Cintas Corporation (NASDAQ:CTAS) Q2 2025 Results Conference Call December 19, 2024 10:00 AM ET Company Participants Jared Mattingley - Vice President, Treasurer, and Investor Relations Todd Schneider - President and Chief Executive Officer Mike Hansen - Executive Vice President and Chief Financial Officer Conference Call Participants Tim Mulrooney - William Blair Andrew Steinerman - JPMorgan Securities Jasper Bibb - Truist Securities Manav Patnaik - Barclays Josh Chan - UBS George Tong - Goldman Sachs Shlom ...

Financial Data and Key Metrics - Adjusted EBITDA for Q2 2025 was $30.6 million, up from $23 million in the prior year quarter [8] - Earnings per share (EPS) for Q2 2025 was $0.25, compared to a loss of $0.12 per share in the same period last year [8] - Net sales for the quarter were $739 million, down 9% from the prior year quarter due to lower volumes and lower average selling prices [35] - Shipments for the quarter were 936,000 tons, down 3% year-over-year [35] - Cash flow from operations was $68 million, and free cash flow was $33.2 million [42] Business Line Performance - Automotive market shipments were down 2% year-over-year, with a significant 30% decrease in volume from one major OEM customer [36][37] - Construction market volumes decreased by 20% year-over-year, influenced by a shift in market mix and unexpected automotive order cuts [40][41] - Heavy truck market is expected to remain slow in the first half of 2025 but could see growth in the second half due to regulatory changes [23] Market Performance - The US automotive market showed positive signs in November, with overall vehicle sales reaching their highest levels since May 2021 [22] - The construction market is expected to see moderate growth in 2025, particularly in data centers and manufacturing sectors [23] - Europe remains a high-growth market for electric vehicles, with 80% of vehicles produced expected to be battery electric or hybrids by 2030 [11] Strategic Developments and Industry Competition - The company announced the acquisition of a 52% stake in Sitem Group, strengthening its presence in Europe and expanding its electrical steel lamination business [11][12] - The company continues to implement its transformation strategy, focusing on continuous improvement in quality, service, and cost efficiency [14][15] - Worthington Steel was recognized as a military-friendly employer for the 10th consecutive year and included in Computerworld's list of Top Places to Work in IT [18][19] Management Commentary on Operating Environment and Future Outlook - Management expressed cautious optimism for the automotive market, expecting OEMs to adjust their commercial strategies and rebuild market share [21][61] - Lower interest rates and decreasing inflation are expected to provide positive momentum for the construction market [23] - The company remains positive about its long-term prospects, citing strong customer relationships, an experienced leadership team, and a sound strategy [24] Other Important Information - The company released its first Corporate Citizenship and Sustainability Report, highlighting achievements in safety, carbon emissions reduction, and community support [17] - A new member, Scott Kelly, was added to the Board of Directors, bringing expertise in operations and the energy industry [20] - Capital expenditures for fiscal 2025 are expected to increase to $125 million, up from the previous estimate of $110 million, due to timing changes and additional projects [43][44] Q&A Session Summary Question: What caused the significant drop in EBITDA per ton, and when will profitability return to previous levels? - The drop was primarily due to unexpected volume declines, increased SG&A expenses (including bad debt and professional fees), and underperformance at Serviacero [54] - Management expects profitability to stabilize as the automotive market recovers and the company adjusts to the current challenges [61] Question: What are the implications of potential US trade policy changes under a new administration? - The company does not expect significant disruptions from potential tariffs, as it sources locally and has operations in Canada and Mexico that mitigate risks [71] - Management believes that any trade policy changes will likely be negotiated without major disruptions to the North American supply chain [71] Question: Are there any signs of recovery in the company's end markets? - Management sees cautious optimism in the automotive market, with potential recovery in the latter half of 2025 driven by lower interest rates and regulatory changes [74][75] - The construction market is expected to see moderate growth, while the heavy truck market may pick up later in the year due to regulatory changes [74]

Financial Data and Key Metrics - Total revenue increased by 2.3% in Q1 2025, with a 1% decline in organic sales for the IT&S business [11] - Gross profit margin declined by 90 basis points to 51.4%, primarily due to lower sales in the Americas and a higher percentage of service revenue [13] - Adjusted SG&A remained flat at 29% of revenue, reflecting effective cost management [14] - Adjusted EBITDA margins declined by 100 basis points, and adjusted EPS increased by 3% to $0.40 [14] - Net debt stood at $63 million, with net-debt leverage of 0.5 times adjusted EBITDA, and total liquidity was $529 million [15] - Free cash flow improved by $11 million due to higher net earnings and lower incentive compensation payments [16] Business Line Performance - IT&S business revenue increased by 2.3% YoY, with a 5.6% increase in service revenue offset by a 3% decline in product sales [11] - Cortland Biomedical reported a 2.6% YoY revenue increase [13] - DTA acquisition contributed $3 million in revenue and $5 million in order volume, with expectations of €20 million in full-year 2025 sales [12] Regional Performance - EMEA region showed positive YoY growth, particularly in the wind market, with strong service revenue driven by petrochemical and power generation markets [20] - Asia Pacific region returned to YoY growth with mid-single-digit sales gains, despite softness in Australia due to mining industry conditions [21] - Americas region remained cautious, with weaker sales of standard industrial tools but gains in Heavy Lifting Technology (HLT) and services [22] Strategic Direction and Industry Competition - The company is focused on cost management and operational efficiency through its Powering Enerpac Performance (PEP) program [24] - Strategic sourcing initiatives have reduced the supplier base from over 6,000 to fewer than 5,000, aiming to further optimize supply chain efficiency [25] - The company is leveraging its global brand leadership and customer-driven innovation to outperform the market [8] Management Commentary on Operating Environment and Future Outlook - The company is monitoring the sluggish industrial macro environment, particularly in the Americas, but remains optimistic about future demand driven by potential policy changes and customer sentiment [8][34] - Management expects growth in the Asia Pacific region and anticipates a more positive demand environment in the Americas in the coming months [21][22] Other Important Information - The company is relocating its headquarters, which is expected to bring long-term benefits [16] - Enerpac is well-positioned for disciplined M&A, internal investments, and opportunistic share repurchases due to strong cash generation and low leverage [17] Q&A Session Summary Question: How did Q1 2025 performance align with expectations? - Q1 2025 played out as expected, with challenges in the industrial environment, but the company remains optimistic about future demand [33][35] Question: Potential impact of tariffs on the business? - The company is in a favorable position regarding potential tariffs, with minimal impact from imports from China and negligible imports from Canada and Mexico [36][37] Question: EMEA region performance and market share gains? - EMEA region continues to outperform despite challenging macro conditions, driven by strong commercial strategies and new product rollouts [39] Question: Drivers of service revenue growth and margin improvement? - Service revenue growth is driven by steady maintenance demand, while margin improvement is expected through operational efficiency and differentiation in service offerings [41][44] Question: Pricing strategy and potential price increases? - The company typically takes price increases 1-2 times a year to recover inflationary costs and has announced low-single-digit price increases for January 2025 [51][52] Question: Infrastructure spending and lead times? - The company sees favorable indicators for infrastructure projects, particularly in Europe and Asia Pacific, and is well-positioned to meet demand with competitive lead times [55][57] Question: Integration of DTA acquisition? - DTA integration is progressing well, with strong order volumes and early success in leveraging Enerpac's global commercial network [72][73] Question: Progress on efficiency initiatives like PEP and ECX? - The company continues to see benefits from its continuous improvement programs, with PEP driving efficiency and ECX being rolled out in EMEA [68][70]

Soho House & Co Inc. (NYSE:SHCO) Q3 2024 Earnings Conference Call December 19, 2024 9:00 AM ET Company Participants Thomas Allen - CFO Andrew Carnie - CEO Conference Call Participants Steven Zaccone - Citigroup Shaun Kelley - Bank of America Stephen Grambling - Morgan Stanley Operator Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Soho House & Co. Third Quarter 2024 Conference Call. Today's conference is being recorded. All ...

Steelcase Inc. (NYSE:SCS) Q3 2025 Earnings Conference Call December 19, 2024 8:30 AM ET Company Participants Mike O'Meara - IR Sara Armbruster - President & CEO David Sylvester - SVP & CFO Conference Call Participants Reuben Garner - Benchmark Steven Ramsey - Thompson Research Group Gregory Burns - Sidoti Joseph Gomes - NOBLE Capital Markets Operator Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Steelcase Third Quarter Fisca ...

Darden Restaurants, Inc. (NYSE:DRI) Q2 2025 Earnings Conference Call December 19, 2024 8:30 AM ET Company Participants Phil McClain - Vice President, Finance and Investor Relations Rick Cardenas - President and Chief Executive Officer Raj Vennam - Senior Vice President and Chief Financial Officer Conference Call Participants David Palmer - Evercore ISI Eric Gonzalez - KeyBanc Capital Markets Jim Salera - Stephens Peter Saleh - BTIG Jeffrey Bernstein - Barclays Sara Senatore - Bank of America Andrew Charles ...

Second Quarter Highlights and Financial Results Fiscal 2025 Forward Looking Statements Certain written statements in this presentation may contain, and members of management may from time to time make or discuss statements which constitute, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, all matters that are not historical facts. Forward-looking statements are n ...

FuelCell Energy, Inc. (NASDAQ:FCEL) Q4 2024 Earnings Conference Call December 19, 2024 10:00 AM ET Company Participants Tom Gelston - Investor Relations Jason Few - President & Chief Executive Officer Mike Bishop - Executive Vice President, Chief Financial Officer & Treasurer Conference Call Participants George Gianarikas - Canaccord Genuity Saumya Jain - UBS Noel Parks - Tuohy Brothers Dushyant Ailani - Jefferies Operator Good morning, ladies and gentlemen, and thank you for standing by. My name is Abby, a ...

CarMax, Inc. (NYSE:KMX) Q3 2025 Earnings Conference Call December 19, 2024 9:00 AM ET Company Participants David Lowenstein - Assistant Vice President, Investor Relations Bill Nash - President and Chief Executive Officer Enrique Mayor-Mora - Executive Vice President and Chief Financial Officer Jon Daniels - Senior Vice President, CarMax Auto Finance Operations Conference Call Participants Brian Nagel - Oppenheimer Sharon Zackfia - William Blair John Murphy - Bank of America Seth Basham - Wedbush Securities ...

Industry Overview * **Hardware Growth Acceleration**: The report forecasts hardware growth to accelerate in 2025, with a focus on enterprise vs. consumer end markets. However, the current valuation at 19 P/E for 4-7% rev/EPS growth in 2025 suggests that acceleration is already priced in. * **CIO Survey**: The 3Q24 CIO survey indicates that CIOs expect spending on PCs, servers, and storage to accelerate in 2025. This aligns with the overall optimistic outlook for hardware spending growth. * **Tech Hardware Valuation**: Tech hardware stocks are currently trading at an all-time high P/E of 19x, which is 4-6x turns above valuations at similar points in past cycles. This suggests that the market has already priced in a growth re-acceleration in 2025. * **Hardware Spending Expectations**: The report forecasts average enterprise hardware revenue growth of 3% Y/Y in 2025, with the strongest growth in AI servers and PCs. Average consumer hardware revenue growth is expected to be 3% Y/Y, ~175bps below consensus. * **Macroeconomic Factors**: The report identifies macroeconomic factors such as interest rates, inflation, and employment as headwinds to hardware spending. However, it also notes that clarity on the presidential election and a favorable interest rate environment could alleviate some of these concerns. * **Tail Risks**: The report identifies tariffs and cuts to government spending as potential tail risks to hardware spending in 2025. However, it believes that the impact of these risks is less significant than perceived. Key Companies and Their Outlooks * **Apple (AAPL)**: The report maintains an Overweight rating on Apple, considering it the Top Pick in the US IT hardware coverage universe. The company is expected to benefit from a multi-year iPhone refresh cycle and consistent double-digit Services growth. * **Dell Technologies (DELL)**: Dell remains one of the core IT hardware Overweights, well-positioned to benefit from accelerating AI server orders and a cyclical recovery in core servers, storage, and PCs. * **Seagate Technology (STX)**: Seagate is considered an Overweight due to its strong position in the HDD market and potential for revenue and gross margin expansion. * **Kornit Digital (KRNT)**: Kornit is the top small cap Overweight, leading in the digital textile printing market with strong growth and margin trajectory. * **Garmin (GRMN)**: Garmin is Underweight due to concerns about sustainability of its growth rates and negative risk-reward profile. * **Sonos (SONO)**: Sonos is Underweight until clearer evidence that the negative consumer reaction to the mid-2024 app update has passed. * **Xerox Corp (XRX)**: Xerox is Underweight due to challenges in its core business and uncertain macro environment. * **CDW Corporation (CDW)**: CDW is Equal-weight, potentially undervalued as a way to play a more robust cyclical recovery in 2025. * **Ingram Micro (INGM)**: INGM is Equal-weight, with potential for upside as a beneficiary of a more robust cyclical recovery in 2025. * **Logitech (LOGI)**: LOGI is Underweight due to concerns about execution and valuation. Conclusion The report provides a comprehensive overview of the IT hardware industry, highlighting key trends, risks, and opportunities. While the industry is expected to grow in 2025, valuation concerns and macroeconomic uncertainties remain. The report offers valuable insights for investors looking to navigate the complex landscape of the IT hardware industry.