Westlake (WLK) Q2 2025 Earnings Call August 05, 2025 11:00 AM ET Company ParticipantsJohn Zoeller - VP & Head - IR and TreasurerJean-Marc Gilson - President & CEOSteven Bender - EVP & CFOAdam Hamilton - Senior Associate - Equity ResearchJohn Roberts - Managing DirectorVincent Andrews - Managing DirectorFrank Mitsch - PresidentKevin McCarthy - PartnerMichael Sison - Managing DirectorJosh Spector - Executive Director - Chemicals Equity ResearchHassan Ahmed - Co-founder & Head - ResearchDavid Begleiter - Direc ...

Financial Data and Key Metrics Changes - The company reported a nearly 27% growth in revenue for Q2 2025, with a 3.5% increase in legacy business sales, and a year-to-date growth of approximately 26% [3][4] - Adjusted EBITDA increased by $20 million, up 190 basis points to 12% [4][22] - Non-GAAP diluted earnings per share rose by 31.6% for the quarter and 47.9% year-to-date [22] Business Line Data and Key Metrics Changes - Vehicle Control segment sales increased by 6.9% in Q2, with year-to-date growth of 5.3% [17] - Temperature Control segment sales rose by 5.5% in Q2, with year-to-date growth of 12.3% [19] - Nissens Automotive contributed $90.5 million in net sales and $16.3 million in adjusted EBITDA, exceeding expectations with an 18% EBITDA margin [20][21] - Engineered Solutions segment sales declined by 8.3%, reflecting a slowdown in certain end markets [21] Market Data and Key Metrics Changes - The North American aftermarket remains stable, with strong demand for nondiscretionary products [27][28] - Nissens is outperforming the European aftermarket, gaining market share and expanding into new categories [42][44] Company Strategy and Development Direction - The company is focusing on integrating Nissens to leverage synergies and expand product offerings [10][28] - A new distribution center in Shawnee, Kansas, is expected to enhance operational efficiency and capacity [12][60] - The company is adapting to the changing tariff landscape by relocating production and implementing cost-sharing strategies with suppliers [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a challenging economic environment, with a bullish outlook for future growth [26][28] - The updated sales guidance for the full year is now in the low 20% range, reflecting strong performance and the impact of tariffs [24][25] Other Important Information - Cash used in operations decreased to $5.9 million from $10.1 million year-over-year, indicating improved cash flow management [22] - The company plans to continue monitoring interest rates for potential refinancing opportunities [56] Q&A Session Summary Question: Pricing trends in the second half and SKU inflation assumptions - Management indicated that pricing plans are in place to cover tariff costs, with expectations for nominal increases across the offering [33] Question: Comparison of POS to sell-in and inventory builds - Vehicle Control sales were up low to mid single digits, reflecting ongoing customer expansion rather than a reaction to price increases [34][35] Question: Timing of tariff impacts and segment breakdown - Higher costs were observed in Q2 due to inventory turnover with higher tariffs, but these are expected to be offset in the second half [40][41] Question: Performance of Nissens and European aftermarket - Nissens is exceeding expectations, gaining market share and expanding into new categories, with strong performance in temperature control products [42][44] Question: Expectations for margins and efficiency post-distribution center completion - Management expects better efficiencies and cost savings from the new distribution center, although some net higher costs are anticipated initially [60][61] Question: Future tariff costs and their impact - Current tariff costs are not expected to decrease significantly, with management prepared to adapt pricing strategies as needed [63][64]

Financial Data and Key Metrics Changes - For Q2 2025, comparable diluted earnings per share (EPS) increased to $0.90 from $0.74 in Q2 2024, representing a 22% increase [8] - Comparable net earnings for Q2 2025 were $249 million, driven by higher volume and cost management initiatives, partially offset by higher interest expense and lower interest income [8][10] - The company returned $1.13 billion to shareholders through share repurchases and dividends [7] Business Line Data and Key Metrics Changes - In North and Central America, volume growth was driven by energy drinks and non-alcoholic beverages, although product mix and cost to serve headwinds impacted margins [8][9] - EMEA segment volume remained robust with a 14% increase in comparable operating earnings, driven by sustained volume growth and operational efficiency [9] - South America saw a 38% increase in segment comparable operating earnings, supported by strong performance in Argentina and Chile, despite Brazil underperforming [10] Market Data and Key Metrics Changes - Global beverage can shipments increased by 4.3% year over year in 2025 [10] - The company anticipates North American volume growth near the top end of the 1% to 3% long-term range, driven by strong demand in non-alcoholic categories [12] - EMEA is expected to see mid-single-digit volume growth in 2025, while South America is projected to exceed the 4% to 6% long-term range due to recovery in Argentina and Chile [12] Company Strategy and Development Direction - The company aims for 12% to 15% comparable diluted EPS growth for 2025, focusing on operational excellence, disciplined cost control, and enhancing productivity [11][15] - The strategic focus includes leveraging the resilience of the global portfolio and managing ongoing uncertainties related to tariffs and geopolitical conditions [15][16] - The company is committed to future-proofing its business by securing long-term contracts and optimizing its operational footprint [16][127] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating external volatility and achieving financial objectives despite geopolitical uncertainties [17] - The company anticipates that the defensive nature of its portfolio will help manage potential economic uncertainties [12][17] - Management noted that while inflationary pressures could impact volume, the current consumer behavior favors multipack purchases, which may sustain demand [88][80] Other Important Information - The company expects to repurchase at least $1.3 billion of shares in 2025, having already purchased $1 billion year to date [14] - Full-year 2025 effective tax rate on comparable earnings is expected to be slightly above 22% due to lower year-over-year tax credits [15] Q&A Session Summary Question: What is driving the outperformance in non-alcohol categories in North America? - Management noted strong growth in energy drinks, with one strategic partner growing nearly 20%, and highlighted successful promotional activities driving multipack purchases [22][24] Question: Why were margins down 140 basis points in North America? - Management attributed margin decline to operational inefficiencies due to unexpected growth, product mix changes, and tariff impacts [26][27] Question: Can Europe benefit from margin expansion like North America? - Management indicated that while margins may not improve significantly, operational leverage will remain consistent, with expectations of mid-single-digit growth [31] Question: How are customer conversations regarding tariffs and pricing strategies evolving? - Management stated that discussions about 2026 pricing are premature, but noted that customers are focused on managing current tariff impacts [38][39] Question: What is the outlook for Brazil's market performance? - Management expressed optimism for recovery in Brazil, citing strong performance from a key customer and overall market growth expectations [52][54] Question: How is the company preparing for potential demand slowdowns? - Management indicated that current trends in multipack purchasing are favorable, and they do not anticipate a slowdown in demand [80][81] Question: What is the impact of scrap metal pricing on the business? - Management stated that scrap metal pricing has been negligible, with more concern about demand side impacts from tariffs [140]

Financial Data and Key Metrics Changes - Consolidated revenues for Q2 2025 totaled $118.6 million, down from $147.4 million in Q2 2024, with deliveries of 939 railcars compared to 1,159 railcars a year ago [15][19] - Gross profit for Q2 2025 was $17.8 million with a gross margin of 15%, compared to a gross profit of $18.4 million and a gross margin of 12.5% in Q2 2024 [15][19] - Adjusted net income for Q2 2025 was $3.8 million or $0.11 per share, compared to $3.5 million or $0.10 per share in the same quarter last year [18][19] - Adjusted EBITDA for Q2 2025 was $10 million, down from $12.1 million in Q2 2024, but adjusted EBITDA margin expanded by 20 basis points [17][19] Business Line Data and Key Metrics Changes - The company secured 1,226 new orders in Q2 2025, valued at $107 million, contributing to a backlog of 3,624 units, up approximately 300 units from the prior quarter [7][12] - The backlog reflects a higher proportion of rebuild and conversion work, indicating strong demand for these services [8][12] - The aftermarket sales increased by almost 61%, while railcar sales fell about 26% compared to the prior year [24] Market Data and Key Metrics Changes - The industry forecast for new railcar deliveries has been revised downward for 2025, with total industry deliveries expected to fall below the previously anticipated 40,000 units per year average [9][14] - The company expects overall industry annual demand to fall within the 35,000 to 40,000 range due to over 160,000 railcars projected to reach their mandated retirement in the next four and a half years [14] Company Strategy and Development Direction - The company is investing in a tank car retrofit program to enhance manufacturing capabilities and vertical integration, expected to contribute an additional $6 million of EBITDA over the next two years [10][20] - The company aims to maintain a diversified order book and prioritize margin performance and manufacturing flexibility to navigate the moderating demand environment [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture market share and respond to evolving customer needs despite a challenging industry backdrop [9][10] - The company anticipates a steady increase in order volume in the second half of the year, supported by a healthy backlog and ongoing inquiries [12][63] Other Important Information - The company generated $8.5 million in operating cash flow, marking the fifth consecutive quarter of positive cash flow from operations [19][21] - Capital expenditures for Q2 totaled $600,000, with expectations for full-year capital expenditures in the range of $9 million to $10 million [20] Q&A Session Summary Question: Impact of productive capacity on railcar sales and expectations for Q3 and Q4 - Management clarified that production was higher than shipments in Q2 due to timing, and they expect higher deliveries in Q3 and Q4 [24][27] Question: Manufacturing segment gross margins and future expectations - Management indicated that current margins are influenced by product mix and operational productivity, with expectations for similar margins in the second half of the year [29][50] Question: Tank car retrofit program and its impact on revenue and margin - Management confirmed that the tank car retrofit program is expected to add $6 million in EBITDA over two years, with production starting in mid-2026 [36][57] Question: Effects of mergers among Class 1 rail carriers - Management noted that while it is too early to determine specific impacts, improvements in productivity and customer service in the rail industry would benefit builders [39][40] Question: Potential demand for coal-related railcars - Management acknowledged increased inquiries for extending the life of existing coal railcars, but noted it is too early to predict new car builds [44][45] Question: Long-term gross margin expectations - Management stated that gross margins are dependent on product mix and operational productivity, with no immediate concerns for a decline from current levels [48][51] Question: Tank car conversion pipeline and customer conversations - Management highlighted ongoing discussions with customers regarding conversions and new car orders, preparing for increased demand as deadlines approach [56][58]

Financial Data and Key Metrics Changes - Crescent Energy reported record production of 263,000 barrels of oil equivalent per day, with 108,000 barrels of oil per day, generating approximately $171 million of free cash flow for the quarter, all exceeding Wall Street expectations [7][14] - The company achieved approximately $514 million of adjusted EBITDA and $265 million of capital expenditures, continuing a strong track record of free cash flow generation [14] - The company has generated cumulative free cash flow roughly equal to its current market cap over the last five years, indicating a compelling discount on free cash flow metrics [14] Business Line Data and Key Metrics Changes - The Eagle Ford operations are delivering on a flexible capital program, focusing on gas activity in the latter half of the year, while maintaining a prudent approach in Utah to capture long-term resource opportunities [9][10] - Operational efficiencies have improved well costs by approximately 15% in both the Eagle Ford and Uinta basins since last year, contributing to enhanced production expectations and reduced capital [8][9] Market Data and Key Metrics Changes - The A and D market was quieter in Q2 with continued commodity price volatility, but the company successfully identified compelling value opportunities for both acquisitions and divestitures [10][12] - The company acquired attractive minerals assets expected to generate returns exceeding the 2x MOIC target, while divesting non-operated assets to streamline the business [11][12] Company Strategy and Development Direction - Crescent Energy is focused on driving long-term value through operational excellence, capital efficiency, and a consistent hedge program to generate durable free cash flow [5][6] - The company is transitioning to a single share class to simplify its stock structure and enhance shareholder value [7][14] - The management emphasizes a proactive approach to capital allocation, balancing debt repayment, dividends, and share buybacks [15][33] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market volatility and highlighted the importance of operational execution in delivering strong results [5][6] - The company is optimistic about future opportunities, particularly in the Eagle Ford and Uinta basins, and is committed to maximizing free cash flow and returns on capital [9][10] - Management acknowledged the current dislocation in the A and D market, indicating a cautious yet opportunistic approach to acquisitions [38] Other Important Information - The company repurchased approximately $28 million worth of stock at a weighted average price of $7.88, roughly 12% below the current share price, as part of its buyback program [15] - Crescent Energy paid down approximately $200 million of debt this quarter, increasing liquidity to $1 billion [15] Q&A Session Summary Question: Efficiency gains on D and C per foot - Management attributed the efficiency gains to the execution of best practices, particularly the implementation of simul frac in completion operations [21] Question: Capital allocation decisions in Uinta - Management indicated excitement about the resource potential in Uinta and plans to allocate capital prudently based on proven economic inventory [24] Question: Justification for adding to the minerals portfolio - Management emphasized that the acquisition aligns with their strategy and is expected to be highly cash flow accretive [29] Question: Balance sheet and capital allocation - Management confirmed that 80% of free cash flow is directed towards debt repayment, with the remaining 20% allocated to dividends and buybacks [33] Question: Dislocation in the A and D market - Management noted that many asset sale processes were pulled due to volatility, indicating a functioning market with opportunities for strategic transactions [38] Question: Comparison of returns between Uinta and Eagle Ford - Management stated that both areas have similar capital allocation potential, but Uinta has more stacked resources that require careful evaluation before further development [70]

Financial Data and Key Metrics Changes - Viper Energy reported strong oil production growth in Q2 2025 despite oil price volatility, with a focus on organic growth from Diamondback [5][6] - The company plans to return $0.56 per share to stockholders this quarter, representing 75% of cash available for distribution [7] - The pro forma net debt target is set at $1.5 billion, which represents approximately one turn of leverage at $50 WTI [7][8] Business Line Data and Key Metrics Changes - The expected year-over-year growth in Diamondback operated net oil production is over 15% [6] - Full year 2026 average production is anticipated to increase by a mid-single digit percentage from Q4 2025 production levels [7] Market Data and Key Metrics Changes - The company is experiencing increased activity from third-party operators, primarily large-cap companies like Exxon, Oxy, EOG, and Conoco, which is expected to remain consistent [18][19] - Current activity levels suggest potential upside to the mid-single digit growth outlook for 2026, driven by Diamondback operations [20] Company Strategy and Development Direction - Viper Energy is focused on maintaining a strong relationship with Diamondback, which is seen as a competitive advantage [9] - The company is pursuing organic growth while also considering accretive acquisitions, such as the SITIO royalties acquisition [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the organic growth trajectory continuing into 2026 at current prices [6] - The company aims to balance free cash generation with potential non-core asset sales to reach the net debt target [13][14] Other Important Information - The SITIO acquisition is expected to close shortly after the shareholder meeting on August 18, which will enhance Viper's production profile over the next decade [6] - The company emphasizes a commitment to returning excess cash to shareholders once the net debt target is achieved [8] Q&A Session Summary Question: Flexibility towards the $1.5 billion net debt target - Management indicated that the business can generate significant free cash flow, allowing for a mix of non-core asset sales and free cash generation to reach the target [12][13] Question: Mix of buybacks versus variable dividends - Management noted that they prefer to be a distribution vehicle but may lean towards buybacks given the current stock valuation [15] Question: Sustainability of third-party operator activities - Management highlighted that large-cap operators are expected to maintain their development plans, benefiting Viper's production [18][19] Question: Evaluation of non-core assets in the CTO portfolio - Management stated they will be patient with larger positions and may consider selling non-core assets when market conditions are favorable [24] Question: Strategy regarding dividends and buybacks post-acquisition - Management suggested that the board may consider increasing the base dividend in the next quarter, depending on free cash flow growth [49] Question: Availability of M&A opportunities - Management indicated a cautious approach to M&A, focusing on ensuring the success of recent acquisitions before pursuing new deals [52]

Financial Data and Key Metrics Changes - The bank achieved a net income of $550 million for the first half of 2025, with a return on equity (ROE) of 25.1% [17] - In Q2 2025, the net income was MXN $273 billion, resulting in an ROE of 24.5%, marking the fifth consecutive quarter with an ROE above 20% [17] - The net interest margin (NIM) improved to around 4.1%, reflecting a 100 basis point increase year-on-year [20][21] Business Line Data and Key Metrics Changes - The number of current accounts increased by 10% year-on-year, contributing to a 78% growth in active clients [19] - Credit card transactions rose by 12% year-on-year, while mutual funds brokered saw a 19% increase [19] - The bank's efficiency ratio reached 35.3%, the best in the Chilean industry for 2025 [22] Market Data and Key Metrics Changes - The Chilean peso depreciated to around $9.70 per dollar, influenced by renewed trade tensions [6] - GDP growth for Q2 was reported at 2.9% year-on-year, with inflation at 4.1% in June [7] Company Strategy and Development Direction - The bank completed the migration of its legacy mainstream service to the cloud, enhancing its digital strategy [13] - Initiatives such as smart POS enhancements and the launch of Santander to Comuna aim to increase transactionality and strengthen the funding base [14][15] - The bank is focusing on expanding its client base, particularly through simple savings accounts for children [15] Management's Comments on Operating Environment and Future Outlook - Management expects loan book growth to be in low single digits due to upcoming elections and global uncertainties [29] - The cost of risk is anticipated to improve slightly, with expectations of ROEs in the range of 21% to 23% for the year [30][31] - Political dynamics and global trade tensions are seen as key risks impacting the business [56] Other Important Information - The bank's CET1 ratio reached 10.9%, well above the minimum requirement [27] - The bank has been recognized for sustainability, ranking highly in the MSCI Sustainability Index [16] Q&A Session Summary Question: Future contribution of consumer loans and sustainable cost of risk - Management expects healthy growth in consumer loans, with a cost of risk around 1.35% for the year, gradually improving [34][36] Question: Loan growth post-elections - Management indicated uncertainty regarding loan growth acceleration post-elections, with a focus on consumer lending and SME growth [43][49] Question: Risks around the business with upcoming elections - Key risks include global economic dynamics, particularly US-China trade relations, and potential political volatility [56] Question: NPL normalization expectations - Management anticipates NPLs to normalize below 3% by early 2026, with improvements expected primarily from the commercial portfolio [66] Question: Net interest margin outlook - NIM is expected to stabilize around 4.1% for the year, with potential fluctuations based on inflation and interest rate changes [70]

Financial Data and Key Metrics Changes - Net income per share was $0.09 on a fully diluted basis, and core FFO per share was $0.74, reflecting a 3% year-over-year increase [13] - Cash available for distribution was $29.3 million, exceeding consensus expectations for the quarter [13] - The company maintains its full year 2025 core FFO per share guidance in the range of $2.98 to $3.30 on a fully diluted basis [18] Business Line Data and Key Metrics Changes - The company advanced several key development projects backed by long-term non-cancelable leases, indicating a focus on disciplined growth [6][7] - Soft term lease exposure declined from 5.2% at year-end to 4.7%, demonstrating progress on renewals and tenant engagement [15] Market Data and Key Metrics Changes - The company is operating in a challenging market environment with elevated cost of capital, partly due to a recent dividend reset [9][17] - The company expects an additional $115 million in liquidity later this year from the FDA Atlanta lump sum repayment [16] Company Strategy and Development Direction - The company focuses on delivering reliable performance through mission-critical infrastructure and long-term leases [5][6] - The strategy emphasizes disciplined capital deployment and selective growth into high-quality assets that align with government missions [7][8] - The company aims to rebuild its shareholder base with long-term public investors who understand its mission and strategy [9] Management's Comments on Operating Environment and Future Outlook - Management noted that government real estate decisions are becoming more strategic and cost-conscious, positioning the company as a trusted partner [10] - The company is committed to executing its development pipeline with excellence and deepening relationships across federal, state, and local agencies [11] Other Important Information - The company has $122 million of revolver capacity available, maintaining a leverage ratio within the target range of 6.5 to 7.5 times [16][17] - The company is not pursuing growth for its own sake but is targeting opportunities that create durable value [18] Q&A Session Summary Question: Can you talk about your return expectations for the crime lab development project? - The development is expected to create about a 150 basis point spread to the cost of capital, consistent with other development growth targets [21] Question: What's the size of the pipeline of opportunities you're looking at? - The pipeline volume is estimated at $1 billion to $1.5 billion, with a focus on finding the best deals to meet growth goals [22]

Financial Data and Key Metrics Changes - The adjusted net investment income decreased to $32.5 million or $0.37 per share, down from $38.7 million or $0.45 per share in the prior quarter, primarily due to nonrecurring and noncash items related to refinancing activities [25][27] - The net leverage ratio at quarter end was 0.93 times, flat from last quarter, with total debt outstanding at $1.46 billion [28] - The weighted average interest rate decreased slightly to 6.6% from 6.7% at the end of the prior quarter [28] Business Line Data and Key Metrics Changes - The weighted average yield on new debt investments was 9.1%, compared to 9.5% in the prior quarter, reflecting continued tight spreads in the marketplace [13] - The median EBITDA of portfolio companies was approximately $161 million, a $3 million increase from the prior quarter [17] - The weighted average leverage in the portfolio decreased slightly from 5.2 to 5.1 times, while the weighted average interest coverage increased from 2.1 to 2.2 [17] Market Data and Key Metrics Changes - M&A activity remained muted due to uncertainty surrounding increased tariffs, leading to a pivot towards refinancing existing debt rather than new buyouts [8] - Credit spreads tightened, with pricing for large cap sponsor loans in the SOFR plus 425 to 475 basis points range [9] - The company is observing increased opportunities in Europe, supported by a strengthening economic outlook and favorable valuation metrics [11] Company Strategy and Development Direction - The company is focused on high-quality companies with strong credit profiles and is selectively deploying capital into mature market-leading businesses [15][16] - Oaktree's global platform provides a competitive advantage, allowing access to high-quality transactions often unavailable to smaller lenders [16] - The company aims to maintain a diversified portfolio while avoiding industry concentration risk and steering clear of more cyclical businesses [16] Management's Comments on Operating Environment and Future Outlook - Management noted that the long-term outlook for direct lending remains favorable, with compelling yields on a gross unlevered basis [12] - The company is actively engaged with management teams of challenged positions to drive favorable resolutions [21] - There is confidence in the ability to deploy capital effectively, supported by a robust pipeline of investment opportunities [41] Other Important Information - The company successfully amended and extended the maturity of its senior secured revolving facility, reducing the interest rate, which will reduce overall interest expense [6] - The company has ample liquidity of approximately $730 million, including $80 million in cash and $650 million of undrawn capacity on credit facilities [28] Q&A Session Summary Question: How were spreads generated this quarter? - The company achieved first lien spreads in the mid-500s, influenced by a mix of lower spread deals and higher yielding deals, including life science transactions [34][36] Question: What is the plan regarding leverage and discussions with rating agencies? - The plan is to maintain leverage at the midpoint of the range (0.9 to 1.25) and to engage actively with rating agencies regarding potential increases in leverage to support earnings [40][41] Question: Confidence in the base dividend level of $0.40 per share? - The base dividend was set at $0.40 based on visibility into prepayment activity and the progress made in converting non-interest earning assets into interest-earning assets [54] Question: What types of asset-backed opportunities is the company considering? - The company is looking at a diversified pipeline of asset-backed deals, including rental car leases and small loans for HVAC systems, while avoiding consumer unsecured debt [56][59]

Financial Data and Key Metrics Changes - The company reported adjusted net income of $2.28 per share for the first six months of 2025, compared to $1.6 per share for the same period last year [7] - Adjusted net income for Q2 2025 was $315,000 or $0.01 per share, an improvement from a loss of $2.8 million or $0.07 per share in Q2 2024 [17] - Year-to-date adjusted net income was $92.1 million or $2.28 per share for 2025, up from $61 million or $1.6 per share for the same period in 2024 [21] Business Line Data and Key Metrics Changes - The Northwest Natural Gas segment saw net income increase by $4.5 million or $0.12 per share, with margin increasing by $16.9 million due to new rates in Oregon [18] - Sea Energy provided net income of $1 million or $0.03 per share, with strong margin and net income trends aligning with expectations [18] - The Water segment's net income increased by $1.8 million or $0.04 per share, driven by new rates at the largest water utility in Arizona and additional revenues from acquired utilities [19] Market Data and Key Metrics Changes - The combined utility customer growth rate was 10.6% for the twelve months ended June 30, 2025, primarily driven by gas utilities in Texas [8] - Northwest Natural Water's customer base grew by 5.8% over the last twelve months, including three acquisitions [13] Company Strategy and Development Direction - The company reaffirmed its annual 2025 adjusted earnings guidance, expecting a range of $2.75 to $2.95 per share [22] - The capital expenditure plan for 2025 is projected to be between $450 million and $500 million, focusing on modernizing infrastructure and system upgrades [23] - The company aims for a long-term earnings per share growth rate of 4% to 6% compounded annually from 2025 adjusted EPS [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial targets for the full year, citing strong performance across all business segments [24] - The company noted that while there are signs of housing market slowdown in Texas, overall growth remains strong with significant meter additions [29] Other Important Information - The company filed a general rate case in Oregon to recover investments in gas infrastructure, expecting a modest 2.5% rate increase effective October 31 [11] - The liquidity position at June 30, 2025, was approximately $550 million, with no material debt maturities expected in 2025 [24] Q&A Session Summary Question: Update on Sea Energy's growth and backlog - Management indicated that Sea Energy is performing as expected, with strong growth and a significant backlog exceeding annual goals by midyear [28][29] Question: Scale of upcoming water rate cases - Management noted that individual water rate cases are generally small, often less than $1 million in revenue requirement, leading to multiple rate cases executed annually [30]