Paul Sternlieb: Good morning, Larry.
Anthony Colucci: Hi, Larry.
Larry De Maria: Hi, just maybe follow up on that in the wind, maybe talk about the geographic opportunities. I think most of were referencing domestic opportunities, but are there – but what does it look like outside of the U.S.?
Paul Sternlieb: Yes. No, thanks for the question, Larry. I think a few points I would make there. So first off, we have broad exposure across the whole, what I would call, lifecycle on wind. So we have established good relationships with OEM wind turbine manufacturers and some of their key suppliers, as well as folks that are doing installation and commissioning, as well as O&M or operations and maintenance work, and ultimately even decommissioning of older turbines. So I think we have broad exposure. We’re not overly reliant on any single part of that market. And I would say similarly from a geographic standpoint, earlier in my comments were about the U.S., but we have significant pipeline of activity that we’re looking at in other markets, including in Europe and parts of Asia.
So I think we have really good broad-based exposure geographically and we see increasing interest in investment activity in different parts of the world for wind, again just given the shift to clean energy.
Larry De Maria: Okay, thanks, makes sense. Second question, you talked about your growth outlook – well, you talked about the orders and sort of how to think about and I guess Europe is most cautious and there is some optimism brewing in APAC, can you maybe drill down and give some order magnitude in terms of regional growth for the year?
Paul Sternlieb: Yes, I mean we haven’t broken it out by region. I mean, you can see what the actuals are. I would say, I mean, the sentiment is probably similar across Americas and Europe, you know, sort of neutral to cautious I think we said in terms of the channel. So I think ultimately we’ve affirmed our full year guidance at this point. We don’t have any reason to believe differently one quarter in. I mean, we’re pleased that this quarter we delivered 5.5% organic growth, above our 2% to 4% expectation for the year, but we still have three quarters to go. So we’ll see where the dynamics take us in 2024. But I think we’re just being mindful of some of that neutral to cautious sentiment that we hear from the channel.
Larry De Maria: Okay, makes sense. Last question, you’re – obviously, good start to the year with 24.6% adjusted EBITDA margins. We’re tracking in on that ASCEND targets, so can you just update how do we think about ASCEND in ’24 and beyond and update when might we get an update, I guess?
Anthony Colucci: Yes, so again, we’re really pleased with the performance that we have here in EBITDA margins in Q1 of 24.6% and it’s – we’re tracking well in line with what we guided to for the full year, perhaps a bit ahead of schedule from that perspective. Again, we’ll have some fluctuations here through the rest of the year in both gross margins and EBITDA percentages with various timings that we have with benefits coming through and investments that we’re making here as well. But I’d say, at least on track with where we are expected to be, if not a bit ahead, so really happy to see that. From an ASCEND perspective, there is still more initiatives that are coming through. As we mentioned last year, as we ended fiscal ’23, we achieved our ASCEND benefits a year ahead of schedule, so we’re really excited about that.
Still getting not only the tailwinds from that here in FY ’24 but new initiatives that we’re executing against. And as we said in our last call, we’re going to – we’re not breaking out the ASCEND benefits from just natural benefits as really the business has migrated into just comprehensive view at this point. So – but still improvements to come is what I’ll say and we’re on track with what we got it.
Paul Sternlieb: Yes, my only comment I would add to what Tony said is, we’re continuing to execute ASCEND, but I think he’s right, it evolves much more into our continuous improvement program and framework. We’re pleased with the progress we’ve made, but we still got a very active funnel of initiatives that we’re at various stages of maturity, so we feel good about that. And I would say, likewise, you know, our guidance on – or our financial framework around targeting an adjusted EBITDA margin of 25% by fiscal ’25 that remains at this point, we’d not revise that, but certainly, given what we’re able to deliver in Q4 last year and this Q1, gives us increasing confidence about our ability to meet or beat that framework for fiscal ’25.
Larry De Maria: Okay. It sounds good. Thank you very much and good luck this year.
Paul Sternlieb: Thank you.
Anthony Colucci: Thanks, Larry.
Operator: Thank you. Next question is coming from Steve Silver from Argus Research. Your line is now live.
Steve Silver: Good morning and thanks for taking my questions. So the earnings presentation cites oil & gas and petrochemical as the largest areas of end-market exposure for the company, I was just wondering if you could expand a little bit more on this. You mentioned that the business operates primarily downstream compared to up in mid. Just curious also in terms of that market’s exposure to new builds versus maintenance markets. I’m just trying to get a sense as to how we should think about the growth in that end market broadly.
Paul Sternlieb: Yes, good morning, Steve. Thanks for the question. Yes, I think certainly, you know, it is our largest market, you know, that has come down, let’s say, considerably from the highs of Actuant days, our predecessor company. Our expectation is that will likely come down further, not on an absolute dollar basis, but as a percentage over the coming years as we drive accelerated growth in our more focused verticals like infrastructure, rail, industrial, MRO, and wind. But in the oil & gas sector today, the majority of what we do is largely in the downstream area of that and a little bit of midstream. It’s also largely tied to maintenance. So I would say, the exposure to new build-out and CapEx is relatively minimal there, it’s not zero obviously, but most of what we do is tied to maintenance on existing assets.
So certainly, oil & gas is a cyclical sector, but by and large, I would say that we – our exposure is the less cyclical part of that overall sector and so we’ll continue to see some fluctuations – obviously, given the market dynamics, but we think we’re well-positioned with what we do in that space.
