住宅和基礎設施終端市場的強勁需求，推動了建築市場銷售連續第四個季度成長。儘管非住宅終端市場持續波動，再加上重大風暴事件的短期幹擾，我們的調整後 EBITDA 利潤率仍達到 31.4%，凸顯了 ADS 業務模式的彈性。

Demand for localized water management solutions remains strong, driven by aging water infrastructure and changing weather patterns, highlighting the continued opportunity for ADS and Infiltrator to support the development of more resilient water infrastructure. Overall, we are well positioned in attractive end markets with secular tailwinds from the increasing needs to manage and protect water, the world's most precious resource, safeguarding our environment and communities.

在老化的水基礎設施和不斷變化的天氣模式的推動下，對本地化水管理解決方案的需求仍然強勁，這突顯了 ADS 和 Infiltrator 支持開發更具彈性的水基礎設施的持續機會。總體而言，我們在有吸引力的終端市場中處於有利地位，隨著管理和保護水這一世界上最寶貴的資源、保護我們的環境和社區的需求不斷增長，我們受益匪淺。

With that, I will turn the call over to Scott Cottrill to further discuss our financial results.

接下來，我將把電話轉給斯科特·科特里爾，進一步討論我們的財務表現。

Thanks, Scott. On slide 7, we present our second-quarter fiscal 2025 financial performance. From a top-line perspective, sales in the ADS legacy pipe business decreased 3%, primarily driven by unfavorable price mix in the period that offset an increase in volume. Allied product sales increased 3%, driven by sales of water quality and capture products, and Infiltrator sales increased 11% with active treatment sales up 40% and above-market growth in tank sales as those products continue to take share from traditional materials.

謝謝，斯科特。在投影片 7 中，我們展示了 2025 財年第二季的財務表現。從營收角度來看，ADS 傳統管道業務的銷售額下降了 3%，主要是由於期內不利的價格組合抵消了銷售的成長。在水質和捕集產品銷售的推動下，聯合產品銷售額增長了3%，滲透器銷售額增長了11%，其中活性處理劑銷售額增長了40%，罐體銷售額增長高於市場水平，因為這些產品繼續搶佔傳統材料的份額。

From a profitability perspective, we are pleased with the 31.4% adjusted EBITDA margin in the second quarter. Profitability benefited from volume growth in the quarter as well as the mix benefit from Infiltrator growing faster than the pipe business. Manufacturing costs were favorable in the period due to fixed cost absorption, improved operational efficiency, as well as the benefit of prior investments we've made in the business.

從獲利能力的角度來看，我們對第二季調整後 EBITDA 利潤率為 31.4% 感到滿意。獲利能力得益於本季銷售的成長，以及 Infiltrator 成長速度快於管線業務的綜合效益。由於固定成本的吸收、營運效率的提高以及我們先前在該業務中進行的投資的效益，製造成本在這段時期是有利的。

We continue to invest in logistics and transportation assets as well to ensure we have good product placement and best-in-class customer service. Importantly, we were able to offset unfavorable price cost through volume growth, product mix, and favorable manufacturing costs.

我們也持續投資物流和運輸資產，以確保我們擁有良好的產品佈局和一流的客戶服務。重要的是，我們能夠透過銷售成長、產品組合和有利的製造成本來抵銷不利的價格成本。

On slide 8, we present free cash flow. We generated $238 million of free cash flow year to date compared to $376 million in the prior year, primarily due to an increase in inventory levels as well as material costs. Our year-to-date capital spending increased 36% year over year to $112 million, and we now expect to spend approximately $250 million in capital for the full year.

在幻燈片 8 上，我們展示了自由現金流。今年迄今為止，我們產生了 2.38 億美元的自由現金流，而上一年為 3.76 億美元，這主要是由於庫存水準和材料成本的增加。我們年初至今的資本支出年增 36%，達到 1.12 億美元，我們現在預計全年資本支出約為 2.5 億美元。

These investments are focused on productivity and automation, debottlenecking our recycling operations, the completion of our world-class engineering and technology center, and execution on growth we continue to see in certain geographies. At the end of the first quarter, our net debt to adjusted EBITDA leverage was 0.8 times, with $613 million of cash on hand and $590 million of availability under our revolving credit facility. With ample liquidity and low leverage, we are in a great position to execute on our capital deployment priorities.

這些投資重點在於生產力和自動化、消除我們的回收業務瓶頸、完成我們世界一流的工程和技術中心，以及執行我們在某些​​地區繼續看到的成長。截至第一季末，我們的淨債務與調整後 EBITDA 槓桿率為 0.8 倍，手頭現金為 6.13 億美元，循環信貸額度下的可用現金為 5.9 億美元。憑藉著充足的流動性和低槓桿率，我們處於執行資本部署優先事項的有利位置。

On slide 9, we highlight our disciplined approach to capital allocation. As you all know, our first priority is to grow the business organically through capital investments, closely followed by strategic M&A to enhance our market position and scale. The capital investments we have made in the last several years are clearly paying off and one of the reasons for our strong profitability profile.

在投影片 9 中，我們強調了我們嚴格的資本配置方法。眾所周知，我們的首要任務是透過資本投資實現業務有機成長，其次是策略併購，以提升我們的市場地位和規模。我們過去幾年進行的資本投資顯然已獲得回報，這也是我們獲利能力強勁的原因之一。

We are excited about the Orenco acquisition, which closed in the fiscal third quarter. The Orenco business will report through the Infiltrator segment and is included in today's updated guidance. This was a strategic acquisition in the attractive and growing advanced treatment market. For the balance of fiscal 2025, we expect Orenco to contribute $40 million to $50 million in revenue with profitability initially in the mid-teens.

我們對 Orenco 收購感到興奮，該收購已於第三財季完成。Orenco 業務將透過 Infiltrator 部門進行報告，並包含在今天更新的指南中。這是在有吸引力且不斷成長的高級治療市場中的一項策略性收購。對於 2025 財年的剩餘時間，我們預計 Orenco 將貢獻 4,000 萬至 5,000 萬美元的收入，最初的獲利能力約為十幾歲。

It is worth noting that we see this margin expanding significantly over the next several years through our aggressive synergy program. Notably, while we have been able to reinvest $362 million back into the business in the first half of the year, we have also returned $95 million to shareholders through dividends and share repurchases, staying true to our disciplined and balanced approach to capital allocation.

值得注意的是，透過我們積極的協同計劃，我們預計未來幾年這一利潤率將顯著擴大。值得注意的是，雖然我們在上半年能夠將 3.62 億美元再投資回業務，但我們也透過股息和股票回購向股東返還 9,500 萬美元，始終堅持我們嚴格和平衡的資本配置方法。

Finally, on slide 10, based on our performance to date, current visibility, backlog of existing orders, and trends, we updated our fiscal 2025 guidance ranges today. We now expect revenue to be in the range of $2.9 billion and $2.975 billion and adjusted EBITDA to be in the range of $880 million to $920 million. These ranges result in an adjusted EBITDA margin of 30.3% to 30.9%, down 120 to 180 bps from last year's record margin of 32.1%.

最後，在投影片 10 上，根據我們迄今為止的業績、當前的可見度、現有訂單積壓和趨勢，我們今天更新了 2025 財年指導範圍。我們現在預計營收將在 29 億美元至 29.75 億美元之間，調整後的 EBITDA 將在 8.8 億美元至 9.2 億美元之間。這些範圍導致調整後 EBITDA 利潤率為 30.3% 至 30.9%，比去年創紀錄的 32.1% 下降 120 至 180 個基點。

Today's fiscal 2025 guidance accounts for the results through the first half of the year, the impact from significant weather events to date, continued choppiness in the non-residential end market, the acquisition of Orenco, as well as incremental pressure on material costs and product mix. Pricing is expected to stay at the current levels through the remainder of this fiscal year. We remain focused on executing on our long-term strategic plan to drive consistent long-term growth, margin expansion, and free cash flow generation.

今天發布的 2025 財年指引涵蓋了上半年的業績、迄今為止重大天氣事件的影響、非住宅終端市場的持續波動、Orenco 的收購以及材料成本和產品的增量壓力混合。預計在本財年剩餘時間內定價將維持在目前水準。我們仍然專注於執行我們的長期策略計劃，以推動持續的長期成長、利潤率擴張和自由現金流的產生。

With that, I'll turn the call back over to Scott.

這樣，我會將電話轉回給史考特。

Thanks, Scott. In closing, though we expect some continued choppiness in the non-residential market, for the second half of the year, we will be focused on doubling down on our strengths, including continuing to invest in the end markets where we benefit from attractive tailwinds, specifically the growth in residential and infrastructure across Infiltrator and ADS; getting Orenco onboarded and integration ramped up so we can capitalize on growth in advanced on-site treatment; and then executing on the improvement investments we have made and the cost reduction programs in flight at ADS. The non-residential market will continue to be choppy, and we will manage through this in the second half of the year.

謝謝，斯科特。最後，儘管我們預計非住宅市場將持續波動，但在今年下半年，我們將專注於加倍增強我們的優勢，包括繼續投資於我們受益於有吸引力的順風的終端市場，特別是Infiltrator 和ADS 的住宅和基礎設施的成長；讓 Orenco 加入並加速整合，以便我們能夠利用先進現場處理的成長；然後在 ADS 上執行我們所做的改進投資和飛行中的成本削減計劃。非住宅市場將持續波動，下半年我們將渡過難關。

Operator, you may now open the line for questions.

接線員，現在可以撥打電話提問。

(Operator Instructions) Mike Halloran, Baird.

（操作員說明）Mike Halloran，Baird。

Hey, good morning, everyone.

嘿，大家早安。

Good morning.

早安.

So Scott, at the end there, I think you're pretty helpful in kind of the puts and takes. But just -- can you help understand what's going on, on the pricing side versus what's happening on the material side? It sounds like the pricing side, generally in line with your expectations, relatively stable, all equal sequentially. But the material costs are inflating, and you're just not in a position to maybe move on the price.

所以斯科特，最後，我認為你在投入和採取方面非常有幫助。但是，您能幫助理解定價方面與材料方面的情況嗎？聽起來定價方面，整體符合你的預期，比較穩定，依序都相等。但材料成本正在上漲，你可能無法調整價格。

So could you talk about what's happening on the pricing side then and then what those material cost inflation pressures look like? And how you think that -- when do you think that price/cost timing starts flattening out and becoming neutral or positive?

那麼您能否談談定價方面發生的情況以及材料成本通膨壓力是什麼樣的呢？您如何看待這一點——您認為價格/成本時間何時開始趨於平緩並變得中性或積極？

So Mike, Scott Barbour. This is really our largest market, which is the non-residential market being less than what we anticipated at the beginning of the year. We thought it would be low to mid-single digits, low single digits, and it's more flattish. We've changed our outlook for that market. That hurt the demand and probably our strongest position market.

所以麥克，斯科特·巴伯。這確實是我們最大的市場，非住宅市場低於我們年初的預期。我們認為它會是低到中個位數，低個位數，而且更平。我們改變了對該市場的看法。這損害了需求，也損害了我們最強勢的市場地位。

At the same time, in a weak market, you have these material inflations and it's a little more difficult to recover that in the short term in a weakening market. We have a great value proposition. We're converting projects every day from our competitive materials. All that stuff remains very much intact. I would also say that this impact on allied products, where -- we drive those allied products at a high single-digit, low double-digit growth rate consistently over the years.

同時，在疲軟的市場中，會出現嚴重的通貨膨脹，並且在疲軟的市場中短期內恢復通貨膨脹會更加困難。我們有一個偉大的價值主張。我們每天都在用我們有競爭力的材料轉換項目。所有這些東西都完好無損。我還想說，這對聯合產品的影響，多年來我們一直以高個位數、低兩位數的成長率推動這些聯合產品。

But two-thirds of those sales go into the non-residential market, and that's caught up with us the weakness there. And that slowed down, kind of hurting that overall, what I would call, overall mix of the company. We try to grow Infiltrator and allied faster. The Infiltrator guys are doing a great job of growing, and allied slowing down has certainly had an impact on us. We're managing through this from a material cost side, working on a lot of programs. We're working on this every day and how we price projects, but we think we're kind of in a steady state. Cottrill, do you want to add to that?

但其中三分之二的銷售額進入了非住宅市場，彌補了我們那裡的疲軟。這速度減慢了，有點損害了我所說的公司的整體組合。我們嘗試更快地發展滲透者和聯盟。滲透者在成長方面做得非常出色，而盟軍的放緩無疑對我們產生了影響。我們正在從材料成本方面來管理這個問題，並進行了許多專案。我們每天都在研究這個問題以及我們如何定價項目，但我們認為我們處於穩定狀態。科特里爾，你想補充一下嗎？

No, I agree with everything and Scott said. I think the material cost side of the house, we saw some of that in the first half, but we're going to see more of that in the second half as we go through the year as we look at it. That price cost dynamic, very much a factor of the demand world that we're in right now, as we've talked about. To your point about when do we see that kind of bottoming out and inverting kind of into a favorable perspective, that depends on our view on the end markets for next year. Yes, that would be next year.

不，我同意斯科特所說的一切。我認為房子的材料成本方面，我們在上半年看到了一些，但隨著我們回顧這一年，我們將在下半年看到更多。正如我們所討論的，價格成本動態是我們現在所處的需求世界的重要因素。至於您所說的關於我們何時會看到這種觸底並反轉為有利前景的觀點，這取決於我們對明年終端市場的看法。是的，那是明年。

So it doesn't sound like there's incremental price pressure. That's the stable part. It's just more in the demand environment you're sitting in. You can't -- it's tougher to catch up. And then you're just seeing some more inflation pressures relative to your thought and a little mix pressure, if I just simplify the message. Is that fair?

因此，聽起來並不存在增量價格壓力。這就是穩定的部分。只是更多地處於您所處的需求環境中。你不能——追趕更難。然後，如果我簡化訊息，您將看到與您的想法相關的更多通膨壓力和一點混合壓力。這樣公平嗎？

Yes. That's a good summary.

是的。這是一個很好的總結。

And then second one would be just on the underlying demand. You touched on the pressures on the commercial side. When you think about the project activity, what your customers are saying, anything on that front log or funnel side of things, has that changed at all? And maybe talk about the decision-making process that your clients and customers are facing. What gets them to maybe turn that spigot on, and how are you thinking about that recovery curve from here?

第二個就是關於潛在的需求。您談到了商業方面的壓力。當您考慮專案活動時，您的客戶在說什麼，前端日誌或漏斗方面的任何內容是否發生了變化？也許還可以談談您的客戶和消費者面臨的決策過程。是什麼讓他們可能打開那個水龍頭？

What gets them to move forward? That's a good question. So asked a bit about the funnel. And I would say our quoting activity is reflective of our demand activity, choppy. We'll have a good region and then a bad region. It's just not very consistent. It's kind of sideways, if you will. And I'm really talking about the non-residential. I think in residential and in the infrastructure, it's pretty consistently positive right now.

是什麼讓他們繼續前進？這是個好問題。所以問了一些關於漏斗的問題。我想說，我們的報價活動反映了我們的需求活動，波動很大。我們將有一個好的區域，然後有一個壞的區域。只是不太一致。如果你願意的話，它有點側向。我真正談論的是非住宅。我認為在住宅和基礎設施方面，目前的情況一直非常積極。

But in that non-res very, choppy. In Craig's business and Infiltrator, pretty steady from a -- from an order input, not a lot different than what we've been seeing for these good markets, remaining choppiness there. And when we talk to our customers about what makes them move forward, I will tell you, a lot of them were waiting for this week to get over.

但在非解析度方面非常不穩定。在克雷格的業務和滲透者中，從訂單輸入來看，相當穩定，與我們在這些良好市場中看到的情況沒有太大不同，但仍然存在波動。當我們與客戶談論是什麼讓他們繼續前進時，我會告訴你，他們中的許多人都在等待本週的結束。

We hear that a lot about, I'd like to see what happens with the election. I'd like to see what's going on with interest rates. We'd like to see interest rates move. Even though the Fed has been accommodating here over the last two meetings, I don't think we're seeing that much movement of project work with that. I don't think we got a big tailwind from that in September or here recently. So I think that bears watching. That bears watching. But when we talk to our distributors, they're -- I'm kind of repeating to you what they're saying to us is that things are still kind of bottled up a bit in some -- particularly in some areas.

我們常聽到這樣的說法，我想看看選舉會發生什麼事。我想看看利率發生了什麼變化。我們希望看到利率變動。儘管聯準會在過去兩次會議上表現得融洽，但我認為我們並沒有看到專案工作有那麼大的進展。我認為我們在九月或最近這裡並沒有得到很大的推動。所以我認為這值得關注。這值得一看。但當我們與我們的經銷商交談時，他們——我想向你們重複他們對我們說的話，那就是，在某些方面，尤其是在某些領域，事情仍然有點被壓抑。

Thank you. Really appreciate it.

謝謝。真的很感激。

All right.

好的。

Matthew Bouley, Barclays.

馬修·博利，巴克萊銀行。

Good morning, everyone. Thank you for taking the questions. I wanted to -- I got to go back to the price-cost side. I think that was super clear what you just said that really, price is stable here, and what appears to be the biggest change to the guide is on material cost inflation. And so I guess, number one, it would be helpful if you could maybe educate us a little on historically what happens in terms of your ability to take price when you do have this level of inflation.

大家早安。感謝您提出問題。我想——我必須回到價格成本方面。我認為您剛才所說的非常清楚，實際上，這裡的價格很穩定，指南的最大變化似乎是材料成本通膨。所以我想，第一，如果你能向我們介紹一下歷史上當你確實有這種通貨膨脹水平時，你的定價能力會發生什麼，那將會很有幫助。

And also if, in this case, what you're really waiting for is just kind of a better demand environment in order to be able to push price, are you starting to signal to the trade that price could be something on the horizon? So just any kind of details there on how you would plan to offset it. Thank you.

而且，在這種情況下，如果您真正等待的只是更好的需求環境，以便能夠推高價格，那麼您是否開始向交易者發出信號，表明價格可能即將出現？因此，只要有關於您計劃如何抵消它的任何細節。謝謝。

Hey, Matt, Scott Barbour here. Good morning. So whenever we talk about price, it's always about our value proposition. And all the things we do, I reiterated them in today's script, all the things we do around that. And then what are we trying to achieve in that local environment, in that -- it's a very local business, and what are we trying to achieve in that local project.

嘿，馬特，斯科特·巴伯在這裡。早安.因此，每當我們談論價格時，總是談論我們的價值主張。我在今天的劇本中重申了我們所做的所有事情，我們圍繞著這些事情所做的所有事情。然後我們試圖在當地環境中實現什麼目標——這是一個非常本地化的業務，以及我們試圖在本地專案中實現什麼目標。

Is this people that we think we have opportunities with? What's the importance of the project, the size of the project, the competitors on the project, conversion from traditional materials, and whatnot, that kind of all goes into that day-to-day decision making. And as we've seen -- we've kind of been like in the boiling pot here on material costs. They've just been kind of peaking up a little bit, a little bit, a little bit. That's more difficult environment. In a weak demand environment, it's more difficult to recapture that kind of price -- those kinds of price movements.

我們認為我們有機會與這些人相處嗎？專案的重要性是什麼、專案的規模、專案的競爭對手、傳統材料的轉換等等，這些都會影響日常決策。正如我們所看到的，我們在材料成本方面就像在沸騰的鍋裡一樣。他們剛剛達到了一點點、一點點、一點點。那環境就比較困難了。在需求疲軟的環境下，重新獲得那種價格——那種價格變動更加困難。

So that -- and again, like I said, it's day-to-day how we're making those decisions. And we would -- believe me, we're battling on the material side too on our -- in our procurement, in our recycling, and our blending activities to try to mitigate as much of that as we can. Good performance from the factories, and then transportation has helped overcome some of that. But getting that in a weak demand environment, that slow boil of materials has been more difficult to recover than maybe in really peak high-demand environments. That kind of makes sense. When demand is weak, pricing power is more difficult.

因此，正如我所說，這就是我們每天做出這些決定的方式。相信我，我們也在材料方面進行鬥爭，在我們的採購、回收和混合活動中，盡可能地減少這種情況。工廠的良好表現以及交通運輸幫助克服了其中的一些問題。但在需求疲軟的環境中，材料的緩慢沸騰比在真正的高峰高需求環境中更難以恢復。這是有道理的。當需求疲軟時，定價能力就更加困難。

Okay. Right. And you're saying that -- it sounds like you're also saying that if costs were to be inflating more quickly, you might have an easier time to push price rather than the kind of slow bleed upwards, if I'm hearing you correctly.

好的。正確的。你是這麼說的——聽起來你還說，如果成本上漲得更快，你可能會更容易推高價格，而不是那種緩慢上漲，如果我聽到你的話正確。

That is very true. That is very true. Yes, very true. I mean, repeated many times in the history of the company as you guys saw in previous high material inflation environments.

這是非常正確的。這是非常正確的。是的，非常正確。我的意思是，正如你們在之前的高物質通膨環境中看到的那樣，這在公司的歷史上重複了很多次。

Yes, got it. Okay. Thank you for that, Scott. And then secondly, on the manufacturing and transportation line, as you were just alluding to, I think I heard you say at the top -- I mean, part of the improvement in that line was driven by your prior investments. And obviously, you guys are still in the middle of this big capital investment cycle. So I'm just curious if you could kind of draw a line between some of the investments you have been making in your manufacturing facilities and in transportation, and just sort of what the implication should be to that kind of manufacturing and transportation line going forward? Thank you.

是的，明白了。好的。謝謝你，斯科特。其次，在製造和運輸方面，正如您剛才提到的，我想我聽到您在頂部說 - 我的意思是，該生產線的部分改進是由您之前的投資推動的。顯然，你們仍然處於這個巨大的資本投資週期的中間。因此，我很好奇您是否可以在製造設施和運輸方面進行的一些投資之間劃清界限，以及這對未來的製造和運輸線路有何影響？謝謝。

Yes, so all right, thanks. I appreciate the question, and kind of number one on that list is the performance at the Infiltrator business. As you know, just after the acquisition there, we made pretty significant capital investments. And those investments have paid off very nicely. The result of those investments have been better efficiency, throughput, the new products that have better shot sizes, reduced material content, all that stuff. And you guys can see the numbers, what's happened in terms of their profitability.

是的，好的，謝謝。我很欣賞這個問題，名單中排名第一的是滲透者業務的表現。如您所知，在收購之後，我們進行了相當大的資本投資。這些投資得到了很好的回報。這些投資的結果是更高的效率、吞吐量、具有更好注射尺寸的新產品、減少的材料含量等等。你們可以看到這些數字，他們的獲利能力發生了什麼事。

Number two, in the ADS pipe network, we can see lower scrap rates, better uptime of equipment, better throughput and rate, high -- better safety performance. Now we got a lot of plants in that ADS network. Those that we concentrated on first, we have seen those improvements in the plans and the engineering team that has been working on that equipment. I think have done a pretty nice job, and that's what's turning the tide there is that kind of stuff.

第二，在ADS管網中，我們可以看到更低的廢品率、更好的設備正常運作時間、更好的吞吐量和速率、高——更好的安全性能。現在我們在 ADS 網路中擁有很多工廠。我們首先關注的那些，我們已經看到了計劃和一直致力於該設備的工程團隊的改進。我認為我們做得非常好，這就是扭轉潮流的原因。

So going forward, which is your real question, I think Craig and his team at Infiltrator will continue to perform at very high profit levels. It's pretty good profitability, but I think they'll continue to make improvements. There are additional investments we'll make there that we've already started working on and contemplating. And then I think as our investments across the pipe network spread, we ought to see more consistency there also.

因此，展望未來，這是你真正的問題，我認為克雷格和他的 Infiltrator 團隊將繼續保持非常高的利潤水平。這是相當不錯的獲利能力，但我認為他們會繼續改進。我們將在那裡進行額外的投資，我們已經開始研究和考慮這些投資。然後我認為，隨著我們在整個管網的投資的擴展，我們也應該看到更多的一致性。

And this is -- that capital has been machine rebuilds, new tooling, automated equipment. We've got a -- more than half of our trucking fleet is now refreshed. Truck and trailer fleet, fantastic safety performance in our trucking fleet now and very nice efficiency gains with loads and miles per gallon. So not quite the same magnitude of dollars as an Infiltrator or in the pipe network, but still meaningful improvements. So we're going to continue to work on that. And it's been a long road, and it will continue to be a good thing for the company.

這就是——資本是機器改造、新工具、自動化設備。我們有超過一半的卡車運輸車隊現已更新。卡車和拖車車隊現在在我們的卡車車隊中具有出色的安全性能，並且在負載和每加侖行駛里程方面取得了非常好的效率提升。因此，與滲透者或管道網路中的美元數量不完全相同，但仍然是有意義的改進。所以我們將繼續努力。這是一條漫長的道路，這對公司來說將繼續是一件好事。

Excellent. Well, thanks, Scott. Good luck, guys.

出色的。嗯，謝謝，斯科特。祝你好運，夥計們。

All right. Thanks. See you later, Matt.

好的。謝謝。稍後見，馬特。

Garik Shmois, Loop Capital.

Garik Shmois，Loop Capital。

Hi, thanks. I was hoping if you could just go through what you're seeing in the quarter in a little bit more detail, particularly on the non-res side. Just -- we know that the market has been choppy for a while now, but was there anything maybe outside of the storms that informed you that things were getting worse as the quarter progressed or is it really just kind of broad-based? Just a little bit more color on just how non-res had moved over the last several months.

你好，謝謝。我希望您能更詳細地了解本季所看到的情況，特別是在非資源方面。只是 - 我們知道市場已經波動了一段時間，但是除了風暴之外，是否有任何事情告訴您隨著本季度的進展，情況正在變得更糟，或者這真的只是一種廣泛的基礎嗎？只是再多介紹一下過去幾個月非資源的變化。

Well, the first thing that comes to my mind when I think about the non-residential is in our allied products. Those products, the majority of them go into that segment. And we've had very nice consistent growth in our allied products and particularly in the Stromtype, which is the storage product line. And it just flattened out. It's not like we were losing jobs or there's something going on in there. It's just stuff continually pushes to the right for delivery.

好吧，當我想到非住宅時，我首先想到的是我們的聯合產品。這些產品中的大多數都進入了該細分市場。我們的聯盟產品，尤其是 Stromtype（儲存產品線），取得了非常好的持續成長。它就變平了。這並不是說我們失業了，或是發生了什麼事。這只是東西不斷地推向右側以進行交付。

We might quote, design, get the order. And then consistently, things have been pushing out on us there. And to me, that tells you that there's just a lot of the projects got completed. There's this hesitation to move forward. This is some of that uncertainty I was talking about.

我們可能會報價、設計、取得訂單。然後，事情一直在向我們推進。對我來說，這告訴你只有很多項目已經完成。有這樣的猶豫要不要繼續前進。這就是我所說的一些不確定性。

Maybe the election being done will break loose some of that, but there's nothing -- there's nothing underneath that in terms of quote and design activity that tells us something is really wrong. It just tells us that things are bottled up and not moving forward. And when I say wrong, I mean, with our product line or our offering or a competitor or pricing or something like that. It's just these d*** jobs aren't releasing for shipment.

也許正在進行的選舉會打破其中的一些，但沒有什麼——在報價和設計活動方面沒有任何東西告訴我們確實有什麼問題。它只是告訴我們，事情被壓抑住了，無法向前發展。當我說錯誤時，我的意思是，我們的產品線或我們的產品或競爭對手或定價或類似的東西。只是這些該死的工作沒有發布發貨。

Okay. That makes sense. On the transportation cost piece, specifically, I think last quarter, you were repositioning product kind of across the country, and there was a bit of a headwind. It looks like that reversed nicely here. Just wanted to confirm that you're effectively through that process. And then just on inventories just broadly, how should we think about that? You mentioned they ticked up a little bit year on year here. Is there any concern for potential destocking in some of the channels you service?

好的。這是有道理的。具體來說，在運輸成本方面，我認為上個季度，您在全國範圍內重新定位了產品，並且遇到了一些阻力。看起來這裡的情況正好相反。只是想確認您是否有效地完成了該過程。然後就廣義的庫存而言，我們該如何思考？你提到他們在這裡比去年同期略有上升。您是否擔心您所服務的某些管道可能會出現庫存減少的情況？

So you want to go, Cottrill?

那你想去嗎，科特里爾？

Yes, I can do it. Yes, Garik, on your question, first on destocking, there's no risk there. So we'll put that one off to the side. On the -- what we call capitalize or interplant freight item, absolutely, getting ready for this year. We talked about that in Q4 of our fiscal '24 and how we did that running through a little bit of our first quarter. Those costs go into our inventory costs, they go on our balance sheet, and come through in three months.

是的，我能做到。是的，加里克，關於你的問題，首先是去庫存，那裡沒有風險。所以我們會把那個放在一邊。在我們所謂的資本化或間植貨運項目上，絕對是為今年做好準備。我們在 24 財年第四季討論了這一點，以及我們如何在第一季的一段時間內做到這一點。這些成本計入我們的庫存成本，計入我們的資產負債表，並在三個月內完成。

So in the second quarter, we did actually still have some of those costs as a headwind in that manufacturing and transportation bar. They were just offset by the strength of the manufacturing group's performance during the quarter. To your point as to when do we expect to see that kind of ease on a year-over-year basis and actually flip to a benefit, that's in our 2H guide.

因此，在第二季度，我們實際上仍然有一些成本作為製造和運輸的阻力。它們只是被製造集團本季的強勁業績所抵消。至於您所說的關於我們預計何時會看到這種逐年緩解並真正帶來好處的問題，請參閱我們的 2H 指南。

We actually expect transportation to be favorable year over year in 2H. The issue you have, and it kind of goes to the inventory, is we expect our manufacturing costs, however, on that absorption side of the house. As we look to that demand environment, as we look to our current inventory levels, these are our inventory levels that we have and get to the right DSI. We'll take production down a little bit and have an absorption impact. So again, you'll see manufacturing being a little unfavorable in the second half, and that's embedded in our guide.

事實上，我們預計下半年交通運輸將比去年同期有利。你遇到的問題，以及庫存方面的問題，是我們預期我們的製造成本是在房子的吸收方面。當我們關注需求環境時，當我們專注於當前庫存水平時，這些是我們擁有的庫存水平，並得出正確的 DSI。我們將稍微減少產量並產生吸收影響。再說一遍，您會看到下半年製造業有點不利，這已包含在我們的指南中。

Okay. That all makes sense. Thanks and best of luck.

好的。這一切都是有道理的。謝謝，祝你好運。

Bryan Blair, Oppenheimer.

布萊恩布萊爾，奧本海默。

Thank you. Good morning, everyone.

謝謝。大家早安。

Hey, Bryan.

嘿，布萊恩。

Good morning.

早安.

Scott, you actually just mentioned info related to one of my questions. What kind of decremental should we assume for the back half? We've been kind of walking through the different bars of the revised full year bridge. I would think with there being the relative suddenness of storm impact and related adjustments that -- if we look at the slower non-res, choppier non-res environment, $40 million -- the $40 million in storm impact that there may be pretty elevated decrementals on that, but also with adjusting production levels based on your own inventory. Just trying to get my head around that bar and revised bridge.

斯科特，您實際上剛剛提到了與我的一個問題相關的資訊。我們應該為後半部假設什麼樣的遞減？我們已經走過了修改後的全年橋的不同酒吧。我認為，由於風暴影響和相關調整的相對突然性，如果我們考慮較慢的非資源環境，波動較大的非資源環境，4000萬美元，風暴影響的4000萬美元可能會相當高在此基礎上進行遞減，而且還可以根據您自己的庫存調整生產水準。只是想讓我的腦袋繞過那個酒吧和修改過的橋樑。

Yes, the way I would answer that is I'd look at it two ways. First of all, on a phasing perspective, we typically see about 55% of our revenue in the first half, 45% in the back half. So I would say that that is reflected in this guide as well. When we talk about decremental margins and as we look at it, usually it's -- when we look at 2H versus 1H, it's usually about 300 to 400 basis points weaker in the second half of the year based on seasonality, lower demand, lower revenue and so forth.

是的，我會從兩個方面來回答這個問題。首先，從分階段的角度來看，我們通常會看到上半年收入的 55% 左右，下半年佔 45%。所以我想說這也反映在本指南中。當我們談論利潤率下降時，通常情況下，當我們考慮 2H 與 1H 時，由於季節性、需求下降、收入下降，下半年通常會下降 300 到 400 個基點等等。

Right now, I would tell you it's going to be a little bit like the 400 to 450 is the way to think about that from a decremental or 2H margin performance off of our 1H performance is the way I would model that out or think about it.

現在，我會告訴你，這將有點像 400 到 450 是從我們 1H 表現的遞減或 2H 利潤表現來思考的方式，這是我建模或思考的方式。

Okay. That's very helpful. Thank you. And then you mentioned, I think $40 million to $50 million in Orenco revenue for the remainder of fiscal '25. What should we think about in terms of normalized growth rates there given the combination of the assets and commercial synergies that you can bring to the deal? And then mid-teens margin, where should we expect that to go over time? Is there a concrete kind of synergy level that we can assume for years one, two or any way to help us think about the path forward?

好的。這非常有幫助。謝謝。然後你提到，我認為 Orenco 在 25 財年剩餘時間內的收入將達到 4,000 萬至 5,000 萬美元。考慮到您可以為交易帶來的資產和商業協同效應的結合，我們應該考慮那裡的正常成長率？然後是十幾歲左右的利潤率，隨著時間的推移，我們應該期望它會走向何方？我們是否可以假設第一年、第二年的具體協同水準或任何方式來幫助我們思考前進的道路？

Yes. I think right now, Bryan, we're not going to get into a lot of detail on that. I think what I would highlight for you though is we are so excited about this acquisition. And you know the Infiltrator for financial performance, leadership team, what they've been able to do. This is a strategic acquisition, and I couldn't emphasize how excited we are in what this team is going to be able to do.

是的。布萊恩，我想現在我們不會詳細討論這一點。我想我要向你們強調的是我們對這筆收購感到非常興奮。您了解滲透者的財務表現、領導團隊以及他們所做的事情。這是一項策略性收購，我對這個團隊將能夠完成的工作感到多麼興奮。

Is a mid-teens margin kind of where we want it to be? No. And when you look at our segment disclosure, Infiltrator's in the mid to high 50s from an adjusted gross margin perspective. So are we going to be able to get this business to there? No, unlikely based on where we are today. Are we going to be able to expand that margin significantly over the next two, three, four, five years? Yes, we will.

十幾歲左右的利潤率是我們想要的嗎？不。當您查看我們的細分市場揭露時，從調整後的毛利率角度來看，Infiltrator 處於 50 多歲左右。那我們能把這項業務發展到那裡嗎？不，根據我們今天的情況，不太可能。我們是否能夠在未來兩年、三年、四年、五年內大幅擴大這項利潤率？是的，我們會的。

So more to come on that as we think about next year's guide and so forth. But just suffice it to say, $40 million to $50 million of revenue is in our guide and mid-teens margin. So we thought that was a really appropriate level of disclosure to give you all, so that you could make sure you understood kind of how that was factored into our guide.

當我們考慮明年的指南等時，還會有更多內容。但我只想說，4,000 萬至 5,000 萬美元的收入在我們的指導範圍內，利潤率在十幾歲左右。因此，我們認為這是向大家提供的真正適當的披露水平，以便您可以確保您理解我們的指南中是如何考慮這一點的。

Okay. Understood. Thanks, again.

好的。明白了。再次感謝。

Yes. The one thing I would add, I think we'll probably talk a lot about the Infiltrator's advanced treatment segment and what we're doing in that both organically and with acquisitions at our Investor Day.

是的。我要補充的一件事是，我想我們可能會在投資者日談論很多關於 Infiltrator 的先進治療領域以及我們在有機方面和收購方面所做的事情。

Trey Grooms, Stephens.

特雷格魯姆斯、史蒂芬斯。

Hi, everyone. This is Ethan Roberts on for Trey Grooms. Thanks for taking my question. First, I just wanted to ask, what are the implications of lower-than-expected commercial demand and continued difficulties in agriculture on price mix, especially since you guys called out last quarter that this quarter would have a higher percentage of agriculture sales?

大家好。我是特雷·格魯姆斯的伊森·羅伯茨。感謝您提出我的問題。首先，我只是想問，商業需求低於預期和農業持續困難對價格結構有何影響，尤其是你們上個季度表示本季農業銷售比例將更高？

So I think the biggest impact on this non-res thing is really this allied product where it's such an important product for us and it's -- the growth of that has leveled out, and that affects the gross margin mix of the company. So that's one. Two, in that non-res market, it's a big market for our pipe products. We pursue a lot of projects there all the time -- every day. And we -- when we start to see that architectural billing index move to above 50, when we start to see non-residential starts recover, that will be when we begin to believe that the choppiness in that non-residential market is gone.

因此，我認為對非資源產品最大的影響實際上是這種聯盟產品，它對我們來說是非常重要的產品，而且它的成長已經趨於平穩，這影響了公司的毛利率組合。這就是其中之一。第二，在非資源市場中，這對我們的管道產品來說是一個很大的市場。我們每天都在那裡開展許多項目。當我們開始看到建築帳單指數升至 50 以上時，當我們開始看到非住宅開工復甦時，我們就開始相信非住宅市場的波動已經消失。

And then we did have some negative mix. Agriculture is bigger. It's had a better second half than first half, first half very impacted by the weather -- the very wet weather, particularly in the upper Midwest. We have had a pretty good fall season in our ag business. The mix of that as it grows is a higher percentage of our business, really beginning in kind of September, October, November. It does hurt us from a mix perspective. I think we overcame it a little bit in July and August, that negative mix of September. But your point is it is not a tailwind for us right now. It's more of a headwind.

然後我們確實遇到了一些負面的情況。農業規模更大。下半年比上半年好，上半年受天氣影響很大——非常潮濕的天氣，特別是在中西部北部。我們的農業業務經歷了一個相當不錯的秋天。隨著業務的成長，這種混合在我們的業務中所佔的比例越來越高，實際上是從 9 月、10 月、11 月開始的。從混合的角度來看，它確實傷害了我們。我認為我們在七月和八月克服了一點，九月的負面組合。但你的觀點是，目前這對我們來說並不是順風車。這更像是逆風。

Yes, but I would say --

是的，但我想說--

We're managing pretty well through that.

我們在這方面處理得很好。

I think so. And we talked about elevated volumes in Q2, and we did see that, right? The volumes that we sold in Q2 were really on our expectations, which was a step up.

我想是的。我們談到了第二季度銷量的增加，我們確實看到了這一點，對吧？我們在第二季的銷售量確實符合我們的預期，這是一個進步。

We're kind of recovering in that right now. And we have new General Manager of our ag business who's hit the ground running, and lots of excitement about what he's going to bring to our business.

我們現在正在恢復中。我們的農業業務有了新任總經理，他立即投入工作，並且對他將為我們的業務帶來的影響感到非常興奮。

Okay, thank you. That's super helpful. And then just shifting gears real quick on Orenco, I know you said you'd give more detail in an upcoming Investor Day. But just high level, how are you thinking about the cross-sell opportunities? And it's a highly fragmented market as you pointed out, so any thoughts on additional bolt-on opportunities there?

好的，謝謝。這非常有幫助。然後就在 Orenco 上快速轉變，我知道你說過你會在即將到來的投資者日提供更多細節。但只是高層，您如何看待交叉銷售機會？正如您所指出的，這是一個高度分散的市場，那麼對於那裡的額外補充機會有什麼想法嗎？

Yes, so Ethan, I think after the acquisition, we talked to a lot of people, and the immediate kind of cross sell opportunity is the ability for -- to sell the Infiltrator septic tanks into the Orenco systems. That wasn't happening before the acquisition because the companies were competitors. So that's number one.

是的，所以伊森，我認為收購之後，我們與很多人進行了交談，直接的交叉銷售機會是將滲透者化糞池出售到奧倫科系統中的能力。在收購之前這種情況並沒有發生，因為兩家公司都是競爭對手。所以這是第一。

Number two, Orenco has a controls business. A lot of septic systems have remote monitoring, so their controls package strengthens the Infiltrator offering. So there is the opportunity there. And then one of the faster-growing or the fastest-growing product line at Orenco was this -- what this brand name is this Prelos liquid-only sewer, which has the ability to take -- effectively put in kind of a centralized sewer system in small rural areas, right?

第二，Orenco 擁有控制業務。許多化糞池系統都具有遠端監控功能，因此它們的控制包增強了 Infiltrator 產品的性能。所以那裡有機會。然後 Orenco 增長最快或增長最快的產品線之一是這個 - 這個品牌名稱是 Prelos 純液體下水道，它能夠有效地放入集中式下水道系統在小農村地區，對嗎？

So there's tank and piping that goes with that, and then they're able to kind of under pressure pump the wastewater to kind of like a centralized treatment facility. And so there's good opportunity there with that where we can get that product in the hands of the Orenco sales -- I'm sorry, the Infiltrator salespeople and the Infiltrator distribution and kind of broaden the reach and expansion of that product line.

因此，有與之配套的水箱和管道，然後他們能夠在壓力下將廢水泵送到類似於集中處理設施的地方。因此，這是一個很好的機會，我們可以將該產品交到Orenco 銷售人員手中- 對不起，滲透者銷售人員和滲透者分銷商，並在某種程度上擴大了該產品線的覆蓋範圍和擴展。

Perfect. Thanks so much. I'll pass it on.

完美的。非常感謝。我會把它傳遞下去。

John Lovallo, UBS.

約翰‧洛瓦洛，瑞銀集團。

Good morning, guys. Thanks for taking my questions. The first one is the moving pieces on the revenue side, you've talked about quite a bit here. But can you just help us maybe put a finer point on the walk from the prior implied second-half EBITDA margin of around 31.5% to kind of the implied revised margin of closer to 28.5%? I mean, it seems like there's 30 to 40 bps from Orenco. It sounds like there's a little bit of headwind on the manufacturing side, some unfavorability there. But what are some of the other moving pieces if you could help just kind of bucket those?

早安，夥計們。感謝您回答我的問題。第一個是收入的動態部分，您在這裡已經討論了很多。但您能否幫助我們對從先前隱含的下半年 EBITDA 利潤率約 31.5% 到隱含修訂後利潤率接近 28.5% 的變化進行更詳細的闡述？我的意思是，Orenco 似乎有 30 到 40 個基點。聽起來製造方面存在一些阻力，存在一些不利因素。但是，如果你能幫忙解決一下，還有哪些令人感動的事情呢？

Hey, John, it's Scott here. I think you hit on two of the key drivers. I think the third that you didn't mention was related to material cost. So again, you got the manufacturing headwind, you got a little bit of that mix in allied products on that non-res weakness. But that material costs are -- that's really one of those items as we talked about on the call that really, we've seen kind of an incremental increase as we've gone through almost every month on a year-over-year basis and sequential basis.

嘿，約翰，我是史考特。我認為你找到了兩個關鍵驅動因素。我認為你沒有提到的第三個與材料成本有關。所以，再一次，你遇到了製造逆風，在非資源弱點上，你在聯合產品中遇到了一些這種混合。但是，材料成本確實是我們在電話會議中談到的其中一個項目，實際上，我們已經看到了增量增長，因為我們幾乎每個月都在逐年增加，並且順序基礎。

And this is one of those items that we'll see more of that cost coming through in 2H than we did in 1H. So when you throw that in there, that really impacts your margin performance. And again, like we've talked about, 2H to 1H is usually 300 to 400 bps weaker just based on seasonality, and this will be somewhere around 400 to 500 based on those factors.

這是我們將在 2 小時內看到比 1 小時內更多成本的項目之一。因此，當您將其投入其中時，這確實會影響您的利潤表現。再說一次，就像我們討論過的那樣，僅根據季節性因素，2H 到 1H 通常會弱 300 到 400 個基點，而根據這些因素，這將在 400 到 500 個基點左右。

Okay. Understood. And then I know you generally want to give kind of full-year guidance as opposed to quarterly, but there are so many moving pieces here. Is there any way you could kind of help us frame maybe the cadence of revenue and margin in 3Q and 4Q?

好的。明白了。然後我知道您通常希望提供全年指導，而不是季度指導，但這裡有很多令人感動的事情。您有什麼方法可以幫助我們確定第三季和第四季的營收和利潤率的節奏嗎？

I think the only way, John, I could do that is just to -- just go back to bubble it up a little bit and just indicate that the way we see our revenue phased out typically is in that kind of 55%, 45% 1H, 2H as to how our revenue falls. And we see that falling about the same way.

我認為，約翰，我能做到這一點的唯一方法是——只是回去稍微放大一下，然後表明我們看到我們的收入逐步淘汰的方式通常是 55%、45% 1H、2H 我們的收入如何下降。我們看到它以同樣的方式下降。

As to Q3 versus Q4, I really don't want to get into that just because of the impact of seasonality on those two quarters. So I think using that as what we're projecting and predicting for the second half as well as what we indicated we think is kind of that end market weakness and the weather impact that we expect, I think that's the way I would guide you to try to put that in there and model it out.

至於第三和第四季度，我真的不想僅僅因為這兩個季度的季節性影響而討論這個問題。因此，我認為將其用作我們對下半年的預測和預測，以及我們所表示的終端市場疲軟和我們預期的天氣影響，我認為這就是我將指導您的方式嘗試將其放入其中並對其進行建模。

Okay. Thank you, Scott.

好的。謝謝你，斯科特。

Ryan Connors, Northcoast Research Partners.

Ryan Connors，北海岸研究合作夥伴。

Good morning.

早安.

Good morning.

早安.

I wanted to talk a little bit about maybe the competitive environment because obviously, Mike, you've talked a lot about how price has always been generally positive through all sorts of different cycles historically. And I mean, is there anything that's shifted competitively that's a little more challenging? And related to that, is there any geographic nuance to -- are certain markets seeing more better pricing than others around the country? And any kind of color there about kind of competitive and geographic pricing?

我想談談競爭環境，因為顯然，麥克，你已經談論了很多關於歷史上各種不同周期中價格如何始終總體呈正值的問題。我的意思是，有沒有什麼競爭性的變化更具挑戰性？與此相關的是，是否存在任何地理上的細微差別——某些市場的定價是否比全國其他市場更好？還有關於競爭性和地域性定價的任何顏色嗎？

Yes, Ryan, I would say the competitive environment, Scott made some comments about the kind of demand in the non-residential being a little bit weaker and the difficulty to pass the price through as much as we would like to. I would say, strategically, we're out there making those decisions day to day in certain geographies to pass the price where you think you're able to get it.

是的，瑞安，我想說的是競爭環境，斯科特對非住宅的需求有點疲軟以及難以像我們希望的那樣傳遞價格發表了一些評論。我想說，從戰略上講，我們在某些​​地區每天都會做出這些決定，以將價格傳遞到您認為能夠獲得的價格。

As far as the competitive environment, typically are more competitive plastic geographies, tend to be the Northeast parts of the Midwest, Texas, and parts of the West. So I would say that is holding true today. So I wouldn't say there's some kind of big change or big sweep in how we look at that.

就競爭環境而言，通常是競爭較激烈的塑膠地區，往往是中西部的東北部地區、德州和西部的部分地區。所以我想說這在今天仍然適用。所以我不會說我們對此的看法發生了某種重大變化或大掃除。

Okay. And then related to that, the substitution -- so one thing you haven't mentioned much today that I've heard is conversion. Normally, that's been a big part of the story. But is there anything where the price you've taken in the last few years has kind of narrowed the gap versus some of the substitutes and the conversion? And has that impacted the conversion story and then had a knock-on effect on price at all? Any update on kind of the conversion side?

好的。與此相關的是替代——所以我今天聽到的你沒有提到太多的一件事是轉換。通常，這是故事的重要部分。但是，與某些替代品和轉換相比，您在過去幾年中採取的價格是否縮小了差距？這是否影響了轉換故事，然後對價格產生了連鎖反應？有關轉換方面的任何更新嗎？

So I would say the conversion story continues to progress as it always has. It's very methodical. We still feel we're gaining 100 to 200 basis points of share gain. A lot of that is driven by the HP product, which is polypropylene. I don't think the pricing environment or how much price we've had in the past over the past three years has had a significant impact -- negative impact on our conversion story. We feel we've still been able to take share.

所以我想說，轉變的故事一如往常地繼續進展。這是非常有條理的。我們仍然認為我們的份額增加了 100 到 200 個基點。其中很大一部分是由惠普產品聚丙烯推動的。我不認為定價環境或過去三年我們的價格對我們的轉型故事產生了重大影響——負面影響。我們覺得我們仍然能夠分享。

The concrete pipe industry has faced very similar inflationary pressures that we've had, whether that be input costs going into the product, whether that be labor costs to make it, or transportation cost to deliver it. So they've had to continue to raise price as well. So I think it's still intact, and we don't feel like that has hurt us over the long term here over the past four or five years.

混凝土管道產業面臨與我們非常相似的通膨壓力，無論是產品的投入成本、製造產品的勞動成本或交付產品的運輸成本。因此他們也不得不繼續提高價格。所以我認為它仍然完好無損，我們不覺得這在過去四到五年裡對我們造成了長期傷害。

I would add that the residential and infrastructure growth is largely a conversion story. And those markets have been growing pretty well for us. Those are sales and go-to-market resources we started investing in four years ago, and they've really paid off for us.

我想補充一點，住宅和基礎設施的成長很大程度上是一個轉變的故事。這些市場對我們來說成長得相當好。這些是我們四年前開始投資的銷售和上市資源，它們確實為我們帶來了回報。

Got it. Thanks for your time.

知道了。感謝您抽出時間。

Thanks.

謝謝。

Thank you.

謝謝。

David Tarantino, KeyBanc Capital Markets.

大衛‧塔倫提諾 (David Tarantino)，KeyBanc 資本市場。

Hey. Good morning, everyone.

嘿。大家早安。

Good morning.

早安.

Just to follow up on some of the longer-term margin commentary, a lot of good color on the near term, but we're still ahead of historical levels. So maybe could you touch on the sustainability of these higher margins longer-term, particularly relative to kind of all the price cost commentary and what offsets from investments you still have?

只是為了跟進一些長期利潤率評論，短期內有很多良好的色彩，但我們仍然領先於歷史水平。那麼，也許您可以談談這些較高利潤率的長期可持續性，特別是相對於所有價格成本評論以及您仍然擁有哪些投資抵消？

Yes. This is Scott Barbour, David. Yes, we're above our long-term targets. We'll look at new financials in our Investor Day that will be next year, next calendar year. We think that we still -- things kind of -- they don't go in a straight line. They kind of ebb and flow a bit. And I think we're seeing some of that right now due to some demand conditions and some short-term things in our materials market.

是的。這是史考特巴伯，大衛。是的，我們超出了長期目標。我們將在明年的投資者日關注新的財務數據。我們認為，事情仍然不是直線發展。它們有點潮起潮落。我認為，由於我們材料市場的一些需求狀況和一些短期因素，我們現在正在看到其中的一些情況。

We're making big investments in our engineering center, in material science, and all the different recycling activities that will, I think impact that over the longer term. So if your question is, are we going back to our prior guide -- our Investor Day guide of 2022, no. I don't think we're going back to that. We'll have a plan that continues to march the company up into the right as we look over the long term.

我們正在對我們的工程中心、材料科學以及所有不同的回收活動進行大量投資，我認為從長遠來看，這將產生影響。因此，如果您的問題是，我們是否要回到先前的指南——我們的 2022 年投資者日指南，不。我不認為我們會回到過去。從長遠來看，我們將製定一項計劃，繼續推動公司走向正確方向。

Okay, great. That's helpful. And then just a quick one on the CapEx outlook. It looks like we're still running at a higher level, but could you give us some color around the change here? Is it just timing of projects? And then maybe on capital allocation following Orenco, should we expect you to return to share buyback levels you were previously running at?

好的，太好了。這很有幫助。然後簡單介紹一下資本支出前景。看起來我們仍然在更高的水平上運行，但是您能給我們一些有關這裡變化的信息嗎？僅僅是專案的時間安排嗎？然後，也許在奧倫科之後的資本配置方面，我們是否應該期望您回到先前的股票回購水準？

So CapEx is a timing thing on a couple of bigger projects. And we will remain at elevated CapEx versus historical there. Probably, this $250 million is not a bad number. We might go above and below that a bit, but we're going to invest in good projects in the company. And then share buyback, we're always looking at cash on hand, what's going on in the market, and what is our particular thing looks like, how we return that, what our needs are and opportunities internally. So it's certainly in the mix for us is more share buyback. But that's all I'd like to say right now.

因此，資本支出對於幾個較大的項目來說是一個時間問題。與歷史水準相比，我們將保持較高的資本支出。或許，這2.5億美元並不是一個糟糕的數字。我們可能會稍微高於或低於這個水平，但我們會投資公司的好項目。然後是股票回購，我們總是專注於手頭上的現金、市場上發生的事情、我們的特定事物是什麼樣子、我們如何回報它、我們的需求是什麼以及內部機會。因此，對我們來說，肯定有更多的股票回購。但這就是我現在想說的。

Great. Thanks for the time.

偉大的。謝謝你的時間。

Thank you.

謝謝。

That concludes our question-and-answer session. And I will now turn the call back over to Scott Barbour for closing remarks.

我們的問答環節到此結束。現在，我將把電話轉回給斯科特·巴伯 (Scott Barbour)，讓其致閉幕詞。

All right. Thank you very much for those questions, and we appreciate the discussion that we had today. We are going to continue to do what we do well. We're going to drive our businesses, the Infiltrator and the ADS businesses. We're going to lean into these markets that are growing in residential and infrastructure in particular.

好的。非常感謝您提出這些問題，我們感謝今天的討論。我們將繼續做我們擅長的事情。我們將推動我們的業務、Infiltrator 和 ADS 業務。我們將重點關注這些不斷增長的市場，尤其是在住宅和基礎設施領域。

We are going to continue to work hard when we're -- in the context of our value proposition, the projects on the street, and what we want to do in these localized markets from a participation standpoint. And the non-res market is going to continue to be a little choppy, but that will develop. That will work itself out.

當我們的價值主張、街頭專案以及從參與的角度來看我們希望在這些本地化市場中做什麼時，我們將繼續努力工作。非資源市場將繼續有點波動，但這種情況將會發展。這會自行解決的。

We're going to work on the Orenco integration where these are great product lines and expansion of our sales teams and our distribution and our product lines in this advanced treatment segment, which we really like and has been growing organically, very strong for that -- for us. And we'll push on hard over the second half. We have lots of cost reductions and some things in flight here at ADS side, but that's not going to keep us from getting to our long-term objectives. That's it. Thank you very much. Everyone, have a good weekend.

我們將致力於Orenco 整合，其中有很棒的產品線，以及我們的銷售團隊和我們的分銷以及我們在這個先進治療領域的產品線的擴展，我們真的很喜歡這個領域，並且一直在有機增長，對此非常強大 - - 對我們來說。下半場我們將繼續努力。我們在 ADS 方面降低了很多成本，並且正在進行一些工作，但這不會阻止我們實現長期目標。就是這樣。非常感謝。大家週末愉快。

That will conclude today's call. Thank you all for joining. You may now disconnect.

今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。