Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $0.38, a 35% increase compared to the same quarter last year [6] - Revenues increased by 18.5% year-over-year, rising from $434.4 million to $514.9 million [26] - Net income for the gas business was $17.5 million for the quarter [7] - The company expects GAAP earnings per share to exceed the guidance range of $2.07 to $2.11 for the year [7] Business Line Data and Key Metrics Changes - The gas business showed strong performance with significant revenue growth attributed to favorable rate case outcomes and increased gas volume [26] - The water business is expected to see annual rate base growth of 6% through 2029, not including acquisitions [18] - O&M expenses increased by 4.2% year-over-year, driven by higher employee-related costs and bad debt expenses [29] Market Data and Key Metrics Changes - The company is experiencing a wet summer, which has decreased water consumption in several states [28] - The Texas market has seen a 16% population increase and a corresponding 30% GDP growth, contributing to the company's growth in that region [23] Company Strategy and Development Direction - The company is reaffirming its capital investment plans with a target of approximately $1.4 billion in infrastructure investment for 2025 [7] - The focus remains on growing the water and wastewater business through acquisitions, with recent purchases totaling approximately $58 million for systems serving about 10,300 customers [34] - The company aims to maintain a strong balance sheet and improve cash flow while delivering consistent dividend growth [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong growth potential in both water and gas platforms [36] - The company is committed to addressing PFAS issues and sees regulatory changes as potential growth opportunities [22][76] - Management noted that the engagement with regulatory bodies has been positive, indicating a constructive relationship moving forward [55] Other Important Information - The Board of Directors approved a 5.25% increase in the dividend, continuing a 30-year tradition of dividend growth [12] - The company has been recognized for its community engagement efforts, being named one of Greater Philadelphia's most community-minded businesses [14] Q&A Session Summary Question: Insights on quarterly earnings guidance - Management indicated that GAAP earnings are expected to exceed the guidance range due to strong revenue in gas and favorable tax items [41][44] Question: Cash flow trends and PFAS settlements - The company expects to receive approximately $45 million in PFAS proceeds this year, with $7.1 million already received [49] Question: Regulatory environment in Pennsylvania - Management noted a positive engagement with the new consumer advocate and expressed hope for constructive relationships with all advocates [55][56] Question: Fair market value in acquisitions - Management stated they might consider paying above the reasonable review ratio if significant rate base growth is anticipated [59] Question: Tax rate modeling - Management suggested a low single-digit benefit for 2025 and a low single-digit expense for 2026, indicating a crossover in tax impacts [62]

Financial Performance - Q2 2025 EPS was $0.38, with 2025 EPS guidance set at $2.07 - $2.11[9] - Operating revenues for Q2 2025 increased by 18.5% to $514.9 million, compared to $434.4 million in Q2 2024[41] - Net income for Q2 2025 increased by 43.0% to $107.8 million, compared to $75.4 million in Q2 2024[41] - YTD 2025 operating revenues increased by 24.1% to $1,298.5 million, compared to $1,046.5 million in YTD 2024[75] - YTD 2025 net income increased by 14.8% to $391.6 million, compared to $341.2 million in YTD 2024[75] Investments and Growth - Infrastructure investments for 2025 are projected to be $1.4 billion - $1.5 billion[9] - The company anticipates approximately $7.8 billion in infrastructure investments from 2025-2029[20] - The company targets a rate base CAGR of approximately 6% through 2029 for Aqua[23] - The company targets a rate base CAGR of approximately 11% through 2029 for Peoples[65] Regulatory and Acquisitions - Completed regulatory recoveries in 2025 are expected to increase annualized revenue by $92.6 million for the water segment and $8.2 million for the gas segment[53] - Pending regulatory recoveries are expected to increase annualized revenue by $96.6 million for the water segment[53] - Over 135,000 water and wastewater customers and approximately $550 million in rate base have been acquired through M&A since 2015[60]

Financial Data and Key Metrics Changes - Xcel Energy reported earnings of $0.75 per share for Q2 2025, an increase from $0.54 per share in Q2 2024, driven by higher revenue from electric and natural gas services and increased earnings from AFUDC [20][21][25] - Weather-normalized electric sales increased by 3.5% for the second quarter, with a full-year forecast of 3% growth [21] Business Line Data and Key Metrics Changes - The company invested $2.6 billion in energy infrastructure during the quarter, focusing on resilient and reliable energy systems [6][25] - Xcel Energy anticipates needing an additional $15 billion in capital investment to meet customer needs, primarily within the current five-year forecast [9][12] Market Data and Key Metrics Changes - Strong energy demand is noted from the electrification of transportation, manufacturing, and home heating, indicating a growing market for energy services [7][8] - The company is actively working on resource planning in Colorado, which may require between 5 and 14 gigawatts of new generation to meet reliability and customer demands through 2031 [12] Company Strategy and Development Direction - Xcel Energy is in the early stages of an infrastructure investment cycle in the U.S., with a five-year capital plan of $45 billion to address increased energy demand [8][15] - The company is navigating a rapidly evolving energy policy landscape, focusing on federal legislation that impacts tax credits and permitting [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering on earnings guidance for the 21st consecutive year, highlighting a strong track record in the industry [7] - The company is committed to reducing risks from wildfires and extreme weather through various mitigation strategies and investments [16][17] Other Important Information - Xcel Energy has made significant progress in wildfire risk reduction, with a $1.9 billion wildfire mitigation plan approved in Colorado [16] - The company is preparing for a trial related to the Marshall fire, maintaining that its equipment did not cause the second ignition [50][84] Q&A Session Summary Question: CapEx upside and base capital plan - Management discussed the potential conversion of CapEx upside into the base capital plan, indicating a conservative approach to regulatory perspectives and transparency in future updates [29][31][32] Question: Turbine procurement position - Management confirmed having 19 turbine reservation slots to support upcoming projects, with a significant portion allocated for the SPS portfolio [36][37] Question: Renewable build-out and treasury order impact - Management reassured that the appetite for renewable build-out remains unchanged despite potential changes in the safe harbor window [40][41] Question: Equity needs and asset sales - Management stated that they are not interested in minority interest sales and view their assets as core, focusing on a balanced mix of debt and equity for funding growth [92][94]

Custom Truck One Source 2nd Quarter 2025 Investor Presentation July 30, 2025 CONFIDENTIAL DRAFT1 Safe Harbor This presentation includes certain financial measures that have not been prepared in a manner that complies with generally accepted accounting principles in the United States ("GAAP"), including, without limitation, Adjusted Gross Profit, Adjusted Gross Margin, EBITDA and Adjusted EBITDA (collectively, the "non-GAAP financial measures"). These non-GAAP financial measures may exclude items that are si ...

Core Insights - The Zacks Building Products - Heavy Construction industry is experiencing strong growth driven by favorable long-term trends, despite facing near-term challenges such as inflation and elevated interest rates [1][8]. Industry Overview - The industry encompasses mechanical and electrical construction, industrial and energy infrastructure, and building service providers, focusing on heavy civil construction projects like highways, bridges, and ports [3]. - Companies in this sector are engaged in engineering, construction, and maintenance of communications infrastructure, oil and gas pipelines, and energy processing facilities [3]. Growth Drivers - A robust federal infrastructure agenda is unlocking significant investments in transportation, broadband, and energy networks, leading to increased demand in high-growth sectors [2]. - The data center market's expansion is creating new opportunities for heavy construction firms, driven by the need for large-scale infrastructure solutions [2][5]. - The ramp-up of 5G projects is benefiting industry players, with increased demand for wireline and wireless networks [6]. Trends Impacting the Industry - The U.S. administration's infrastructure plan aims to create sustainable infrastructure, which is expected to significantly impact the construction industry over the next five years [4]. - Acquisitions are being utilized by companies to solidify product portfolios and leverage new business opportunities, particularly in renewable energy projects [7]. Financial Performance - The Zacks Building Products - Heavy Construction industry has outperformed the broader Zacks Construction sector and the S&P 500, with a collective gain of 49.8% over the past year compared to 0.3% for the sector and 16.1% for the S&P 500 [13]. - The industry's forward 12-month price-to-earnings ratio is currently at 22.94, slightly above the S&P 500's 22.87 [17]. Company Highlights - **MasTec, Inc. (MTZ)**: Reports an 18-month backlog of $15.88 billion, a 23.7% year-over-year increase, with a growth outlook supported by diversified operations and strategic focus on clean energy [20][21]. - **Orion Group Holdings, Inc. (ORN)**: Positioned to benefit from rising demand for specialized marine and concrete services, with a focus on operational efficiency and debt reduction [25][26]. - **Primoris Services Corporation (PRIM)**: Gaining from increased activity in power delivery and renewable energy projects, with a robust backlog of $11.4 billion [29][30]. - **Dycom Industries, Inc. (DY)**: Leveraging demand for telecommunications infrastructure, particularly in 5G and fiber-optic deployment, with a strong financial performance reflected in recent earnings [34][35].

Financial Data and Key Metrics Changes - Overall revenue decreased by 1% year over year, while truck revenue increased year over year for the first time since 2022 [7][10] - Truck revenue per load increased by 2.6% compared to the same quarter last year, with a sequential increase of 3.2% from the first quarter of 2025 [15][10] - Gross profit was $109.3 million compared to $120 million in the same quarter last year, with a gross profit margin of 9% [23][24] Business Line Data and Key Metrics Changes - Heavy haul revenue increased by 9% year over year, driven by a 5% increase in revenue per load and a 4% increase in volume [8][17] - Non-truck transportation service revenue decreased by 22% or $21 million compared to the same quarter last year, primarily due to a 20% decrease in ocean revenue per shipment [18][19] - Transportation Logistics segment revenue was down 1% year over year, with a 2% decrease in loadings [19] Market Data and Key Metrics Changes - The freight environment was characterized by soft demand, with truck capacity readily available and market conditions favoring shippers [9][10] - U.S.-Mexico and U.S.-Canada cross-border businesses underperformed compared to domestic revenue performance [19] - Revenue hauled on behalf of other truck transportation companies was 19% below the same quarter last year, indicating accessible capacity in the marketplace [22] Company Strategy and Development Direction - The company remains focused on accelerating its business model and executing strategic growth initiatives despite ongoing challenges [6][10] - Continuous investment in technology solutions and fleet refreshment is prioritized to support independent business owners [11][27] - The company aims to leverage its strong balance sheet and cash generation capabilities to return capital to shareholders through buybacks and dividends [27] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges from volatile federal trade policy and inflation concerns, but expressed optimism about the heavy haul service performance [6][8] - The company will provide revenue commentary for the third quarter instead of formal guidance due to the uncertain economic environment [28] - Management expects to see similar trends in the third quarter, with automotive and construction sectors remaining sluggish [45][46] Other Important Information - The accident frequency rate was reported at 0.67 DOT reportable accidents per million miles, below the national average [12] - The company experienced a decrease in BCO truck count by approximately 6% year over year, but the sequential count was flat, indicating stability [13][14] - Insurance and claims costs increased to $30.4 million in the second quarter, attributed to higher severity of trucking accidents [25][99] Q&A Session Summary Question: Clarification on SG&A outlook for Q3 - Management confirmed that the $3 million decline in SG&A would be off the reported $55.7 million, accounting for the reclassification impact [33][35] Question: Insights on end market performance - Management indicated that automotive remains sluggish, while sectors like data centers and heavy haul are performing positively [45][46] Question: Trends in heavy haul segment - Management expressed optimism about the heavy haul segment, noting broad-based demand across various industries [82][85] Question: Impact of ELP regulations on capacity - Management does not foresee significant exposure to ELP regulations, emphasizing a disciplined approach to recruiting and retaining BCOs [90][91] Question: Trends in insurance costs and claims - Management noted a slight increase in insurance costs due to higher accident severity, but achieved a flat renewal on insurance premiums [99][100]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **metals industry**, particularly in relation to **China's economic policies** and their impact on commodity prices, including iron ore, coking coal, and lithium [1][3][11]. Core Insights - **Sentiment Shift**: There has been a notable shift in sentiment regarding China's supply-side reforms, steel production cuts, and infrastructure projects, which has positively influenced the metals market [3][11]. - **Price Movements**: Since July, iron ore prices have increased by **11%**, coking coal futures have surged by **51%**, alumina by **16%**, spodumene by **28%**, and lithium carbonate by **18%** [4][11]. - **Fundamental Lag**: Despite the positive sentiment, the underlying fundamentals have not yet aligned, as significant structural changes in China's economy are required to support these reforms [5][11]. - **Iron Ore Positioning**: Managed money positioning in iron ore has shifted from **245 kilots net short** to **39 kilots net short**, indicating a significant change in market sentiment [5][11]. Price Forecasts and Market Dynamics - **Iron Ore Outlook**: The forecast for iron ore prices is expected to remain rangebound between **$95 and $100 per ton** through the second half of the year, with a recent overshoot to **$105 per ton** viewed as excessive [6][11]. - **Met Coal Challenges**: Met coal fundamentals are under pressure, with imports to China down **8% year-to-date** [6][11]. - **Infrastructure Investment**: The launch of the Tibet hydropower project is anticipated to drive further infrastructure investment, which could bolster demand for metals [3][11]. Additional Considerations - **Production Cuts**: Production cuts in China could potentially increase seaborne demand for met coal, while the lithium supply-demand balance is improving, although rapid price rebounds could disrupt supply discipline [11][13]. - **Monitoring Future Developments**: Attention is being paid to upcoming policy meetings in China, with expectations of limited stimulus due to robust GDP growth [14][11]. - **China's Steel Production**: Recent data indicates that China's steel production has decreased more than expected, which may lead to higher port inventories of iron ore [6][11]. Conclusion - The metals industry is currently experiencing a sentiment-driven rally, primarily influenced by China's policy signals and infrastructure projects. However, the sustainability of this rally is contingent upon actual demand growth and the alignment of market fundamentals with the optimistic sentiment observed in recent weeks [11][5].

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the launch of a significant hydropower project in China, valued at RMB 1.2 trillion (approximately USD 167 billion), located on the Yarlung Tsangpo River. This project is part of China's strategy to stimulate infrastructure development in response to weak demand, particularly in the property sector [1][2]. Core Insights and Arguments - **Project Scale and Impact**: The hydropower project is expected to be 5-6 times the size of the Three Gorges Dam, contributing approximately 5% to China's 2024 infrastructure fixed asset investment (FAI). It will consist of five cascade hydropower plants with a projected power generation capacity of 60-70 GW annually, making it the world's largest hydro dam upon completion in 15-20 years [2]. - **Cement Demand**: The project is estimated to require 30-50 million tons of cement, 150-250 million tons of sand and aggregate, and 90-150 million cubic meters of concrete. This demand represents about 1.7% of China's total annual cement production. In Tibet, the average annual cement demand from this project could account for 25%-35% of local production, significantly tightening regional demand and potentially increasing cement prices from RMB 500-600 per ton to RMB 700 per ton [4]. - **Steel Consumption**: The project is projected to consume around 4 million tons of steel, which is about 0.4% of China's annual crude steel production. The specific location in Tibet will likely increase the demand for high-quality steel products, benefiting companies like Baosteel [4]. - **Power Generation Equipment**: Key players in the hydropower equipment sector, such as Dongfang Electric and Harbin Electric, are expected to benefit from the project. The project aims to add 60-70 GW to China's existing hydropower capacity of 436 GW by the end of 2024, enhancing long-term earnings prospects for the power generation equipment sector [4]. - **Construction Machinery Investment**: The machinery investment for the project could reach RMB 72-96 billion, which is significant compared to the revenues of the top five domestic construction machinery companies projected at RMB 130 billion in 2024. This investment is expected to alleviate concerns regarding construction machinery demand and positively impact companies like Sany, XCMG, and Zoomlion [4][5]. Additional Important Insights - **Investment Recommendations**: The report recommends buying shares in companies such as Conch, CNBM, and XCMG, which are positioned to benefit from the anticipated increase in construction activity and material demand due to the hydropower project [1][4]. - **Regional Economic Impact**: The project is expected to have a substantial positive impact on regional economies, particularly in Tibet, by increasing demand for construction materials and machinery, thereby stimulating local economic growth [4]. - **Long-term Outlook**: The hydropower project is seen as a critical component of China's broader strategy to enhance its infrastructure and energy capacity, which is expected to drive growth in related sectors over the next decade [2][4].

Market Overview - The Shanghai Composite Index rose by 0.72% to close at 3559.79 points, with a daily high of 3560.63 points [1] - The Shenzhen Component Index increased by 0.86% to close at 11007.49 points, reaching a high of 11008.48 points [1] - The ChiNext Index gained 0.87%, closing at 2296.88 points, with a peak of 2297.14 points [1] ETF Market Performance - The median return for stock ETFs was 0.72% [2] - The highest return among scale index ETFs was 2.07% for the Penghua CSI 800 Free Cash Flow ETF [2] - The highest return in industry index ETFs was 10.05% for the Fuguo CSI All-Share Construction Materials ETF [2] - The top three ETFs by return were: - Fuguo CSI All-Share Construction Materials ETF (10.05%) - Guotai CSI All-Share Construction Materials ETF (9.97%) - E Fund CSI All-Share Construction Materials ETF (9.94%) [4][5] ETF Fund Flow - The top three ETFs by fund inflow were: - GF CSI Construction Engineering ETF (5.98 billion CNY) - Guotai CSI All-Share Construction Materials ETF (4.48 billion CNY) - Huaxia SSE Sci-Tech 50 ETF (4.39 billion CNY) [6][7] - The top three ETFs by fund outflow were: - Invesco CSI A500 ETF (2.57 billion CNY) - Huatai-PB SSE 300 ETF (2.02 billion CNY) - Guotai CSI Military Industry ETF (1.95 billion CNY) [6][7] Financing and Margin Trading - The highest financing buy amounts were: - Huaxia SSE Sci-Tech 50 ETF (619 million CNY) - E Fund ChiNext ETF (437 million CNY) - Guotai CSI All-Share Securities Company ETF (295 million CNY) [8][9] - The highest margin sell amounts were: - Southern CSI 500 ETF (35.19 million CNY) - Huatai-PB SSE 300 ETF (29.61 million CNY) - Huaxia SSE 50 ETF (10.41 million CNY) [8][9] Institutional Insights - Dongwu Securities noted stable infrastructure investment in the first half of the year, with a focus on urban renewal and key engineering projects [10] - The firm expects fiscal policy support and improvements in financing to gradually show effects on investment and physical output [10] - Everbright Securities highlighted that infrastructure investment grew by 4.6% year-on-year in the first half, driven by the commencement of major projects [11]

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Materials - **Key Project**: Construction of a new hydro station in Tibet with a total investment of Rmb1.2 trillion and an installed capacity of 60-70GW, which is three times that of the Three Gorges Dam [1][2][8] Core Insights and Arguments - **Capacity and Power Generation**: The new hydro station is expected to generate over 300TWh annually, with a construction timeline of 18-20 years, including 13 years for the main body and 5 years for auxiliary facilities [2][8] - **Material Demand**: The project will require 20-30 million tons of cement in total, with an annual demand of 1-1.5 million tons. Local companies such as Huaxin, CNBM, and Conch are positioned to benefit due to their proximity to the project [3][8] - **Cement Pricing**: Current cement prices in Tibet are Rmb500 per ton, significantly higher than the national average of Rmb330 per ton, indicating a favorable pricing environment for local producers [3] - **Impact on Metals**: The hydro station will increase demand for copper and aluminum due to the power equipment and cables required for power transfer. This could also stimulate local investments in data centers and other power-intensive projects [4][8] - **Thermal Power Impact**: Once operational, the hydro station may negatively affect demand for thermal power and thermal coal [8] Additional Important Points - **Beneficiaries**: Cement and steel sectors are direct beneficiaries during the construction phase, with local factories expected to receive orders [3][8] - **Investment Opportunities**: The project aligns with the 14th Five-Year Plan, which may lead to stronger-than-expected infrastructure demand [10][21] - **Risks**: Potential risks include weaker-than-expected property demand, government intervention in cement pricing, and production suspensions due to environmental regulations [13][18][22] Company-Specific Insights - **Anhui Conch Cement Co. Ltd**: Price target derived from A-share price target, with a higher A/H premium of 35% since 2023 [9] - **China National Building Material Company**: Price target based on a discounted cash flow model with a cost of equity of 13.5% [15] - **Huaxin Cement Co**: Price target derived using a discounted cash flow model, with a focus on demand in Hubei and Yunnan [22] Conclusion The construction of the hydro station in Tibet represents a significant investment opportunity for the materials sector, particularly for cement and metal producers. The project is expected to drive demand and pricing in these sectors while also posing certain risks related to market dynamics and government policies.