Siemens Energy (OTCPK:SMEG.F) 2025 Capital Markets Day November 20, 2025 08:30 AM ET Company ParticipantsChristian Bruch - CEOChad Zamarin - President and CEOVinod Philip - Member of the Executive BoardBen Uglow - Managing DirectorAlexander Jones - Director of Equity ResearchTobias Hang - Head of Investor RelationsNone - Video Narrator 3None - Video Narrator 2None - Company RepresentativeAnne-Laure de Chammard - Executive Board Member and EVP for Industrial Business DivisionAlan Duong - Executive VP and Chi ...

Polen Capital, an investment management company, released its “Polen U.S. Small Cap Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the strategy returned 21.4% gross and 21.1% net of fees, respectively, compared to a 12.2% return for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025. In its third-quarter 2025 investor letter, Polen U.S. Small Cap Growth Strategy highlighte ...

Group 1: AI Infrastructure Investment - The AI infrastructure segment is experiencing significant momentum, with a projected capital expenditure of $380 billion by four major companies in 2025, representing a 54% year-over-year increase in spending on the AI ecosystem [1] - The demand for data center capacity is surging due to the growth of cloud computing, indicating a robust market for AI-related investments [2] Group 2: Recommended Stocks - Five stocks are recommended for long-term investment due to their direct or indirect benefits from the AI boom: Vertiv Holdings Co. (VRT), Mirion Technologies Inc. (MIR), Comfort Systems USA Inc. (FIX), Celestica Inc. (CLS), and Corning Inc. (GLW) [2] - These recommended stocks have shown significant price increases this year and are expected to continue growing following strong third-quarter earnings results [3] Group 3: Vertiv Holdings Co. Performance - Vertiv Holdings has a Zacks Rank of 1, with a third-quarter performance driven by a diverse product portfolio, including thermal systems, liquid cooling, and modular solutions [4] - The company reported a 35% sales growth, attributed to strong market demand and enhanced capabilities to meet complex infrastructure needs [5] - Vertiv is expanding its capacity to support AI-enabled pipelines, benefiting from the digital transformation driven by AI and data center demand [5] Group 4: Strategic Partnerships - Vertiv's partnership with NVIDIA Corp. is a significant catalyst for growth, aiming to provide efficient power solutions for next-generation AI data centers [7] - The company is focused on staying ahead of GPU advancements to support the scaling of AI deployments in high-performance data centers [7]

Core Thesis - Powell Industries, Inc. is positioned as a strong player in the custom-engineered electrical power systems market, with significant growth potential driven by diversification into renewables and grid modernization [3][6] Company Overview - Powell Industries, Inc. has been serving the industrial, utility, and energy sectors for over 75 years, specializing in integrated solutions such as switchgear and motor control centers [2] - The company operates a project-based, engineered-to-order model, allowing it to handle complex projects that competitors often avoid, leading to a strong reputation and repeat business [3] Financial Performance - For FY2024, Powell's revenues reached $1.01 billion, a 45% increase from $699 million in 2023, with net income nearly tripling to $149.8 million [4] - The company reported a gross margin of approximately 27% and an operating margin of around 17.7% [4] - In Q3 FY2025, Powell generated $286 million in revenue with a gross margin of 30.7% and a record backlog of $1.4 billion, indicating strong revenue visibility for FY2025 [4] Competitive Position - Powell maintains a strong balance sheet with zero debt, robust liquidity, and significant free cash flow, providing flexibility for investments and resilience against market volatility [4][6] - The company faces competition from major global electrical conglomerates such as ABB, Siemens, and Schneider Electric, which poses a challenge to its market position [5] Risks and Challenges - Powell's business model is cyclical and heavily reliant on capital spending in the energy and industrial sectors, leading to revenue fluctuations [5] - Structural risks include supply chain constraints and cost inflation that could impact margins on fixed-price contracts [5] - The company has a modest dividend yield of approximately 0.3–0.4%, highlighting the importance of disciplined growth execution [5]

Core Viewpoint - GE Vernova is positioned to benefit from the explosive growth of artificial intelligence (AI), which is driving a significant demand for new power generation and grid capacity, leading to a bullish outlook from analysts with a price target of $740 [1][2]. Group 1: Demand for Power Generation - The rise of AI data centers is creating a generational demand for electricity, necessitating a structural shift in global energy demand and a multi-billion-dollar investment to expand energy infrastructure [2][3]. - GE Vernova's power segment reported a 44% organic increase in orders in Q2 2025, indicating rapid utility capacity additions, including orders for heavy-duty gas turbines linked to the AI boom [6][7]. - The company's total backlog reached $128.7 billion, with a gas equipment backlog of 55 gigawatts, ensuring a multi-year production runway [7]. Group 2: Grid Modernization - GE Vernova's electrification segment is crucial for modernizing the electrical grid, achieving a 20% organic revenue growth in Q2 2025 [9]. - The company secured nearly $500 million in data center-related orders in the first half of 2025, significantly surpassing the previous year's total [10]. - The equipment backlog for the electrification segment rose to approximately $24 billion, driven by sales of essential hardware for grid stability [11]. Group 3: Financial Outlook - GE Vernova raised its full-year 2025 guidance, increasing the adjusted EBITDA margin forecast from 8% to 9% and raising free cash flow projections by $1 billion to a range of $3.0 to $3.5 billion [12][13]. - The company is implementing a $6 billion share repurchase program, reflecting strong financial health despite challenges in its wind segment [13]. - Analyst optimism is growing as GE Vernova is recognized as a core technology provider for the AI revolution, supported by a clear growth trajectory [14].

Powell Industries (POWL) FY Conference Summary Company Overview - Powell Industries is an electrical distribution company specializing in industrial electrical components, primarily located in the Gulf Coast and Houston [3][4] - The company celebrated its 70th anniversary and reported revenues exceeding $1 billion last year [4] Product and Service Offerings - Powell manufactures medium and low voltage switchgear and circuit breakers, with a focus on engineered-to-order (ETO) operations [6][9] - The company is agnostic to the power source (solar, wind, coal, hydro) and the application of power [10][11] - Powell's product range includes power control rooms and offshore modules, which are customized for specific electrical configurations [14][15] Market Segmentation - Core industrial markets account for 50-60% of revenue, including sectors like LNG, carbon capture, hydrogen, and legacy refineries [19][20] - The utility sector is also significant, focusing on generation and distribution, with no current involvement in transmission [30] - Data centers have emerged as a new sector, contributing approximately 15% of total revenue, with half of that attributed to data centers [22][45] Financial Performance - The company reported over $400 million in cash and zero debt as of the last fiscal quarter [32] - Powell has a robust R&D pipeline, with recent product launches across various sectors [33] - The backlog surpassed $1 billion in 2023, with a steady order cadence and a book-to-bill ratio of 1.1 in 2024 [40][41] Strategic Focus - Powell aims to enhance its automation and control solutions, recently acquiring a UK operation called REM Stack [19][28] - The company is focused on organic and inorganic growth, with plans to expand its product portfolio and services [30][31] - Powell's business model emphasizes flexibility and customer collaboration, allowing for on-site adjustments during projects [24][26] Geographic Revenue Distribution - Over 80% of revenues are generated in the United States, with a significant portion adhering to ANSI electrical standards [42][43] - International revenue includes operations in Canada and the UK, with a growing presence in IEC standards [13][43] Challenges and Risks - The company is monitoring potential tariff impacts, particularly concerning materials sourced from India and copper price fluctuations [50][52] - Powell has hedged against copper price spikes but remains vigilant about future supply chain challenges [51][53] Conclusion - Powell Industries is well-positioned in the electrical distribution market, with a strong financial foundation, diverse product offerings, and a strategic focus on growth and innovation across various sectors [46]

Core Insights - Caterpillar Inc. (CAT) and Hunt Energy Company, L.P. have formed a long-term strategic collaboration to address the increasing power demands of data centers, focusing on delivering scalable and reliable energy solutions [1][9] - The partnership combines over 190 years of industry experience, leveraging Hunt's expertise in energy infrastructure and Caterpillar's leadership in power systems [1] Company Overview - Caterpillar's power solutions portfolio includes natural gas and diesel generation equipment, gas turbines, switchgear, controls, aftertreatment, and engineering design services, along with advanced monitoring and servicing capabilities [2] - Hunt Energy specializes in infrastructure development, project financing, and operational execution for data center projects, with significant experience in battery energy storage systems (BESS), having deployed over 310 MW of BESS solutions in the last four years [3] Project Details - The first joint project is planned for Texas, aiming to deliver up to 1 gigawatt of power generation capacity for data centers across North America, with a long-term vision to expand to other regions as demand grows [4] Industry Context - The digital transformation has led to increased reliance on data centers, which must ensure continuous operations and build redundancies to prevent costly outages [5] - Companies like Vertiv and Eaton are also positioned in the critical digital infrastructure space, focusing on energy efficiency and high-density power solutions for AI-driven data centers [6][7] Financial Performance - Caterpillar shares have increased by 15.3% this year, slightly outperforming the industry growth of 15.2% and the S&P 500's increase of 8.5% [8][9] - The current forward 12-month price/earnings (P/E) ratio for Caterpillar is 20.84X, compared to the industry average of 19.73X [10] - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 16.7% for 2025, followed by a growth of 16.7% in 2026, with recent earnings estimates showing a downward trend for 2025 and an upward trend for 2026 [11][14]

Summary of Conference Call Notes Industry Overview - The focus is on the **Multi-Industry** sector in **North America** with specific attention to the impact of **Trump 2.0 tariffs** on pricing dynamics [1][7][75]. Key Insights - **Price Dynamics**: The year-to-date (YTD) change in Producer Price Index (PPI) by category indicates that certain verticals are better positioned to sustain price increases into Q3 compared to others [2][4]. - **Industrial Sector Performance**: Despite positive Q2 updates, US Industrials experienced a de-rating during earnings season, suggesting challenges in maintaining premium valuations observed earlier in July [4][9]. - **Pricing Power**: The report emphasizes that US Industrial pricing power is an underappreciated factor contributing to operational durability, which is expected to positively influence revisions and valuations in upcoming quarters [18]. - **Profitability from Tariffs**: Companies that capitalized on Trump 1.0 tariffs are now benefiting from excess backlog and improved value addition, which is expected to support pricing power in the second half of the year [9][18]. Notable Verticals - The strongest price increases are seen in sectors such as **Switchgear, Welding, Valves, Electrical Equipment, Pumps + Compressors, HVACR, Non-Residential Lighting, and Industrial Controls**. Companies like **Eaton (ETN), Acuity (AYI), Hubbell (HUBB), Rockwell (ROK), and others** are highlighted as favorable due to their pricing strategies [4][18]. - **Fastener PPI Data**: There is a noted disconnect between the muted Fastener PPI data and the strength observed in Fastenal (FAST), indicating potential market anomalies [4]. Historical Context - The analysis includes a review of pricing changes during the **2021-22 hyperinflation period**, revealing that no verticals have given back price increases in 2023-24 despite commodity deflation and a prolonged manufacturing recession [16][18]. Future Outlook - The expectation is that companies capable of ramping up volumes in the second half of the year will experience multiple expansions, indicating a more durable momentum into 2026 [9]. - The report suggests that the enhanced value addition and reshoring activities in the US will further support pricing power and profitability for the best-positioned companies [18]. Additional Considerations - The report includes a caution regarding the need for positive revisions to drive further upside in stock valuations, emphasizing that companies pushing the most price will likely fare better [4][9]. - The document also contains various disclosures regarding potential conflicts of interest and the investment banking relationships of Morgan Stanley with the companies mentioned [6][28][31]. This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current state and future outlook of the Multi-Industry sector in North America.

Financial Data and Key Metrics Changes - Sales in Q2 2025 were down 1.2% on an organic basis compared to the prior year, aligning with expectations [6][11] - Adjusted earnings per share increased by 8.3% to $2.48 [11] - Adjusted EBITDA margin was 22%, down 20 basis points year-over-year [11] - Free cash flow generated in Q2 was $493 million, with $368.5 million related to an accounts receivable securitization program [11][25] Business Line Data and Key Metrics Changes - **Automation and Motion Control (AMC)**: Sales decreased by 3.4% year-over-year, primarily due to weakness in the medical end market and project timing [16][18] - **Industrial Powertrain Solutions (IPS)**: Sales were down 4.4% year-over-year, attributed to project timing impacts in Metals and Mining [20][21] - **Power Efficiency Solutions (PES)**: Sales increased by 6.5% year-over-year, driven by strong growth in residential and commercial HVAC [23] Market Data and Key Metrics Changes - Orders in AMC declined by 7.5% year-over-year, impacted by a large data center order that slipped into July [19] - IPS orders increased by 3% on a daily basis, with a book-to-bill ratio of 1.01 [22] - PES orders were down 5.4% on a daily basis, consistent with expectations due to anticipated headwinds in residential HVAC [24] Company Strategy and Development Direction - The company is on track to deliver at least $250 million in cross-sell synergies from recent acquisitions, with a growing funnel of opportunities [12][14] - Focus on longer cycle projects and engineered solutions is expected to drive growth in IPS and AMC segments [20][22] - The company aims to neutralize tariff impacts on adjusted EBITDA and maintain margin neutrality by mid-2026 [27][30] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about low single-digit sales growth in 2025, supported by a growing backlog and positive order trends [8][33] - The company anticipates a recovery in the medical market and improved conditions in the data center sector [36][71] - Management acknowledges ongoing macroeconomic uncertainties but believes underlying business momentum is positive [33][36] Other Important Information - The accounts receivable securitization program completed in Q2 is expected to provide $4 million in annualized interest savings [25][26] - The gross annual unmitigated cost impact from tariffs is estimated to have decreased from $130 million to approximately $125 million [29][30] Q&A Session Summary Question: Expectations for end market recovery in the second half of the year - Management expects orders to be up mid-single digits in the second half, driven by strong performance in data centers and other solid markets [36][37] Question: Exposure to rare earth magnets and data center wins - Rare earth magnets represent about 1% of sales, but challenges in procurement impacted Q2 performance; however, recovery is expected in Q3 and Q4 [39][40] Question: AMC division margin ramp and backlog visibility - AMC's margin guidance has been widened due to rare earth exposure, with expectations for improved conditions in the medical market and higher shippable backlog [92][93] Question: Competitive position in the data center market - The company is well-positioned in the data center market, focusing on customized solutions, and has a strong order funnel [85][86]

Summary of Key Points from the Expert Call on High Voltage Power Equipment Industry Overview - **Industry**: High Voltage Power Equipment - **Key Drivers**: Demand driven by renewable energy installations, data centers, and potential growth in transmission capital expenditures (capex) Core Insights 1. **Price Increases**: - Price hikes for high voltage power equipment have accelerated, with certain types experiencing over 10% year-over-year increases since June 2025, attributed to tariffs and rising demand from renewables [2][4][5] - General price increases were noted at 3-5% in the first half of 2025, with transformers seeing the largest hikes [4][5] 2. **Strong Demand**: - Demand for high voltage power equipment remains robust year-to-date (YTD), primarily driven by new connections for renewable energy projects, accounting for over 70% of total demand [2][5] - The expert anticipates continued strong demand through 2026/27 due to the push for renewable energy and data center installations [2][5] 3. **Future Demand Dynamics**: - While demand from renewables may plateau, it is expected that new connections for gas-fired and nuclear power plants, along with data centers, will fill the gap [5][6] - The replacement cycle for existing equipment is expected to gain momentum in the coming years, although currently, replacement demand is less than 30% [2][5] 4. **Transmission Capex Growth**: - A forecasted 10% growth in transmission capex for 2025, with potential for stronger growth in subsequent years, contingent on resolving permitting issues [6] - The expert highlighted that regulatory hurdles remain a significant barrier to long-distance transmission network growth [6] 5. **Trade Tariff Impact**: - The impact of trade tariffs on pricing is seen as limited, with operators willing to pay higher prices to secure essential equipment for grid connections [6] - Equipment manufacturers are adjusting prices or negotiating with customers to pass on increased costs due to tariffs [6] 6. **Supply Constraints**: - There has been no noticeable increase in supply for high voltage power equipment YTD, particularly for transformers, primarily due to a lack of skilled labor [6] - Local manufacturers face challenges in ramping up capacity, and there is reluctance among regulated utilities to procure from Chinese manufacturers due to national security concerns [6] Additional Insights - **Market Sentiment**: The expert's views align with a bullish outlook on the demand/supply imbalance for high voltage power equipment in the US, supporting the positive ratings on companies like Hyundai Electric, Hyosung Heavy, and Sieyuan Electric [2][4] - **Long-term Trends**: The expert noted that lead times for high voltage equipment remain extended, indicating ongoing supply chain challenges [5] Conclusion - The high voltage power equipment industry is poised for growth driven by renewable energy and data center demands, despite challenges in supply and regulatory hurdles. The pricing environment is influenced by tariffs, but demand remains strong, suggesting a favorable outlook for key players in the market.