Avanos Medical Inc. (NYSE:AVNS) Q4 2024 Earnings Conference Call February 26, 2025 9:00 AM ET Company Participants Scott Galovan - Vice President of Strategy & Corporate Development Michael Greiner - Interim Chief Executive Officer Conference Call Participants Danny Stauder - Citizens GMP Operator Good morning, ladies and gentlemen. Welcome to the Avanos Medical, Inc. fourth quarter 2024 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question an ...

Financial Data and Key Metrics Changes - The company reported consolidated GAAP diluted earnings per share for Q1 2025 at $1.75, down from $1.93 in the prior year, while operating earnings per share was $1.92 compared to $1.95 in the previous year [16] - Restaurant level margin percentage remained flat year-over-year at 23.2%, aided by the completion of a new beverage partner contract [13] Business Line Data and Key Metrics Changes - Jack in the Box achieved positive same-store sales growth of 40 basis points for the quarter, despite challenges from California wildfires and unusual weather, which negatively impacted sales by approximately 20 basis points [11] - Del Taco faced a challenging quarter with pressured same-store sales and is also expected to post negative same-store sales in Q2, although a menu optimization initiative has shown encouraging results [14] Market Data and Key Metrics Changes - The company opened five restaurants and closed six in Q1, with expectations to open between 35 and 45 restaurants for fiscal year 2025 [13] - Del Taco's restaurant count at the end of the quarter was 589, with one opening and six closures [15] Company Strategy and Development Direction - The company is focused on capital allocation and cash flow improvement, with a slight reduction in capital expenditure guidance for the year [17][18] - The strategy includes a barbell approach to marketing, value leadership, and digital evolution to drive sales [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro pressures and anticipated negative same-store sales results for Q2, but expressed confidence in the marketing calendar and digital capabilities to drive future sales [12][39] - The leadership transition is seen as an opportunity to build on a strong foundation for growth and maximize long-term potential [9][22] Other Important Information - The company repurchased 124,000 shares for $5 million during the quarter, but plans to halt further repurchase activity for the year to focus on reducing leverage [16][17] - An updated capital expenditure range for the year is set at $100 million to $105 million, reflecting a slight reduction [18] Q&A Session Summary Question: Capital allocation and cash flow focus - Management confirmed a sharpened focus on capital allocation and cash flow, indicating that further announcements regarding free cash flow acceleration opportunities are expected in May [27][30] Question: Company store openings strategy - Management stated that while there is a place for company store builds, the focus will be on complementing franchisee growth rather than leading it [36] Question: Consumer environment and sales strategy - Management acknowledged the cautious consumer environment but expressed confidence in their sales strategy, emphasizing value and menu innovation to reestablish positive momentum [38]

Financial Data and Key Metrics Changes - The company reported a modest revenue decline in 2024 to approximately $3.9 billion, with adjusted EBITDA of $866 million at a margin of 22.4%, slightly ahead of the previous year [19][20] - Free cash flow reached a record $229 million in Q4, contributing to a total of over $640 million for the year [18][23] - Q4 revenues surpassed $1 billion, with adjusted EBITDA of over $251 million at a margin of 24.8% [20][22] Business Line Data and Key Metrics Changes - Food Processing segment achieved 4.7% organic revenue growth in Q4, resulting in revenues exceeding $219 million and an adjusted EBITDA margin of 29.6%, up 200 basis points year-over-year [20][21] - Residential segment reported Q4 revenues of $185 million, a sequential increase from Q3, but down 2.4% year-over-year, with an adjusted EBITDA margin of 13% [21][22] - Commercial segment's Q4 revenues were over $609 million, with organic revenues down 2.8% year-over-year, maintaining healthy margins over 28% [22] Market Data and Key Metrics Changes - The company noted gradual improvement in macro conditions for both commercial and residential businesses, despite challenges persisting [14][15] - The Food Processing business finished the year strongly, with expectations for continued growth driven by favorable long-term market drivers [15][19] Company Strategy and Development Direction - The company announced plans to separate its Food Processing business into a stand-alone public company, aiming to enhance strategic and operational focus for both entities [5][6] - The remaining Middleby Corporation will focus on commercial and residential kitchen equipment, with an emphasis on innovation and automation [9][10] - The company is positioned to capture market opportunities through strategic acquisitions and investments in new product categories [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the residential business, anticipating gradual improvement in 2025 [50][110] - The company expects low single-digit organic revenue growth across segments in 2025, with profitability growth rates exceeding organic revenue growth [30][31] - Management highlighted the importance of M&A activities and strategic investments to drive future growth [62][66] Other Important Information - The company added two new Board members, enhancing its governance and strategic direction [11][12] - The separation of the Food Processing business is expected to be executed through a tax-free spinoff by early 2026 [10] Q&A Session Summary Question: Can you walk us through the decision to separate Food Processing? - Management indicated that the decision was based on a long-term strategic review, believing that separation will accelerate growth for both entities [41][44] Question: What are the expected free cash flow conversions for the separate businesses? - Management suggested that both businesses could achieve 100% or greater free cash flow conversion, although specific long-range guidance for Food Processing is still being developed [46][47] Question: How do you view the recovery in the residential business? - Management noted that the residential business is at a cyclical trough but has significant growth potential, with expectations for gradual recovery in 2025 [49][50] Question: What is the leverage profile expected post-spin? - Management anticipates less leverage on the Food Processing business, allowing for more focus on M&A opportunities [95] Question: Are there any strategic alternatives being considered for the residential business? - Management confirmed that the residential business is continuously reviewed, but currently, it is seen as a strong platform with potential for margin expansion [72][110]

Financial Data and Key Metrics Changes - Targa Resources reported a record adjusted EBITDA of $4.1 billion for 2024, a 17% increase compared to 2023, despite weak natural gas and NGL prices [13][37] - The fourth quarter adjusted EBITDA was $1.122 billion, reflecting a 5% increase over the third quarter, driven by higher Permian volumes [36][37] - The company expects full-year 2025 adjusted EBITDA to be between $4.65 billion and $4.85 billion, representing a 15% increase over 2024 [39] Business Line Data and Key Metrics Changes - Permian GMP volumes grew by 14% year-over-year, with an incremental 709 million cubic feet per day moving through the system [11] - NGL pipeline transportation volumes averaged a record during the fourth quarter, with fractionation volumes also reaching a record of 1.1 million barrels per day [21] - The logistics and transportation segment is expected to benefit from full-year contributions of the Daytona NGL pipeline and trains nine and ten [40] Market Data and Key Metrics Changes - The company anticipates continued volume growth in the Permian Basin, which will drive operating margins across its businesses [39] - The outlook for NGL supply growth remains robust, supported by downstream system expansions to handle growth from the Permian systems [22] Company Strategy and Development Direction - Targa Resources announced three new projects aimed at increasing NGL capacity, including the Delaware Express pipeline expansion and new fractionators [9][10] - The company is focused on organic growth opportunities while maintaining a strong balance sheet to support capital returns to shareholders [34][66] - The strategy includes opportunistic share repurchases and significant dividend increases, with a 33% increase in the common dividend per share expected for 2025 [14][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, highlighting strong commercial success and increased infrastructure investments [7][10] - The company expects a back-half weighted growth in 2025, with significant contributions from new commercial agreements [51][52] - Management noted that 2026 is projected to be even stronger than 2025, driven by the addition of four new plants [53][118] Other Important Information - Targa Resources repurchased $755 million of common shares in 2024, a substantial increase from $347 million in 2023 [33] - The company closed a new five-year $3.5 billion revolving credit facility, enhancing its liquidity position [43][44] - Targa purchased BP's 12% interest in Cedar Bayou Fractionators for approximately $111 million, now owning 100% of the asset [25] Q&A Session Summary Question: Forward outlook and EBITDA trajectory - Management indicated a strong growth outlook for 2025, with expectations for more back-half growth and significant contributions from commercial deals [50][52] Question: Badlands buy-in clarification - Management stated the decision was opportunistic, driven by a strong balance sheet and the potential for $80 million in annual cash savings [62][63] Question: Capital allocation priorities - The company maintains an all-of-the-above approach, focusing on organic growth while also executing opportunistic share repurchases [66][68] Question: Commercial success across footprint - Management highlighted good commercial success in both the Midland and Delaware basins, with significant acreage positions available for growth [76][78] Question: Expected returns on new projects - Management confirmed that the previously provided framework holds, with expectations to exceed the five and a half times build multiple [104] Question: North Texas Mountain Valley NGL pipeline timing - Management discussed the need for new capital and the flexibility provided by third-party offload deals to manage growth [127][131]

Financial Data and Key Metrics Changes - For full year 2024, the company reported a net income of $659 million and adjusted EBITDA of $1,136 million, representing a growth of approximately 12% from 2023 [14][18] - The adjusted EBITDA for Q4 was $298 million, an increase from $287 million in Q3, driven by higher throughput volumes [18][19] - The company anticipates adjusted EBITDA for 2025 to be in the range of $1,235 million to $1,285 million, reflecting an approximate 11% growth at the midpoint compared to 2024 [10][22] Business Line Data and Key Metrics Changes - Gas processing volumes averaged 447 million cubic feet per day in Q4, with full year 2024 averaging 420 million cubic feet per day [9][10] - Crude terminaling volumes averaged 127,000 barrels of oil per day in Q4, with a full year average of 123,000 barrels per day [9][10] - Water gathering volumes averaged 130,000 barrels of water per day in Q4, with a full year average of 125,000 barrels per day [9][10] Market Data and Key Metrics Changes - Bakken net production averaged 208,000 barrels of oil equivalent per day in Q4, with a full year average of 204,000 barrels per day, marking a 12% year-over-year increase [7][8] - The company expects gas volumes to grow by more than 25% from 2024 through 2027, driven by Hess' planned development activity and increasing third-party volumes [6][10] Company Strategy and Development Direction - The company plans to maintain annual capital expenditures in the range of approximately $250 million to $300 million through 2027, focusing on disciplined, low-cost investments to meet growing basin demand [12][24] - A new gas processing plant with a capacity of 125 million cubic feet per day is set to begin construction in 2025, expected to support throughput growth through at least the end of the decade [10][12] - The company aims to generate sustainable cash flow and return additional capital to shareholders, with a targeted distribution growth of at least 5% annually through 2027 [16][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory supported by Hess production and third-party opportunities, with a disciplined approach to capital allocation [35][36] - The company anticipates a strong recovery in volumes following severe winter weather impacts in Q1 2025, with expectations for significant growth in EBITDA throughout the year [57][58] - Management highlighted the importance of maintaining a strong balance sheet while prioritizing shareholder returns through unit repurchases and distribution increases [16][25] Other Important Information - The company has returned $1.95 billion to shareholders since 2021 through accretive repurchases, with a distribution per Class A share growth of approximately 55% since 2021 [16][18] - The gross adjusted EBITDA margin for Q4 was maintained at approximately 80%, above the 75% target, indicating strong operating leverage [18] Q&A Session Summary Question: Multi-year growth outlook and EBITDA growth potential - Management explained that the MVCs provide visibility to the volumes underpinning growth, with gas processing expected to drive significant revenue [27][29][30] Question: Long-term outlook in Bakken and potential for M&A - Management confirmed no plans to expand outside of Bakken, focusing on organic growth supported by Hess production and potential third-party volumes [34][35][36] Question: Capital expenditures and future growth CapEx - Management indicated that the increase in CapEx is driven by activity phasing and efficiency improvements, with expectations for a step down in CapEx post-2027 [41][44][45] Question: Capital allocation program and potential changes - Management reiterated confidence in the return on capital framework, emphasizing continued unit repurchases and distribution growth, while considering public participation in repurchases as ownership changes [48][50] Question: Use of leverage and financial flexibility - Management discussed the balance between leverage capacity and excess free cash flow, maintaining a focus on shareholder returns while exploring organic growth opportunities [53][55] Question: Q1 guidance and weather impacts - Management acknowledged the unpredictability of Q1 weather but expressed confidence in recovery and growth in volumes for the remainder of the year [56][57][58]

Financial Data and Key Metrics Changes - Revenue increased by 20% sequentially to $3.5 billion [10] - Net income attributable to Alcoa was $202 million, up from $90 million in the prior quarter, with earnings per share doubling to $0.76 [10] - Adjusted EBITDA rose by $222 million to $677 million, driven by higher alumina and aluminum prices, increased shipments, and lower energy costs [11] Business Line Data and Key Metrics Changes - In the alumina segment, third-party revenue increased by 45% due to higher average realized prices and higher shipments [10] - The aluminum segment saw a 5% increase in third-party revenue, primarily from higher average realized prices [10] - The alumina segment's adjusted EBITDA increased by $349 million, mainly due to higher alumina prices and volumes [11] Market Data and Key Metrics Changes - Alumina prices reached an all-time high in Q4 due to tight market conditions and lower-than-expected supply [26] - Global demand for aluminum remained resilient, particularly in the packaging and electrical sectors, while building and construction faced challenges [27] - The bauxite market is currently tight, with pricing into China at $120-$130 per ton, impacting alumina availability [56] Company Strategy and Development Direction - The company aims to enhance safety and operational excellence, particularly in Brazilian operations, and prioritize customer-focused decisions to become the supplier of choice [24] - Plans for targeted growth through organic and inorganic opportunities where returns exceed the cost of capital [25] - Deleveraging and repositioning debt are priorities for 2025, with expectations of generating sufficient cash for further debt reductions [25] Management's Comments on Operating Environment and Future Outlook - Management noted that alumina prices are expected to remain tight in the first half of 2025, with new production in India and Indonesia needed to balance the market [57] - The outlook for aluminum demand outside China is expected to rebound, supported by higher real incomes and lower interest rates [29] - Management expressed caution regarding potential tariffs and their impact on supply, demand, and trade flows [35] Other Important Information - The company completed a $385 million debt repayment while maintaining its quarterly dividend [9] - The profitability improvement program exceeded its $645 million target ahead of schedule, with significant savings from raw materials and productivity initiatives [8][14] - The company has a cash balance of $1.1 billion and expects capital expenditures of $700 million in 2025 [19] Q&A Session Summary Question: Impact of potential tariffs on Midwest premium and trade flows - Management indicated that the Midwest premium would likely increase significantly if tariffs are imposed, disrupting trade flows and potentially leading to higher costs for U.S. customers [43][45] Question: Net debt position and capital return timing - The company closed the year with $2.1 billion in adjusted net debt and will prioritize deleveraging in 2025, considering capital returns if excess cash is available [50][52] Question: Bauxite availability for new refineries - The bauxite market is tight, and alumina prices are expected to remain high, impacting the ramp-up of new refineries in India and China [56] Question: Cash balance and MOU progress at San Cyprian - Cash consumption is still depleting weekly, and while the MOU is a positive step, it does not guarantee a deal will be reached [62][64] Question: Monetizing excess energy offtake - The company has opportunities to monetize energy in Brazil and potentially in Wort, but these are currently being utilized for smelting operations [66] Question: Monetizing idle sites for data centers - The company has a history of successfully monetizing legacy assets and is in contact with developers for potential sales, but maximum value is the priority [70][73]

Summary of Woodward (WWD) FY Conference Call - September 05, 2024 Company Overview - **Company Name**: Woodward, Inc. - **Industry**: Aerospace and Defense, Industrial Markets - **Headquarters**: Fort Collins, Colorado - **Market Capitalization**: Approximately $10 billion with 60 million shares trading around $162 [2][2] - **Net Debt**: $340 million [2][2] Key Points and Arguments Business Dynamics - Woodward has evolved over 150 years from controlling water wheels to manufacturing fuel control systems for aerospace and industrial applications [3][3] - The company specializes in fuel control, air oil management, combustion control, and motion control [4][4] China On Highway Business - Woodward's fuel control systems for natural gas engines in heavy-duty trucks in China have seen a significant market share shift from diesel to natural gas, increasing from 10-15% to 30% [7][8] - The company reported record levels of business in the last five quarters, exceeding $50 million per quarter [9][9] - Anticipated demand for the upcoming quarter is projected between $10 million to $15 million due to near-term destocking [9][9] Aerospace Fuel Control Business - Woodward is a key supplier for the LEAP engine used in the Boeing 737 MAX and has expanded its content significantly through acquisitions [13][18] - The company has tripled its content per aircraft for both the A320 and 737 platforms, with $250,000 and $350,000 of content per shipset respectively [18][18] Aftermarket and Legacy Fleet - The legacy fleet is expected to plateau over the next four to five years, with strong aftermarket performance driven by increased flight hours [25][26] - The company anticipates a significant increase in aftermarket demand for the LEAP and Geared Turbofan engines starting around 2026-2027 [22][23] Defense Business - The JDAM program has seen a decline in demand but is expected to stabilize following a recent $7.5 billion contract with Boeing and the Air Force [29][30] - Increased geopolitical tensions, particularly in Israel, have driven some demand for defense products [32][32] Supply Chain Management - Woodward has stabilized its supply chain through proactive measures and investments in rapid response machining centers, spending approximately $10 million [42][44] - The company has improved its performance by identifying supply issues early and maintaining continuity of supply [44][44] Capital Allocation and Financial Performance - Woodward has successfully implemented price increases to recover from inflation, achieving 7-9% year-over-year price realization [53][53] - Industrial margins improved by 400 basis points over two years, reaching 14% [55][55] - Aerospace margins are projected to improve to approximately 19% for 2024, with a target of 20-22% by 2026 [56][57] - The company has returned $1.3 billion to shareholders over the last six years, primarily through share repurchases [63][63] Future Outlook - Woodward is well-prepared for anticipated production ramps in the aerospace sector, with existing capacity and plans for increased automation [45][46] - The company is focused on organic growth and is selective in pursuing acquisitions that align with its strategic goals [61][62] Additional Important Insights - The company has a strong focus on automation to enhance efficiency and reduce reliance on labor [48][49] - Woodward's leadership transition has positively impacted its operational strategies and supply chain management [41][41]

MDU Resources Group (MDU) 2024 Investor Day Summary Company Overview - MDU Resources Group is transitioning to a pure play regulated utility company after the spin-off of Knife River in early 2023 and the anticipated spin-off of MDU Construction Services Group (now Everest Construction Group) expected at the end of 2024 [7][10][11] - The company serves 1.2 million customers across eight states with over 30,000 miles of electric and natural gas transmission and distribution lines, and has plans to invest $2.7 billion in regulated infrastructure over the next five years [8][11] Financial Performance - MDU's Utility Group earnings increased by 17% over 2022, with significant capital investments driving rate base growth of over 8.5% [71] - Pipeline earnings rose by 33% year-over-year, attributed to expansion projects and higher contracted volume commitments [72] - Everest Construction Group reported record revenue, earnings, and EBITDA, with a compound annual growth rate of 17% over the past five years [57][72] Strategic Focus - The company aims for nearly 100% regulated business, providing stability and predictability in cash flow [11][26] - MDU's long-term guidance includes an EPS growth rate of 6% to 8% and utility rate base growth of 7% [21][87] - The CORE framework focuses on customers and communities, operational excellence, returns-focused strategies, and employee engagement [13][25] Regulatory Environment - MDU has a proactive regulatory strategy, with significant activity in 2023 including completed rate cases in North Dakota and Montana [76][77] - The company plans to file several new rate cases in 2024, aiming to minimize regulatory lag and enhance earnings growth [77][78] Sustainability Initiatives - MDU is committed to reducing greenhouse gas emissions, with targets of a 45% reduction by 2030 for its electric utility and a 30% reduction for its natural gas utility by 2035 [43][42] - The company is also focusing on renewable natural gas and has established interconnection agreements to enhance its sustainability efforts [44] Market Opportunities - The company sees strong growth potential in the electrical and mechanical infrastructure markets, driven by federal funding and the demand for large-scale transmission projects [63][85] - The data center market is a significant growth opportunity, with a major customer addition in 2023 and plans for further expansions [23][72] Conclusion - MDU Resources Group is positioned for long-term growth with a strong balance sheet, a focus on regulated utility operations, and a commitment to sustainability and community engagement [88][89] - The anticipated spin-off of Everest Construction Group is expected to enhance shareholder value and allow both entities to focus on their core strengths [85][88]