Earning Date, Transcript Summary & Report

Strong Q3 Revenue and Profit: Our Q3 results reflect solid revenue growth and substantial increases in our key profit measures.

Strong Margin Performance: Our margin performance was strong across both segments and we continue to execute on our key value creation initiatives, including sustainability and continuous improvement.

Strong Financial Guidance: We are well positioned to achieve our fully year guidance, which reflects a year-on-year increase in adjusted EBITDA of approximately 35% and an increase in adjusted EPS of 28%.

Revenue Growth in HVAC: For the third quarter, we grew revenue by 7.8%, driven by strength in HVAC cooling.

EBITDA Growth and Margin Expansion: Adjusted EBITDA increased approximately 27% year-on-year with 320 basis points of margin expansion.

Strong Quarterly Results: O u r t h i r d q u a r t e r r e s u l t s w e r e s t r o n g .

Adjusted EPS Growth: Y e a r - o n - y e a r , a d j u s t e d E P S g r e w 3 1 % t o $ 1 . 3 9 .

Quarterly Revenue Increase: F o r t h e q u a r t e r , t o t a l c o m p a n y r e v e n u e i n c r e a s e d 7 . 8 % y e a r - o n - y e a r .

Organic and Acquisition Revenue Growth: O r g a n i c a l l y , r e v e n u e g r e w 3 % , w h i l e a c q u i s i t i o n s d r o v e a n i n c r e a s e o f 4 . 4 % , F X w a s a m o d e s t t a i l w i n d .

Segment Income Growth: C o n s o l i d a t e d s e g m e n t i n c o m e g r e w b y $ 2 2 . 2 m i l l i o n o r 2 4 . 2 % t o $ 1 1 3 . 8 m i l l i o n , w h i l e s e g m e n t m a r g i n i n c r e a s e d 3 1 0 b a s i s p o i n t s .

HVAC Revenue Growth: F o r t h e q u a r t e r , i n o u r H V A C s e g m e n t , r e v e n u e s g r e w 1 5 . 9 % y e a r - o n - y e a r .

Revenue Growth Drivers: O n a n o r g a n i c b a s i s , r e v e n u e s i n c r e a s e d 9 % , d r i v e n b y c o n t i n u e d s t r e n g t h i n c o o l i n g d e m a n d , w h i l e h e a t i n g w a s s i m i l a r t o t h e p r i o r y e a r .

Acquisition-Driven Growth: T h e a c q u i s i t i o n o f I n g e n i a a n d o u r c o o l i n g p l a t f o r m c o n t r i b u t e d g r o w t h o f 6 . 8 % , w h i l e t h e F X i m p a c t w a s n o m i n a l .

Segment Income Growth: S e g m e n t i n c o m e g r e w b y $ 2 1 . 7 m i l l i o n o r 3 7 . 2 % w h i l e s e g m e n t m a r g i n i n c r e a s e d 3 7 0 b a s i s p o i n t s .

Segment Income and Margin Growth: T h e i n c r e a s e s i n s e g m e n t i n c o m e a n d m a r g i n w e r e d u e t o o p e r a t i n g l e v e r a g e o n h i g h e r o r g a n i c c o o l i n g s a l e s a n d t h e I n g e n i a a c q u i s i t i o n .

Segment Backlog Increase: S e g m e n t b a c k l o g a t q u a r t e r e n d w a s $ 4 3 8 m i l l i o n , u p m o d e s t l y f r o m Q 3 .

Revenue Decline in Segment: F o r t h e q u a r t e r i n t h e D e t e c t i o n & M e a s u r e m e n t s e g m e n t , r e v e n u e s d e c r e a s e d 7 % y e a r - o n - y e a r .

Market Tailwind Impact: F X w a s a 0 . 8 % t a i l w i n d .

Revenue Decrease Factors: D e c r e a s e i n r e v e n u e w a s d r i v e n l a r g e l y b y l o w e r c o n t r a c t s a l e s a s s o c i a t e d w i t h t h e l a r g e p a s s - t h r o u g h p r o j e c t d e l i v e r e d d u r i n g 2 0 2 3 a n d i n t o t h e f i r s t q u a r t e r o f 2 0 2 4 .

Revenue Growth Excluding Pass-Through: E x c l u d i n g t h e p a s s - t h r o u g h p r o j e c t , r e v e n u e g r e w a p p r o x i m a t e l y 3 % , d r i v e n b y t r a n s p o r t a t i o n a n d A t o N p r o j e c t s a l e s .

Segment Income Growth: Y e a r - o n - y e a r s e g m e n t i n c o m e g r e w $ 0 . 5 m i l l i o n a n d m a r g i n i n c r e a s e d 1 9 0 b a s i s p o i n t s , d r i v e n b y m o r e f a v o r a b l e p r o j e c t m i x .

Segment Income Margin Improvement: S e g m e n t i n c o m e m a r g i n a l s o c o n t i n u e d t o b e n e f i t f r o m o u r e f f o r t s t o e n h a n c e t h e e f f i c i e n c y o f o u r s e g m e n t s t r u c t u r e .

Segment Backlog Decline: S e g m e n t b a c k l o g a t q u a r t e r e n d w a s $ 1 9 3 m i l l i o n , d o w n 5 . 8 % s e q u e n t i a l l y f r o m Q 3 , r e f l e c t i n g t h e t i m i n g o f c e r t a i n p r o j e c t d e l i v e r i e s a n d a w a r d s .

Cash and Debt Overview: I n Q 3 w i t h c a s h o f $ 1 2 9 m i l l i o n a n d t o t a l d e b t o f $ 7 3 8 m i l l i o n .

Leverage Ratio Calculation: O u r l e v e r a g e r a t i o i s c a l c u l a t e d u n d e r o u r b a n k c r e d i t a g r e e m e n t w a s 1 . 4 x .

Leverage Ratio Decline: W e n o w a n t i c i p a t e o u r l e v e r a g e r a t i o d e c l i n i n g t o 1 . 2 x o r l o w e r b y y e a r - e n d , b e l o w o u r t a r g e t r a n g e o f 1 . 5 t o 2 . 5 x , a s s u m i n g n o a d d i t i o n a l c a p i t a l d e p l o y m e n t .

Adjusted Free Cash Flow: A d j u s t e d f r e e c a s h f l o w f o r t h e q u a r t e r w a s a p p r o x i m a t e l y $ 6 1 m i l l i o n .

Credit Facility Expansion: D u r i n g t h e q u a r t e r , w e a m e n d e d o u r c r e d i t a g r e e m e n t t o d o u b l e t h e s i z e o f o u r r e v o l v i n g c r e d i t f a c i l i t y f o r $ 1 b i l l i o n i n o r d e r t o b e t t e r m a t c h o u r i n c r e a s e d s i z e a n d g r o w t h o p p o r t u n i t i e s .

Guidance Maintenance: W e a r e m a i n t a i n i n g o u r f u l l y e a r g u i d a n c e f o r a d j u s t e d E B I T D A a n d a d j u s t e d E P S .

HVAC Revenue Guidance Update: W e a r e n a r r o w i n g t h e r a n g e o f o u r H V A C r e v e n u e g u i d a n c e t o $ 1 . 3 6 5 b i l l i o n t o $ 1 . 3 8 5 b i l l i o n , r e f l e c t i n g y e a r - o n - y e a r g r o w t h o f 2 2 . 5 % a t t h e m i d p o i n t .

HVAC Margin Guidance Update: W e a r e a l s o s l i g h t l y n a r r o w i n g o u r r a n g e f o r H V A C m a r g i n g u i d a n c e w h i l e m a i n t a i n i n g t h e m i d p o i n t o f 2 3 . 5 % o r 2 6 0 b a s i s p o i n t s i n c r e a s e y e a r - o n - y e a r .

Margin Guidance Increase: I n D & M , b a s e d o n o u r y e a r - t o - d a t e p e r f o r m a n c e a n d o u t l o o k , w e a r e i n c r e a s i n g o u r m a r g i n g u i d a n c e t o a r a n g e o f 2 1 . 2 5 % t o 2 2 % , r a i s i n g t h e m i d p o i n t t o a p p r o x i m a t e l y 2 1 . 6 % .

Year-over-Year Increase: T h i s r e p r e s e n t s a y e a r - o n - y e a r i n c r e a s e o f a p p r o x i m a t e l y 2 4 0 b a s i s p o i n t s c o m p a r e d w i t h a y e a r - o n - y e a r i n c r e a s e o f 2 1 0 b a s i s p o i n t s p r e v i o u s l y .

Consolidated Income Stability: I n t o t a l , c o n s o l i d a t e d m i d p o i n t s e g m e n t i n c o m e f o r t h e c o m p a n y r e m a i n s u n c h a n g e d a s a r e s u l t o f t h e s e a d j u s t m e n t s .

Modeling Considerations Appendix: A s a l w a y s , y o u ' l l f i n d m o d e l i n g c o n s i d e r a t i o n s i n t h e a p p e n d i x t o o u r p r e s e n t a t i o n .

Market Review and Closing Comments: I ' l l n o w t u r n t h e c a l l b a c k t o G e n e f o r a r e v i e w o f o u r e n d m a r k e t s a n d h i s c l o s i n g c o m m e n t s .