Financial Data and Key Metrics Changes - In fiscal year 2025, the company achieved a total revenue growth of 12% and an organic revenue growth of 8%, excluding a confidential contract [4][24] - Adjusted EBITDA increased by 1% to a record $609 million, with an adjusted EBITDA margin expansion of 60 basis points to 9.6% [25][33] - Free cash flow conversion reached 100%, exceeding the high end of the fiscal year 2025 cash flow guidance range [4][30] Business Line Data and Key Metrics Changes - Critical Infrastructure segment saw a revenue increase of 12% in Q4 2025, driven by 9% organic growth and contributions from recent acquisitions [26] - Federal Solutions segment reported a 9% revenue increase in Q4, excluding the confidential contract, but total revenue decreased by 22% including it [27][29] - For the full year, Critical Infrastructure revenue increased by 15%, while Federal Solutions revenue increased by 9% excluding the confidential contract [26][29] Market Data and Key Metrics Changes - The company reported strong demand in both North America and the Middle East, with double-digit revenue growth in both regions for four consecutive years [17][18] - The funded backlog reached a record $6.4 billion, representing 73% of total backlog, which is also a company record [32] Company Strategy and Development Direction - The company aims for mid-single digit or better annual organic revenue growth supplemented by accretive acquisitions, targeting double-digit adjusted EBITDA margins by 2028 [8][36] - The focus on integrated solutions and strategic contracts is expected to drive long-term shareholder value [6][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a robust pipeline of opportunities and alignment with government spending priorities [22][37] - The company anticipates challenges from domestic budget uncertainty and a competitive labor market but sees strong tailwinds from global infrastructure spending [34] Other Important Information - The company completed three acquisitions in 2025 and plans to continue strategic acquisitions to enhance its portfolio [5][15] - The company was recognized as the number one program management firm globally and received accolades for its ethical practices and leadership [5] Q&A Session Summary Question: Expectations for Critical Infrastructure margins - Management confirmed that legacy adjustments are behind them and expects continued margin expansion in Critical Infrastructure, with a focus on North America [38] Question: Order activity in Federal Solutions post-government shutdown - Management noted a positive procurement environment and anticipates a book-to-bill ratio over 1.0 for Federal Solutions in the first half of 2026 [39] Question: Addressable market for DroneArmor system - Management highlighted the broad market opportunities for DroneArmor, including potential contracts with the Department of Homeland Security and FAA [40] Question: Demand for mega projects in the Middle East - Management reported ongoing strong demand for major projects in the Middle East, particularly in Saudi Arabia, with a focus on urban development and defense sectors [42][43] Question: Changes in Federal Solutions revenue guidance - Management acknowledged previous downward revisions but expressed confidence in a strong procurement environment moving forward [46] Question: Outlook for FAA customer revenue - Management expects growth from the FAA technical support services contract, which was recently extended [60]

Financial Data and Key Metrics Changes - The company achieved 4% net sales growth in Q3 2025, with 3% organic daily sales growth and 11% growth in adjusted EBITDA compared to the prior year [5][14]. - Adjusted EBITDA for the quarter increased 11% to $127.5 million, with an adjusted EBITDA margin improvement of 60 basis points to 10.1% [16][28]. - Net income attributable to the company increased 33% to $59 million due to net sales growth, improved gross margin, and SG&A leverage [27]. Business Line Data and Key Metrics Changes - Organic sales volume grew 2% during Q3, with maintenance-related demand remaining steady and achieving 3% organic daily sales growth in agronomic products [14][25]. - Landscaping products also saw a 3% increase in organic daily sales, driven by sales initiatives and improved pricing [14][25]. - Acquisition sales contributed approximately $13 million or 1% to net sales growth [26]. Market Data and Key Metrics Changes - The company estimates an 18% share of the fragmented $25 billion wholesale landscape products distribution market, indicating significant long-term growth opportunities [8]. - Seven out of nine regions achieved positive organic daily sales growth in Q3, although sales in Sun Belt states like Texas were weaker due to softness in new residential construction [25][41]. Company Strategy and Development Direction - The company aims to leverage its scale and resources to deliver superior value to customers and suppliers while focusing on organic growth and acquisitions [9][10]. - The acquisition strategy is expected to continue filling in product lines and expanding geographic reach, with a focus on smaller companies [13][38]. - The company plans to consolidate or close 15-20 branches to optimize its footprint and cost structure [45]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in driving continued performance and growth despite softer end markets heading into 2026 [6][41]. - The outlook for the fourth quarter includes expectations for low single-digit organic daily sales growth, with continued focus on SG&A leverage and adjusted EBITDA margin expansion [44][45]. - Management noted that the repair and upgrade market has begun to stabilize, providing a more optimistic outlook for future growth [60]. Other Important Information - The company has completed over 100 acquisitions since 2014, adding more than $2 billion in acquired revenue, demonstrating the strength of its acquisition strategy [12]. - The effective tax rate for Q3 was 20.4%, down from 26.2% in the prior year, primarily due to increased excess tax benefits from stock-based compensation [27]. Q&A Session Summary Question: Why is the charge not excluded from adjusted EBITDA guidance? - The company maintains strict guidelines for adjusted EBITDA, which primarily reflect acquisitions and adjustments within the first year [50]. Question: What is the pricing realization in agronomic vs. landscape products? - Pricing for landscape products was up 1%, while agronomic products were flat, with expectations for fourth-quarter pricing between 1% and 2% [51][53]. Question: Are you seeing positive organic sales growth in October? - Yes, positive organic sales growth has been observed in October, although the fourth quarter is a tougher comp due to weather impacts [59]. Question: Any changes in competitor behavior due to demand softness? - The company has not seen unusual competitor behavior, although competition naturally increases in softer markets [67]. Question: Will branch closures affect the ability to serve a recovering market? - The company believes it can fully serve a stronger market with its current network and has the capacity to add associates as needed [70]. Question: What is the outlook for input inflation in commodities? - The company does not anticipate major swings in input inflation for commodities, as this is embedded in their guidance [74]. Question: Will there be a focus on shareholder returns if the M&A market remains soft? - The company is committed to investing in the business first, but being at the low end of the leverage range may lead to increased share repurchases [102].