Industrial Sector Ideas

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>>> Axon is using technology to benefit society

https://finance.yahoo.com/news/forget-nvidia-likely-next-once-113000380.html

Justin Pope (Axon Enterprise): Years from now, investors may look back at Axon as a generational company that hid in plain sight. The company started with Tasers but has evolved into a full-fledged technology business offering cloud-based solutions for law enforcement.

In addition to non-lethal weapons, Axon sells body cameras and cloud-based software for evidence management and law enforcement operations. These products help protect law enforcement and citizens, ensuring accountability from all parties.

Axon's revenue has grown virtually uninterrupted for years, benefiting from dependable government budgets:

Today, Axon has over 17,000 customers, and the business boasts a 122% net revenue retention rate, meaning that solid growth is baked into the business even without it acquiring new customers.

The stock has already been a big winner. Shares have returned a staggering 54,000% over their lifetime. Axon could continue to deliver. The business still does "just" $1.5 billion in annual revenue.

Management estimates that its current addressable market is $63 billion, leaving a clear opportunity for growth over the coming decade and beyond.

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Vertiv Holdings - >>> Here's Why Shares in This Nvidia Partner Soared in March


by Lee Samaha

Motley Fool

Apr 5, 2024


https://finance.yahoo.com/news/heres-why-shares-nvidia-partner-121917710.html


Shares in data center equipment company Vertiv Holdings (NYSE: VRT) rose by a whopping 20.8% in March as the company rode the artificial intelligence (AI) investment boom. The stock price took a leg up in mid-March following the announcement that Vertiv would become a Solution Advisor: Consultant partner in the Nvidia (NASDAQ: NVDA) Partner Network.

Data centers are cool

You can't have a burgeoning investment in AI applications without data centers, and you can't have data centers without cooling. As such, Vertiv has a critical role in the growth of AI, a fact acknowledged by Nvidia CEO Jensen Huang at Nvidia's GPU Technology Conference (GTC) a day after the announcement. Huang noted that Nvidia and Vertiv were working on cooling systems, with Vertiv acknowledged as "very important" in ensuring the cooling of data centers.

While that's a red rag to an Nvidia bull, there's reason and hard numbers behind the optimism.

Spending on data centers continues to surge

As previously discussed, there's been an incredible boom in U.S. manufacturing construction investment over the last couple of years, led by investment in semiconductors and electronics, including data centers. In fact, U.S. manufacturing spending came in at $214 billion in 2023 compared to less than $100 billion in 2022 and even lower in the pre-pandemic era.

Moreover, the boom in interest in AI has made spending on data centers higher. For example, here's a look at capital expenditures at leading data center company Equinix. Although it dipped through 2022 in line with a correction after the boom inspired by the pandemic, it's now taken off again. Equinix management expects $2.9 billion to $3 billion in capital spending in 2024.

Vertiv will benefit from booming data center spending

The ongoing spending in data centers is also seen in Vertiv's order growth -- up 23% on a year-over-year basis in the fourth quarter of 2023 and 18% in the third quarter of 2023. Moreover, CEO Giordano Albertazzi expects spending "to continue to be strong up in the high teens on a year-on-year basis in the first quarter across the portfolio" in the first quarter.

As such, Vertiv is set for another year of strong growth, and management forecasts call for a double-digit increase in organic revenue for the full year.

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>>> Vertiv Holdings Co (NYSE:VRT) - Number of Hedge Fund Investors: 75

https://finance.yahoo.com/news/billionaire-stanley-druckenmiller-top-12-114039919.html

Duquesne Capital’s Q4 2023 Investment Value: $111.1 million

Vertiv Holdings Co (NYSE:VRT), an American multinational corporation, specializes in providing critical infrastructure and services for data centers, communication networks, and commercial and industrial environments. On February 21, the company released its fourth-quarter results. Adjusted earnings per share for the period were reported at $0.56, exceeding estimates by $0.03. However, revenue for the quarter saw a 12.7% year-over-year increase, reaching $1.87 billion, falling short of estimates by $0.03.

As of Q4 2023, Vistra Corp. (NYSE:VST) was one of the top picks in Stanley Druckenmiller's portfolio. A total of 75 elite hedge funds tracked by Insider Monkey held its shares, valued at $3.1 billion.

ClearBridge SMID Cap Growth Strategy stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its fourth quarter 2023 investor letter:

“Within IT, AI trends continue to positively impact order trends at data center and technology hardware companies to the benefit of companies like Monolithic Power Systems, our top-performing holding during the quarter. Enthusiasm supplying power management for Nvidia’s AI GPUs supported both strong 2023 performance and a robust future outlook. This strong demand also translated into positive performance for industrials holding Vertiv Holdings Co (NYSE:VRT), a leader in power and thermal management and related tools and systems used by data centers. However, we continue to monitor the sustainability of such trends, as well as their valuations, on a case-by-case basis. As a result, we trimmed the position size of both of these investments, following strong stock performance.”

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>>> Sterling Infrastructure (NASDAQ:STRL) is a construction company that specializes in e-infrastructure. This segment includes data centers, e-commerce distribution centers and warehouses, and multi-use facilities. As tech companies grow, they will need more properties for data storage.

https://finance.yahoo.com/news/market-mavericks-7-growth-stocks-154037454.html

It’s a boon for Sterling Infrastructure which has resulted in a 135% gain over the past year. Shares are up by an astonishing 512% over the past five years. The company is outperforming most of the big tech, and tailwinds for big tech trickle down to Sterling.

The company isn’t only invested in its e-infrastructure category. Sterling Infrastructure recently won big contracts for a major Nevada highway project and from the Lihue Airport in Hawaii in Kauai, Hawaii.

Sterling Infrastructure reported an 8% year-over-year revenue increase in Q4 2023. Net income was up by 99% year-over-year. The company’s midpoints for 2024 guidance are $2.17 billion for $160 million for net income. Those figures represent 10.2% and 15.4% year-over-year growth rates respectively.

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>>> Axon 2023 Revenue Grows 31% to $1.56 Billion


PR Newswire

Feb 27, 2024


https://finance.yahoo.com/news/axon-2023-revenue-grows-31-210100362.html


SCOTTSDALE, Ariz., Feb. 27, 2024 /PRNewswire/ --

Axon Cloud and Services revenue grows 52% to $561 million

Annual recurring revenue grows 47% to $697 million

Annual net income of $174 million supports Adjusted EBITDA of $329 million

Company projects Full Year 2024 revenue of $1.88 billion to $1.94 billion, representing 20% to 24% annual growth


Fellow shareholders,

Axon is delighted to deliver another year of record company performance, fueled by product innovation, partnership with our customers and strong industry trends. Demand for our mission-driven product ecosystem continued to grow in the fourth quarter of 2023, and we recorded our fifth consecutive year of 25% or greater revenue growth, growing 31% year over year. We achieved this growth with a full year net income margin of 11% and Adjusted EBITDA margin of 21%.

Our core measure of success as a company is progress on our mission to protect life. Our mission aligns our people, our customers and our communities. Together, we focus on solving problems with modern technology, pioneering new ways of thinking and taking new approaches to complex social dynamics, driving toward our moonshot goal to cut gun-related deaths between police and the public in half by 2033. In this first year after announcing our moonshot, we introduced new technology, new modern training capabilities and new sources of improved data and analytics. We've laid the groundwork for the next nine years, and we are just getting started.

Our mission and products have resonated with our customers and afford us a growing pipeline across our business. In 2024, Axon expects to deliver annual revenue in a range of $1.88 billion to $1.94 billion, and Adjusted EBITDA of $410 million to $430 million, reflecting more than 20% annual growth and continued Adjusted EBITDA margin expansion from the prior year. We are propelling our growth through innovation and diversification while realizing efficiencies and leverage on our business as it scales. We are humbled to enter a new year with robust expectations for each of our product categories and customer verticals. In this letter, we recap a historic 2023 for our company and provide an update on the opportunities we see ahead, our roadmap and our progress.

2023 Key Takeaways

Commitment to being a Force for Good

Axon's mission is embodied in our moonshot goal to cut gun-related deaths between police and the public by 50% over 10 years. 2023 was the first year in our moonshot journey, and we progressed significant advancements to help us achieve this goal, including introducing technology, new ways of training, and optimized data collection and reporting with the Axon Public Safety Gun Fatality Database. We also published our Force For Good report in November, a bi-annual update on our progress in the areas of Corporate Social Responsibility. In addition, we summarize 5 Giant Leaps we made over the last year, here.

Strong financial results

Axon delivered annual revenue of $1.56 billion and net income of $174 million in 2023. This represents 31% annual revenue growth and an 11.1% net income margin, supporting Adjusted EBITDA of $329 million (21.1% margin). We are delivering profitable growth at scale and improvement in our operating expenses as a percentage of revenue was primarily driven by leverage on sales, general and administrative ("SG&A") expenses. Axon continues to grow our research and development ("R&D") footprint to invest in several multi-year growth opportunities, and our R&D expenses grew roughly in-line with revenue. 2023 revenue and Adjusted EBITDA margin exceeded our expectations and reflect record performance for our company.

Product innovation

We power our business through relentless product innovation. In 2023, years of investments materialized in two major new product launches — TASER 10 and Axon Body 4 — and a number of advancements in our ecosystem, including groundbreaking real-time communications features such as two-way voice communications and WatchMe, as well as an expanded virtual reality ("VR") training suite including all-new bespoke TASER VR controllers alongside expanded training content and more. We also reached key adoption milestones, including new deployments bringing us to over 100 agencies live on one or more modules of Axon Records.

New customer vertical expansion

Axon has diversified beyond U.S. state and local law enforcement. In 2023, we achieved significant growth in emerging customer verticals, including U.S. federal, international, justice, corrections and enterprise. A few examples of our progress include the successful deployment of Axon Records with the U.S. Department of Veterans Affairs, two of our largest TASER 10 orders coming from international and corrections customers, and our partnership with the Government of Scotland to power its digital evidence management system across courts, lawyers, government and police. We also have several trials kicking off with our newly launched product for enterprise, including Fairview Health, where they are trialing Body Workforce with nurses as part of their commitment to patient and staff safety.

Strategic investments to further enhance our ecosystem and expand our TAM

Axon's investment and partner strategy is geared to accelerate our product roadmap and enhance our ecosystem while building our talent base in product categories accretive to our long-term growth. In 2023, we acquired Sky-Hero and earlier this month we announced our acquisition of Fusus. Sky-Hero is an example of an acquisition supporting Axon in building next-generation technology in public safety that will leverage enhanced robotic security capabilities to improve situational awareness, power more effective means of response and protect life. With Fusus, Axon advances mission control, the future of real-time operations for public safety, enabling customers to aggregate live video, data and sensor feeds from virtually any source. Even without updating our core total addressable market ("TAM"), which we updated last year and update on a bi-annual basis, these acquisitions expand Axon's TAM from $50 billion to more than $63 billion...

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>>> Hyliion Holdings Reports Fourth-Quarter and Full-Year 2023 Financial Results


Business Wire

Feb 13, 2024


https://finance.yahoo.com/news/hyliion-holdings-reports-fourth-quarter-213000641.html


AUSTIN, Texas, February 13, 2024--(BUSINESS WIRE)--Hyliion Holdings Corp. (NYSE: HYLN) ("Hyliion"), a developer of sustainable electricity-producing technology, today reported its fourth-quarter and full-year 2023 financial results.

Key Business Highlights

Announced today, the KARNOTM generator is expected to qualify for up to a 40% tax credit under the Inflation Reduction Act’s Infrastructure Tax Credit (ITC)

Announced today, Detmar Logistics executed a letter of intent for an initial KARNO unit to be deployed in the Permian Basin to operate on waste flare gas

Executed a letter of intent to provide KARNO generators to GTL Leasing

Confirmed plans to deliver initial KARNO generator units to customers in late 2024

Began printing production-intent design components of the KARNO generator

Successfully tested KARNO reactor technology on unprocessed Permian Basin gas; results surpassed emissions standards by 98% for CO and 76% for NOx

Appointed Govindaraj Ramasamy as Chief Commercial Officer

Announced $20 million Stock Repurchase Program

Ended the year with $291 million of total cash and investments

Guidance of $40 to $50 million cash expenditures for KARNO development in 2024

Executive Commentary

"I’m pleased to report that the company’s strategic shift to wind down powertrain operations and focus on our KARNO generator is on track, with significant achievements made in advancing our generator technology and engaging prospective customers during the quarter," said Hyliion’s Founder and CEO, Thomas Healy. "We expect to deliver the initial KARNO generator deployment units with customers late in 2024 followed by a ramp-up in production and additional deliveries in 2025."

KARNO Commercial Updates

Today, the company announced that, under the Inflation Reduction Act, the KARNO generator is expected to be characterized the same as a fuel cell, enabling customers to qualify for up to a 40% tax credit under the current ITC.

Hyliion is addressing the commercial power market first with a locally-deployable 200kW generating system which it intends to deliver to initial deployment customers in late 2024. To lead these efforts, Hyliion recently hired former Cummins powergen executive, Govi Ramasamy, as Chief Commercial Officer.

Hyliion also announced today that Detmar Logistics has executed a non-binding letter of intent for a KARNO generator and to be part of Hyliion’s early adopter program. Detmar, who supplied Hyliion with test gas from the Permian Basin, intends to operate their unit on waste flare gas to produce electricity at oil & gas sites, without the need for pre-treating the gas.

In addition to Detmar, Hyliion also announced a non-binding letter of intent with GTL Leasing to deliver two KARNO generators for their portable electric vehicle recharging business. Other customers’ letters of intent are in place or being finalized to represent the remaining planned deployments in 2024 and initial deliveries in 2025. Hyliion plans for initial deployments to represent a broad range of applications, including vehicle charging, waste gas fuel sourcing, and prime power generation.

KARNO Generator Development

Hyliion is developing a revolutionary new electrical generator powered by a linear heat motor that is expected to deliver step-change improvements in performance characteristics compared to conventional generating systems, including efficiency, emissions, maintenance requirements, noise levels and fuel flexibility. The KARNO generator is enabled by the latest advances in additive manufacturing technology. Hyliion hosted a Technology Fireside Chat in December 2023 during which Thomas Healy and Josh Mook, Chief Technology Officer, explained the capabilities and advantages of the generator.

Recent technological advancements include beginning to print production-intent design parts of the BETA design of the KARNO generator. The BETA generator design will go through validation throughout 2024 and then is expected to be ready for customer deployments later this year.

The company also tested unprocessed flare gas that was collected from the Permian Basin and confirmed the ability for the KARNO reactor to operate on this fuel, showcasing the fuel agnostic characteristics of the generator. Recent test results on this fuel highlight that the KARNO’s flameless oxidation process is expected to surpass current EPA Tier 4 emissions standards by 98% for CO and 76% for NOx with no additional aftertreatment or catalyst needed.

Powertrain Wind-Down

In November 2023, Hyliion announced that it was winding down its powertrain business segment to maintain the company’s strong cash position as it furthers development of the KARNO generator technology. The company intends to retain the powertrain technology, enabling it to explore future use or sale of the technology and tangible assets. Most wind-down activities are expected to be completed in the first quarter of 2024 while efforts to monetize powertrain assets and technology continue.

Financial Highlights and Guidance

Fourth quarter operating expenses totaled $32.6 million, compared to $31.6 million in the prior-year quarter as the company initiated powertrain wind-down actions. Fourth quarter expenses include $11.5 million of charges directly related to the wind-down, including employee severance, contract cancellation costs, and accelerated depreciation of assets.

Full-year expenses totaled $136.3 million, compared to $152.4 million for the full year in 2022. Expenses in 2022 include $28.8 million of one-time charges associated with the purchase of KARNO generator technology from GE. Cash expenditures for 2023 were $131 million, including net losses and capital investments. The company ended the year with $291 million in unrestricted cash, and short-term and long-term investments.

For 2024, total cash consumed by the KARNO generator business is expected to be between $40 and $50 million, down compared to $131 million in capital consumed by the company in 2023. This estimate excludes cash payments associated with the stock repurchase program, payments associated with the ongoing wind-down of powertrain operations, and cash generated from the sale of powertrain assets and technology. Hyliion expects to achieve commercialization of the KARNO generator with the capital on hand.

Projections for 2025 include growth of KARNO generator deliveries with proceeds from sales in the low double-digit millions of dollars. The company also projects gross margins to be approximately break-even or slightly negative and cash spending to grow modestly compared to 2024.

About Hyliion

Hyliion is committed to creating innovative solutions that enable clean, flexible and affordable electricity production. The Company’s primary focus is to provide distributed power generators that can operate on various fuel sources to future-proof against an ever-changing energy economy. Headquartered in Austin, Texas, and with research and development in Cincinnati, OH, Hyliion is addressing the commercial space first with a locally-deployable generator that can offer prime power, peak shaving, and renewables matching. Beyond stationary power, Hyliion will address mobile applications such as vehicles and marine. The KARNO generator is a fuel-agnostic solution, enabled by additive manufacturing, that leverages a linear heat generator architecture. The Company aims to offer innovative, yet practical solutions that contribute positively to the environment in the energy economy.

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>>> Here's What Will Make Caterpillar Stock a Buy


Motley Fool

By Lee Samaha

Feb 10, 2024


https://www.fool.com/investing/2024/02/10/heres-what-will-make-caterpillar-stock-a-buy/


KEY POINTS

The cyclicality of Caterpillar's earnings means investors should be careful about what they assume for the company's earnings growth.

The company displayed impressive pricing power in 2023 as its product lineup fell into favor.

Weakening end markets, notably in construction industries in China and Europe, are creating near-term headwinds, but lower interest rates will boost growth.

The company's valuation is looking stretched, but there are pathways to value for the industrial stock.

Caterpillar (CAT) just delivered one of the best earnings reports in the industrial sector this earnings season. As the chart below demonstrates, its stock price continues to rise. However, the question now is what will make the stock a buy for investors. Here's what you need to know.

Three things to make Caterpillar a buy

There are three key answers to this question, and I will flesh them out below:

A lower stock price because Caterpillar's valuation is starting to look stretched.

An improvement in earnings from better operational execution.

An upside catalyst to earnings from an improvement in its end markets.

Caterpillar's valuation

The stock is an excellent value based on its trailing earnings and free cash flow (FCF). For example, earnings per share (EPS) of $21.21 puts it on just 15.2 times earnings, and machine, energy & transportation (ME&T) FCF of $10 billion puts it on 16.4 times FCF.

However, there's something else to consider: Caterpillar is, and always will be, a cyclical company (more on that later), and its earnings and FCF history reflect that.

Take FCF, for example. Management previously guided toward $4 billion to $8 billion through the cycle. The good news is that the guidance was raised to $5 billion to $10 billion through the cycle. For 2024, CFO Andrew Bonfield expects "to be within the top half of our updated ME&T free cash flow target range of $5 billion to $10 billion."

In summary, Caterpillar's guidance implies that its FCF may have peaked in 2024, so investors shouldn't consider the $10 billion reported in 2023 as a base level.

A conservative way to value a cyclical like Caterpillar is to take the midpoint of its FCF range through the cycle. Using the updated guidance of $5 billion to $10 billion and the midpoint of $7.5 billion and applying a 20 times FCF multiple to it (reasonable for a mature industrial), Caterpillar is better valued at $150 billion -- an 8.5% discount to the current price.

Operational improvement

Caterpillar is doing an excellent job operationally, and investors can be confident that the company can potentially improve its profitability, FCF, or earnings quality. There's no better way to tell if a company has a strong product lineup than by looking at its pricing power, specifically comparing the profit change due to sales volumes vs. price realization.

As the table below shows, sales volumes declined in the fourth quarter but were more than offset by powerful price realization. Clearly, Caterpillar has pricing power, and it might be able to increase profits even as volumes decline.

In addition, management can improve the quality of its earnings by continuing to grow its less cyclical services revenue. Indeed, it aims to hit $28 billion in services revenue by 2026, given that it increased services revenue from $14 billion in 2016 to $23 billion in 2023. It's reasonable to expect Caterpillar to hit its target, which might lead investors to value the company on higher earnings and FCF multiples.

Improving end markets

There's little doubt Caterpillar's growth is slowing, and Bonfield's full-year guidance calls for sales to "be broadly similar to 2023." Moreover, a look at Caterpillar's retail-sales data (Caterpillar primarily sells its machines and power systems to independent dealers, who then sell to end users) shows the slowdown graphically. The data below is retail sales to end users.

Strength in U.S. infrastructure spending will support construction sales in 2024, but China is softening, and Caterpillar sees Europe declining in 2024. Bonfield expects "lower sales versus 2023, impacted by lower machine volume primarily in off-highway and articulated trucks" in resource industries. Finally, Bonfield thinks energy and transportation sales will only be "slightly higher" in 2024.

Lower interest rates will support construction activity and possibly lead to higher commodity prices, encouraging investment in oil and gas and mining industries.

Is Caterpillar a buy?

Based on the idea that its earnings have hit a local peak, the stock looks overvalued. On the other hand, this is a high-quality company with strong pricing power, so don't be surprised if its earnings surpass estimates if the global growth outlook improves. Caterpillar is the kind of company investors should look to pick up should the market present a better opportunity, though.

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>>> Can General Electric's Fantastic Bull Run Keep Going?


Motley Fool

By Lee Samaha

Jan 31, 2024


https://www.fool.com/investing/2024/01/31/can-general-electrics-fantastic-bull-run-keep-goin/


KEY POINTS

Despite some margin headwinds, GE Aerospace looks set for another year of strong revenue growth and margin expansion.

GE Vernova has to turn its loss-making offshore business into profit.

The game plan at GE Vernova is well understood, and management has a good track record of implementing a similar strategy at GE Power.

The stock has had a great run, and here's a look at how it could continue.

General Electric (GE) isn't going out with a whimper but with a bang. The stock is up almost 64% over the last year as the company readies itself for a breakup that will see GE disappear as GE Aerospace and GE Vernova (a combination of GE Power and GE Renewable Energy) appear. Investors holding the stock will get a piece of both companies, but is it time to take profits, or does it make sense to keep holding the stock?

Improving but still a work in progress: GE Aerospace

The spinoff and the nature of the aerospace industry make it a bit difficult to get a handle on GE Aerospace's prospects and financials. The following table combines the guidance on the recent earnings call with the 2025 guidance on the investor day in March.

As you can see, there are some asterisks, but they shouldn't be ignored as trivialities.

Firstly, the 2024 operating profit guidance is $6 billion to $6.5 billion. Still, since this includes $600 million of corporate and stand-alone costs due to the spinoff, I've used the "current reporting" guidance for ease of comparison to show the bridge to the 2025 guidance. The same logic applies to the 2025 guidance, where management assumes $500 million in stand-alone costs, making the actual profit guidance $7.1 billion to $7.6 billion.

Furthermore, the 2024 profit margin guidance is my estimate using the midpoint of the "current reporting" guidance and assuming that 12.5% equates to low double digits.

Of course, the next question is why GE Aerospace's margins will possibly be flat in 2024 and then bounce in 2025. It's especially relevant as GE's rival engine maker, RTX's Pratt & Whitney, sees margin expansion in 2024 -- a point noted by Jefferies analyst Sheila Kahyaoglu on the RTX earnings call.

GE and GE Aerospace may be conservative with their guidance. Culp has a good track record of exceeding guidance, not least in 2023, where initial guidance for $5.3 billion to $5.7 billion was easily trumped by the $6.1 billion noted in the table above.

One answer to the question comes from the nature of the airplane engine industry, whereby engines are sold at a loss only to generate decades of highly profitable aftermarket and service revenue. Indeed, GE and GE Aerospace CFO Rahul Ghai noted that the ramp in the LEAP engine (used on the Airbus A320 neo family and the sole engine on the Boeing 737 MAX) production ramp would negatively impact margins. In addition, "even though LEAP services becomes profitable in '24, it's still a margin headwind," and then there's the GE9X engine (used on the Boeing 777X) ramp in 2025 as well.


Lots of places to improve: GE Vernova

Turning briefly to GE Vernova, the business managed to eke out a small profit in 2023, and management expects further improvement in 2024 with profitability at GE Power, onshore wind, and digital, offsetting losses at offshore (all GE Renewable Energy business), ultimately resulting in $0.7 billion to $1.1 billion in free cash flow (FCF).

I've discussed the game plan at GE Vernova in a previous article, and GE Vernova CEO Scott Strazik noted it had reduced the offshore equipment backlog to $4 billion and said, "The industry is beginning to reset, and while it does, we'll be highly selective on adding to the backlog."

Is GE stock a buy?

Conservatively combining the 2024 FCF guidance at both industrial businesses of ">$5 billion" at GE Aerospace and $0.7 billion to $1.1 billion for GE Vernova would put GE on a forward multiple of around 24 times FCF. That might appear rich, but it includes stand-alone costs for the breakup, and both businesses are set for long-term growth.

GE Aerospace is set for multidecade services/aftermarket revenue from LEAP and existing engines. GE Vernova's margins should improve as it works through an unfavorable backlog offshore and improves the business's margin profile.

It's still an attractive stock for investors but is not far from fair value now.

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>>> Veralto Corporation (VLTO) provides technology solutions that monitor, enhance, and protect resources worldwide. Its technologies address challenges across regulated industries, including municipal utilities, food and beverage, pharmaceutical, and industrials. The company core offerings include water analytics, water treatment, marking and coding, and packaging and color. It operates through two segments Water Quality (WQ) and Product Quality & Innovation (PQI). The WQ segment improves the quality and reliability of water through brands, including Hach, Trojan Technologies, and ChemTreat. The PQI segment promotes consumer trust in products and help enable product innovation through brands, such as Videojet, Linx, Esko, X-Rite, and Pantone. Veralto Corporation was formerly known as DH EAS Holding Corp. and changed its name to Veralto Corporation on February 22, 2023. The company was incorporated in 2022 and is based in Waltham, Massachusetts. Veralto Corporation operates as a subsidiary of Danaher Corporation.

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Comfort Systems, Watsco, nVent Electric - >>> 3 Super Stocks Trading Near All-Time Highs That You Can Still Buy


by Lee Samaha

Motley Fool

February 21, 2024


https://finance.yahoo.com/news/3-super-stocks-trading-near-133100241.html


There's always a reason why stocks trade near their all-time highs, usually because they are firing on all cylinders. That's certainly the case with Comfort Systems (NYSE: FIX), Watsco (NYSE: WSO), and nVent Electric (NYSE: NVT). All three have excellent tailwinds behind them, making them attractive stocks for investors who like to buy high and sell higher.

Comfort Systems (FIX)

You can always find pockets of growth in an economy, even in the slowing one we have now. One such pocket is shown in the remarkable chart below. According to the Department of the Treasury, the spending boom is "principally driven by construction for computer, electronic, and electrical manufacturing," partly encouraged by the CHIPS Act.

One way to make money from this trend comes from the mechanical and electrical contracting services company Comfort Systems. The company generates a third of its revenue from the manufacturing sector, with technology second at 21%. Given this exposure, it was no surprise to hear CEO Brian Lane say on the third-quarter earnings call in October, "Our revenue mix continues to trend toward data centers, life science, food and other manufacturing such as chip plants and battery."

Indeed, order strength led to the company's backlog rising to $4.3 billion at the end of the third quarter of 2023 compared to just $1.5 billion at the end of 2020.

If these trends continue, encouraged by ongoing demand for A.I. and semiconductor manufacturing in the U.S., then Comfort Systems' strong run can continue.

Watsco (WSO)

The heating, ventilation, air conditioning, and refrigeration (HVACR) equipment and parts distributor is one of those boring stocks that quietly goes on, generating stellar returns for investors almost unseen. The stock is up 1,560% over the last 20 years and 315% over the last decade, and has paid a dividend for 50 consecutive years.

It's an impressive record due to management's "buy and build" strategy. In a nutshell, Watsco is the leading player in a highly fragmented market for HVACR distribution characterized by myriad small local players serving localized markets. Its strategy involves expanding geographically by acquiring small distributors and improving its performance by adding products and technologies to the acquired distributors' offerings.

There's even more benefit to the "buy and build" strategy as Watsco continues to roll out technological improvements such as e-commerce-enabled websites, mobile apps, and digitized product information -- solutions making it much easier for technicians to order products from distributors.

Last year marked a year of consolidation following 16% sales growth in 2022 and 24% in 2021, as high levels of replacement demand occurred due to stay-at-home measures leading to high levels of equipment usage. It's an impressive result, and Wall Street analysts expect 6.4% growth in 2024. As such, Watsco can continue its remarkable track record of delivering returns for investors.

nVent Electric (NVT)

Alongside Comfort Systems and Watsco, nVent is another "boring" company that happens to deliver significant returns for investors. The electrical connection and protection product company's stock is up 135% over the last five years, driven by the electrification of everything trend.

The trend encompasses everything from AI and increasing demand for data centers and networks to electric vehicles and renewable energy driving demand for electrical installations. Industrial automation, smart buildings/infrastructure, and connected technologies require electrical installations, which means more demand for nVent's enclosures, fastening solutions, and heat tracing systems.

Led by an all-female CEO/CFO team, the company has attracted attention for its consistent record of beating and raising guidance. Management believes it's on track for organic growth of 3%-5% in 2024, with adjusted earnings per share up 4%-7% to hit a range of $3.17-$3.27. That may seem unimpressive, but consider that there's a headwind of $0.11 built into its guidance due to a change in tax standards. Without that, nVent would be heading for 7%-10% growth.

The electrification of everything trend is still in its early innings, and investors in nVent can expect many more years of growth from a company with an excellent track record of success.

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>>> nVent Electric plc (NVT), together with its subsidiaries, designs, manufactures, markets, installs, and services electrical connection and protection solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and internationally. The company operates through three segments: Enclosures, Electrical & Fastening Solutions, and Thermal Management.

The Enclosures segment provides solutions to protect electronics and data in mission critical applications, including data solutions. This segment also offers digital and automation solutions, system integrations, and global services.

The Electrical & Fastening Solutions segment provides solutions that connect and protect power and data infrastructure. This segment also offers power connections, fastening solutions, cable management solutions, grounding and bonding systems, and tools and test instruments.

The Thermal Management segment offers heat management solutions that protect people and assets. This segment includes heat tracing for freeze protection and process temperature maintenance and control; pipe freeze protection, surface deicing, hot water temperature maintenance, floor heating, fire-rated wiring, and leak detection; and heat trace systems, connected controls, remote monitoring, and annual service programs.

The company markets its products through electrical distributors, contractors, and original equipment manufacturers under the CADDY, ERICO, GARDNER BENDER, HOFFMAN, ILSCO, RAYCHEM, SCHROFF, and TRACER brand names. Its products are used for various applications, such as industrial, commercial and residential, infrastructure, and energy. nVent Electric plc was founded in 1903 and is based in London, the United Kingdom.

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>>> Watsco, Inc. (WSO), together with its subsidiaries, engages in the distribution of air conditioning, heating, refrigeration equipment, and related parts and supplies. The company distributes equipment, including residential ducted and ductless air conditioners, such as gas, electric, and oil furnaces; commercial air conditioning and heating equipment systems; and other specialized equipment. It also offers parts comprising replacement compressors, evaporator coils, motors, and other component parts; and supplies, such as thermostats, insulation materials, refrigerants, ductworks, grills, registers, sheet metals, tools, copper tubing, concrete pads, tapes, adhesives, and other ancillary supplies, as well as plumbing and bathroom remodeling supplies. The company serves contractors and dealers that service the replacement and new construction markets for residential and light commercial central air conditioning, heating, and refrigeration systems. It operates in the United States, Canada, Mexico, and Puerto Rico, as well as exports its products to Latin America and the Caribbean Basin. Watsco, Inc. was founded in 1945 and is headquartered in Miami, Florida.

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>>> What Makes Generac Holdings (GNRC) an Investment Choice?


Insider Monkey

by Soumya Eswaran

Feb 21, 2024


https://finance.yahoo.com/news/makes-generac-holdings-gnrc-investment-131705104.html


Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Strategy” fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund delivered 10.46% gross and 10.22% net of fees compared to a 12.75% return for the Russell 2000 Growth Index. The firm views the performance in many respects as evidence of the stability of its investment approach in the face of frequent and significant market swings. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Polen U.S. Small Company Growth Strategy featured stocks such as Generac Holdings Inc. (NYSE:GNRC) in the Q4 2023 investor letter. Headquartered in Waukesha, Wisconsin, Generac Holdings Inc. (NYSE:GNRC) is a power generation equipment, energy storage systems, and other power product manufacturer and supplier. On February 20, 2024, Generac Holdings Inc. (NYSE:GNRC) stock closed at $114.39 per share. One-month return of Generac Holdings Inc. (NYSE:GNRC) was 1.08%, and its shares lost 3.63% of their value over the last 52 weeks. Generac Holdings Inc. (NYSE:GNRC) has a market capitalization of $6.879 billion.

Polen U.S. Small Company Growth Strategy stated the following regarding Generac Holdings Inc. (NYSE:GNRC) in its fourth quarter 2023 investor letter:

"Generac Holdings Inc. (NYSE:GNRC) is the leading brand for a wide range of power equipment including standby generators for homes and backup power for commercial and industrial markets. Generac is uniquely positioned due to its scale–it’s the largest manufacturer in the U.S. and has the largest dealer/distributor network with 75% market share in the residential business and elevated market share in commercial/industrial depending on the end market. Generac was previously held in the U.S. SMID strategy prior to exiting the position in 2021 due to concerns around the supply chain and a wider range of potential outcomes given a surge in demand through the pandemic. Since then, earnings have declined as pandemic era pull-forward demand normalized and the valuation is far more attractive. We believe long-term earnings per share (EPS) growth is in the mid to high teens but that EPS will grow significantly faster over the next two years as margins inflect post COVID re-set—something we are already observing in the business fundamentals."

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>>> Comfort Systems USA Announces Acquisition


Business Wire

Feb 2, 2024


https://finance.yahoo.com/news/comfort-systems-usa-announces-acquisition-130000094.html


- Acquires Utah’s J & S Mechanical Contractors, Inc. -

HOUSTON, February 02, 2024--(BUSINESS WIRE)--Comfort Systems USA, Inc. (NYSE: FIX) (the "Company") today announced that it has acquired J & S Mechanical Contractors, Inc. ("J & S") headquartered in West Jordan, Utah.

J & S was founded in 1976 and provides mechanical construction services to commercial and industrial sectors across the Mountain West region of the United States. J & S works on many of the largest and most technical construction projects in their region. Initially, J & S is expected to contribute annualized revenues of approximately $145 million to $160 million, and earnings before interest, taxes, depreciation, and amortization of $12 million to $15 million. In light of the amortization expense, J & S is expected to make a neutral to slightly accretive contribution to earnings per share in 2024 and 2025.

Brian Lane, Comfort Systems USA’s Chief Executive Officer, commented, "We are extremely happy to announce that J & S is now a part of the Comfort Systems USA family of companies. J & S has deep roots and a strong reputation in Utah for providing extraordinary outcomes for its customers in industrial, institutional, and commercial markets. This partnership will increase our commitment to the vibrant markets of the Intermountain West, as J & S brings excellent expertise, capability, and leadership at all levels. J & S has earned its tremendous reputation and solid customer relationships thanks to its formidable workforce, and we are confident that the people of J & S will thrive as a part of our family of similar businesses."

Jack Jensen, President of J & S, commented, "We believe that Comfort Systems USA shares our core beliefs, including strong performance for our customers, growth and opportunity for our employees, and honesty and integrity in our daily business. We are happy to embark on this new stage in our development and we are committed to continuing to serve, innovate, grow, and thrive in both Utah and Nevada." Justin Barlow, Executive Vice President of J & S, added, "We chose Comfort Systems USA as the best answer for us to preserve our founders’ legacy of excellence and commitment to our community, while providing a bright future for our unmatched team members. We look forward to a strong partnership for our collective future."

Comfort Systems USA® is a leading provider of commercial, industrial, and institutional heating, ventilation, air conditioning and electrical contracting services, with 172 locations in 131 cities across the nation.

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Amphenol, Carlisle - >>> Electronics equipment maker Amphenol to buy Carlisle's unit for about $2 bln


Reuters

January 30, 2024


https://finance.yahoo.com/news/1-electronics-equipment-maker-amphenol-134720806.html


Jan 30 (Reuters) - Electronics equipment maker Amphenol said on Tuesday it plans to buy a unit of Carlisle Companies for about $2 billion in cash.

Carlisle Interconnect Technologies (CIT), the unit that supplies cables and connectors to defense and industrial end markets, is expected to broaden Amphenol's existing portfolio.

The deal comes at a time when Amphenol is seeing growing demand for its products as countries across the world expand their investments in defense technology amid the conflict in the Middle East and the Russia-Ukraine war.

The acquisition of CIT is expected to be accretive to Amphenol's earnings per share in the first year post-closing of the deal, the company said.

The deal is expected to close by the end of the second quarter of 2024 and will be financed through a combination of Amphenol's cash on hand and its existing credit and commercial paper facilities.

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>>> What Makes AAON (AAON) a Lucrative Investment?


Insider Monkey

by Soumya Eswaran

February 7, 2024


https://finance.yahoo.com/news/makes-aaon-aaon-lucrative-investment-112143112.html


Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In 2023, the fund (Institutional Shares) returned 22.58% outperforming the 18.66% return for the Russell 2000 Growth Index. In Q4, the fund returned 12.44% compared to a 12.75% return for the index. Since its inception, investors in the fund have earned an annualized return of 12.42%, resulting in a more than tripled investment. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Baron Discovery Fund featured stocks such as AAAON, Inc. (NASDAQ:AAON) in the fourth quarter 2023 investor letter. Headquartered in Tulsa, Oklahoma, AAON, Inc. (NASDAQ:AAON) is an air conditioning and heating equipment manufacturer. On February 6, 2024, AAON, Inc. (NASDAQ:AAON) stock closed at $72.07 per share. One-month return of AAON, Inc. (NASDAQ:AAON) was 0.31%, and its shares gained 40.29% of their value over the last 52 weeks. AAON, Inc. (NASDAQ:AAON) has a market capitalization of $5.855 billion.

Baron Discovery Fund stated the following regarding AAON, Inc. (NASDAQ:AAON) in its fourth quarter 2023 investor letter:

"AAON, Inc. (NASDAQ:AAON) is a high-quality manufacturer of HVAC equipment based in Tulsa, OK. It is a leader in providing premium, semi-custom HVAC equipment to the non-residential market with products that are more energy efficient, have longer life spans, and overall are better customized than peers to fit customers’ needs. This has driven significant outperformance over the past decade with organic growth in the high single-digit to low double-digit range compared to a low to mid-single-digit range for its peers.

Strong secular growth driven by decarbonization and broader ESG trends/ regulations is leading to greater demand for the types of products AAON specializes in such as energy efficient HVAC equipment that provides better air quality. To satisfy incoming regulations, peers have been forced to update their offerings and raise prices, while AAON today has ready-to-ship products satisfying all regulations. This dynamic is reducing the price premium between AAON’s products and the industry standards from 15% to 20% historically to a high single-digit level today. This price gap reduction is accelerating volume growth and enabling the company to take share. With the acquisition of BasX Solutions, a leader in data center, cleanroom systems, and custom HVAC units in December 2021, AAON expanded its addressable market by around 50% to over $30 billion in segments of the market where its focus on energy efficient units is extremely valuable. BasX’s adjusted cash flow (EBITDA) has roughly doubled over the past two years under AAON’s ownership. Lastly, CEO Gary Fields has undertaken a multi-year reorganization of the company’s management team and invigoration of company culture with a greater focus on selling and pushing the AAON solution from niche to mainstream. A simple illustration of the change brought by Gary is the opening of the exploration center this past April. This is a 28,000 square foot facility with over 10,000 square feet of exhibits and AAON products. We toured this facility at the company’s Analyst Day this past May where AAON units were placed next to competitor solutions. By purchasing and deconstructing competitors solutions, the team clearly highlighted the value of AAON’s superior products. They are more durable and have higher levels of efficiency. The team hoped that they would bring one to two potential customers a week to the center, but the demand has been so strong that one to two customers a day are visiting with a strong conversion from visits to eventual orders.

Going forward, with run-rate revenue at a little over $1 billion in a $30 billion market, there is ample opportunity ahead for AAON to grow and take market share. We expect mid-single-digit price increases across its product set along with mid-single-digit volume growth. The business is about 65% replacement/35% new construction with a mix of end-markets and limited exposure to new office construction. Given the growth opportunity ahead, the company is continuing to invest aggressively but at the same time has taken steps to maximize its physical footprint and, over time, will achieve greater levels of operating leverage. We believe the company will drive gross margins from the low 30% to the mid-high 30% levels with EBITDA margins expanding from the low to high 20% levels over our five year investment horizon. We calculate this combination of above market growth combined with significant margin expansion will allow us to double our investment over the next five years."

AAON, Inc. (NASDAQ:AAON) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held AAON, Inc. (NASDAQ:AAON) at the end of third quarter which was 19 in the previous quarter.

We discussed AAON, Inc. (NASDAQ:AAON) in another article and shared the list of best growth stocks to buy according to billionaire Ray Dalio’s Bridgewater Associates. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.

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Deere, Lincoln Elect, Mueller Indust - >>> Manufacturing Marvels: 3 Industrial Stocks Set for Success


Investor Place

by Will Ashworth

Jan 18, 2024


https://finance.yahoo.com/news/manufacturing-marvels-3-industrial-stocks-184428692.html


The S&P 500 generated a 24.23% return (26.44% with dividends) in 2023. Of the 11 sectors in the index, industrial stocks had the fourth-best performance, up 16.04%. Only technology (56.39%), communication services (54.36%), and consumer discretionary (41.04%) did better.

How did smaller industrial stocks do?

According to S&P Dow Jones Indices, industrials in the S&P MidCap 400 had a 30.10% return in 2023, the best performance of the 11 sectors. In the S&P SmallCap 600, industrial stocks returned 30.36%, the best-performing sector, behind only consumer discretionary at 30.74%.

So, as you can see, industrial stocks in the S&P Composite 1500, which makes up the three sub-indexes, had an excellent year.

Fidelity Investments’ outlook for industrial stocks in 2024 is quite encouraging. David Wagner, Fidelity Sector Portfolio Manager, stated:

“I believe the current environment offers reasons for bullishness on industrials. After decades of underinvestment in the U.S. industrial base, supply-chain difficulties during the pandemic and geopolitical tension have highlighted the advantages of greater U.S. self-sufficiency.”

So, industrial stocks should do well in 2024 and beyond unless we go into a severe recession this year.

Here are three that are set for success, one from each sub-index.


Deere & Co. (DE)

Representing the S&P 500 is Deere & Co. (NYSE:DE), One of the world’s leading agriculture and construction equipment manufacturers. In recent years, the Moline-based company has emphasized technology innovation for its end-user customers.

The more technologically advanced its customers are, the more profitable and successful they will be, leading to further purchases of their products. It’s Business 101.

The company estimates that its three addressable markets, Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry, generate more than $150 billion annually.

In 2015, Deere’s OROA (operating return on operating assets) was 15%. In 2022, it had increased to 40%. In 2022, its SVA (shareholder value added) — defined as NOPAT (net operating profit after tax) minus its cost of capital — was $5.8 billion, the highest amount since the company started using SVA as a critical measure in 2001.

DE stock is up 131% over the past five years, 1.7x the index.


Lincoln Electric (LECO)

Lincoln Electric (NYSE:LECO) represents the S&P MidCap 400. It has a 5-year return of 151%, 3x the index. I recently recommended the welding company’s stock as an income opportunity in addition to its capital appreciation potential.

Although its bread-and-butter is welding equipment, I like its move into DC fast EV chargers. American-made, they’ll do very well once America gets back on the renewable energy bandwagon.

In June 2020, I wrote about 10 cash-rich stocks to buy for peace of mind. The two metrics I used were free cash flow to net income, an indication of how much free cash flow a company generates from its net income — more than 100% is ideal — while the second was total cash to total debt. The higher, the better.

In the trailing 12 months ending September 30, 2023, Lincoln Electric’s free cash flow was $572 million, 115% of its $498 million net income. It’s over 100%. That’s good. Its cash was $343 million, 31% of its $1.11 billion in total debt. While it’s not overly cash-rich, it has plenty for its capital allocation decisions.

Its 1.3% yield is an excellent industrial stock for total returns.


Mueller Industries (MLI)

Mueller Industries (NYSE:MLI) represents the S&P SmallCap 600. It’s the top stock from a performance perspective over the past five years, up 259%.

The Memphis-based industrial company’s first sentence in its November presentation emphasizes why you must own MLI stock: “Profitable throughout all economic cycles.”

It doesn’t get much better than that. Or does it?

Mueller specializes in manufacturing copper and copper alloy products for many uses, including building construction, appliances, defense, energy and automotive. It also produces products made from aluminum, steel and plastics. Given it’s been around since 1917, it’s learned a thing or two about manufacturing quality products, which has led to tremendous financial performance.

Here are a few key numbers.

Its EBITDA margin in 2022 was 23% on $4.0 billion in revenue. It had a net debt of $0 at the end of 2022. That hasn’t changed. It’s got a net cash position of $1.07 billion. Its return on invested capital is a high 42%. About 85% of its $4 billion in revenue have operating margins of 24-29%, which helps explain its $11.64 per share earnings in 2022.

Its products touch every part of America. The demand for its products isn’t going away.

As for cash-rich companies, it meets the test. In the trailing 12 months ended Sept. 30, its free cash flow was $658 million, 106% of its $623 million in net income. Its cash was $1.11 billion, 3,154% of its $35 million in total debt.

What’s not to like?

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>>> Lincoln Electric Holdings, Inc. (LECO, through its subsidiaries, designs, develops, manufactures, and sells welding, cutting, and brazing products worldwide. The company operates through three segments: Americas Welding, International Welding, and The Harris Products Group. It offers brazing and soldering filler metals, arc welding equipment, plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, and specialty gas regulators, as well as consumables used in the brazing and soldering alloys market. In addition, it is involved in the retail business in the United States. Further, the company manufactures copper and aluminum headers, distributor assemblies, and manifolds for the heating, ventilation, and air conditioning sector in the United States and Mexico. The company serves general fabrication, energy and process, automotive and transportation, and construction and infrastructure industries, as well as heavy fabrication, ship building, and maintenance and repair markets. It sells its products directly to users of welding products, as well as through industrial distributors, retailers, and agents. The company was founded in 1895 and is headquartered in Cleveland, Ohio.

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>>> RELX PLC (RELX), together with its subsidiaries, provides information-based analytics and decision tools for professional and business customers in North America, Europe, and internationally. It operates through four segments: Risk; Scientific, Technical & Medical; Legal; and Exhibitions.

The Risk segment offers information-based analytics and decision tools that combine public and industry specific content with technology and algorithms to assist clients in evaluating and predicting risk.

The Scientific, Technical & Medical segment provides information and analytics that help institutions and professionals to progress in science and advance healthcare.

The Legal segment provides legal, regulatory, and business information and analytics that help customers in decision-making, as well as increases the productivity.

The Exhibitions segment is involved in the business that combines face-to-face with data and digital tools to help customers learn about markets, source products, and complete transactions. The company was formerly known as Reed Elsevier PLC and changed its name to RELX PLC in July 2015. RELX PLC was incorporated in 1903 and is headquartered in London, the United Kingdom.

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>>> Tetra Tech, Inc. (TTEK) provides consulting and engineering services in the United States and internationally. The company operates through two segments, Government Services Group (GSG) and Commercial/International Services Group (CIG).

The GSG segment offers early data collection and monitoring, data analysis and information management, science and engineering applied research, engineering design, project management, and operations and maintenance services; and climate change and energy management consulting, as well as greenhouse gas inventory assessment, certification, reduction, and management services. This segment serves federal, state, and local governments; and development agencies in water resources analysis and water management, environmental monitoring, data analytics, government consulting, waste management, and a range of civil infrastructure master planning and engineering design markets.

The CIG segment provides early data collection and monitoring, data analysis and information management, feasibility studies and assessments, science and engineering applied research, engineering design, project management, and operations and maintenance services; and environmental remediation and reconstruction services, and industrial water treatment services. This segment serves natural resources, energy, and utilities markets, as well as sustainable infrastructure master planning and engineering design for facilities, transportation, and local development projects. Tetra Tech, Inc. was founded in 1966 and is headquartered in Pasadena, California.

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>>> Illinois Tool Works Inc. (ITW) manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.

The Automotive OEM segment offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks, and other industrial uses.

The Food Equipment segment provides warewashing, refrigeration, cooking, and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services.

The Test & Measurement and Electronics segment produces and sells equipment, consumables, and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics.

The Welding segment produces arc welding equipment; and metal arc welding consumables and related accessories.

The Polymers & Fluids segment produces adhesives, sealants, lubrication and cutting fluids, and fluids and polymers for auto aftermarket maintenance and appearance.

The Construction Products segment offers engineered fastening systems and solutions for the residential construction, renovation/remodel, and commercial construction markets.

The Specialty Products segment offers beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners. It serves the automotive OEM/tiers, commercial food equipment, construction, general industrial, and automotive aftermarket end markets. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is based in Glenview, Illinois.

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>>> Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems.

The Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to ensure purity and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors used in fluid and gas handling; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment. This segment sells its products to original equipment manufacturers (OEMs) and distributors who serve the replacement markets in manufacturing, packaging, processing, transportation, construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries.

The Aerospace Systems segment offers products for use in commercial and military airframe and engine programs, such as control actuation systems and components, engine build-up ducting, engine exhaust nozzles and assemblies, engine systems and components, fluid conveyance systems and components, fuel systems and components, fuel tank inerting systems, hydraulic systems and components, lubrication components, avionics, sensors, pneumatic control components, thermal management products, fire detection and suppression systems and components, and wheels and brakes, as well as fluid metering, delivery, and atomization devices. This segment markets its products directly to OEMs and end users. The company markets its products through direct-sales employees, independent distributors, and sales representatives. Parker-Hannifin Corporation was founded in 1917 and is headquartered in Cleveland, Ohio.

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>>> Hubbell Incorporated (HUBB), together with its subsidiaries, designs, manufactures, and sells electrical and utility solutions in the United States and internationally. It operates through two segments, Electrical Solutions and Utility Solutions. The Electrical Solution segment offers standard and special application wiring device products, rough-in electrical products, connector and grounding products, lighting fixtures, and other electrical equipment for use in industrial, commercial, and institutional facilities by electrical contractors, maintenance personnel, electricians, utilities, and telecommunications companies, as well as components and assemblies. It also designs and manufactures various industrial controls, and communication systems for use in the non-residential and industrial markets, as well as in the oil and gas, and mining industries. This segment sells its products through electrical and industrial distributors, home centers, retail and hardware outlets, lighting showrooms, and residential product-oriented internet sites; and special application products primarily through wholesale distributors to contractors, industrial customers, and original equipment manufacturers. The Utility Solution segment designs, manufactures, and sells electrical distribution, transmission, substation, and telecommunications products, such as arresters, insulators, connectors, anchors, bushings, and enclosures cutoffs and switches; and utility infrastructure products, including smart meters, communications systems, and protection and control devices. This segment sells its products to distributors. Its brand portfolio includes Hubbell, Kellems, Bryant, Burndy, CMC, Bell, TayMac, Wiegmann, Killark, Hawke, Aclara, Fargo, Quazite, Hot Box, etc. The company was founded in 1888 and is headquartered in Shelton, Connecticut.

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>>> EMCOR Group, Inc. (EME) provides electrical and mechanical construction, and facilities services primarily in the United States and the United Kingdom. It offers design, integration, installation, start-up, operation, and maintenance services related to electrical power transmission, distribution, and generation systems; energy solutions; premises electrical and lighting systems; process instrumentation in the refining, chemical processing, and food processing industries; low-voltage systems, such as fire alarm, security, and process control systems; voice and data communications systems; roadway and transit lighting, signaling, and fiber optic lines; heating, ventilation, air conditioning, refrigeration, and geothermal solutions; clean-room process ventilation systems; fire protection and suppression systems; plumbing, process, and high-purity piping systems; controls and filtration systems; water and wastewater treatment systems; central plant heating and cooling systems; crane and rigging services; millwright services; and steel fabrication, erection, and welding services. The company also provides building services that cover commercial and government site-based operations and maintenance; facility management, maintenance, and services; outage services to utilities and industrial plants; military base operations support services; mobile mechanical maintenance and services; services for indoor air quality; floor care and janitorial services; landscaping, lot sweeping, and snow removal services; vendor management and call center services; installation and support for building systems; program development, management, and maintenance for energy systems; technical consulting and diagnostic services; infrastructure and building projects; small modification and retrofit projects; and other building services. It offers industrial services to oil, gas, and petrochemical industries. The company was incorporated in 1987 and is headquartered in Norwalk, Connecticut.

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>>> Applied Industrial Technologies, Inc. (AIT) distributes industrial motion, power, control, and automation technology solutions in North America, Australia, New Zealand, and Singapore. It operates in two segments, Service Center Based Distribution, and Engineered Solutions. The company distributes bearings, power transmission products, engineered fluid power components and systems, specialty flow control solutions, advanced automation products, industrial rubber products, linear motion components, automation solutions, tools, safety products, oilfield supplies, and other industrial and maintenance supplies; and motors, belting, drives, couplings, pumps, hydraulic and pneumatic components, filtration supplies, valves, fittings, process instrumentation, actuators, and hoses, filtration supplies, as well as other related supplies for general operational needs of customers' machinery and equipment. It also operates fabricated rubber shops and service field crews that install, modify, and repair conveyor belts and rubber linings, as well as offer hose assemblies. In addition, the company provides technical support services; engages in the distribution of fluid power and industrial flow control products; advanced automation solutions, including machine vision, robotics, motion control, and smart technologies. It distributes industrial products through a network of service centers. The company serves various industries, including agriculture and food processing, cement, chemicals and petrochemicals, fabricated metals, forest products, industrial machinery and equipment, life sciences, mining, oil and gas, primary metals, technology, transportation, and utilities, as well as government entities. The company was formerly known as Bearings, Inc. and changed its to name to Applied Industrial Technologies, Inc. in 1997. The company was founded in 1923 and is headquartered in Cleveland, Ohio.

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>>> Deere & Company (DE)


https://www.insidermonkey.com/blog/5-best-mario-gabelli-stocks-other-billionaires-are-also-piling-into-1235826/2/


Number of Billionaire Investors In Q3 2023: 14

Deere & Company (NYSE:DE) is one of the world’s biggest industrial machinery firms known for its tractors, crawlers, and other products. More than three quarters of its stock is owned by institutional investors, indicating a strong foundation but also implying low liquidity.

During September 2023, 55 out of the 910 hedge funds profiled by Insider Monkey were the firm’s shareholders. Deere & Company (NYSE:DE)’s biggest hedge fund investor is Michael Larson’s Bill & Melinda Gates Foundation Trust as it owns $1.4 billion worth of shares.

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>>> U.S. Space Force Awards Booz Allen $630M Systems Engineering and Integration Contract


Business Wire

October 4, 2023


https://finance.yahoo.com/news/u-space-force-awards-booz-120000256.html


Booz Allen to support engineering and integration of space sensing systems


MCLEAN, Va., October 04, 2023--(BUSINESS WIRE)--Booz Allen Hamilton (NYSE: BAH) announced today it was awarded a seven-year, $630-million, single-award contract with the U.S. Space Force to support systems engineering and integration of next-generation space-based missile warning, environmental monitoring, and surveillance, reconnaissance, and tracking. As part of this work, Booz Allen will support Space Systems Command (SSC)—the Space Force field command for space development, acquisition, launch, and logistics—in engineering resilient space sensing capabilities. In addition, the firm will integrate the Next Generation Overhead Persistent Infrared (OPIR) program, a $14.4 billion program to upgrade U.S. missile warning and missile tracking capabilities to combat emerging missile threats.

This contract will leverage Booz Allen’s capabilities and mission expertise in digital engineering, mission integration, agile software development, cybersecurity, change management, AI, and machine learning (ML) to help the Space Force achieve its vision for a Digital Service. It also demonstrates the criticality of the space domain in delivering key decision-making information to warfighters and intelligence agencies to protect the nation.

"Booz Allen has been a trusted partner for defense, national security, and civil space missions for more than 50 years, starting with the nation's first missile defense strategy," said Andrea Inserra, executive vice president and leader in Booz Allen’s Aerospace business, which includes critical work for the U.S. Air Force, Space Force, U.S. Space Command, and NASA. "This is an exciting moment for Booz Allen, and we are thrilled to continue building upon our partnership with Space Force and the Department of Defense for critical missions aimed at accelerating and maintaining space superiority and driving information to action—no matter the domain."

Work on the contract will primarily take place in El Segundo, California, and Colorado Springs and Aurora, Colorado, with the ability to leverage teams and technology capabilities at additional U.S. locations as needed.

"This contract win is a key element of Booz Allen’s long-term, multiyear space strategy to meet client needs at the intersection of mission and technology," said Eric Hoffman, vice president and leader in Booz Allen’s space business. "This partnership reaffirms Booz Allen’s position as a leader in building and delivering world-class, mission-critical systems engineering, cyber architecture, and remote sensing capabilities to sustain U.S. space superiority."

This win builds on Booz Allen’s deep history in space solutions. The firm’s work includes over 50 years of multifaceted support for the International Space Station, modernization of NASA’s infrastructure and policies, engineering and analysis for the Artemis mission, and the Cybersecurity and Privacy Enterprise Solutions and Services (CyPrESS) contract—the first time NASA has united cybersecurity for IT, operational technology, and mission systems under one contract.

For more information about Booz Allen’s space solutions, visit here, and for more information on space careers, visit Booz Allen’s open space positions here.

About Booz Allen Hamilton

Trusted to transform missions with the power of tomorrow’s technologies, Booz Allen Hamilton advances the nation’s most critical civil, defense, and national security priorities. We lead, invest, and invent where it’s needed most—at the forefront of complex missions, using innovation to define the future. We combine our in-depth expertise in AI and cybersecurity with leading-edge technology and engineering practices to deliver impactful solutions. Combining more than 100 years of strategic consulting expertise with the perspectives of diverse talent, we ensure results by integrating technology with an enduring focus on our clients. We’re first to the future—moving missions forward to realize our purpose: Empower People to Change the World®.

With global headquarters in McLean, Virginia, our firm employs more than 32,600 people globally as of June 30, 2023 and had revenue of $9.3 billion for the 12 months ended March 31, 2023.

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UFPI - >>> DECKORATORS® VOYAGE DECKING RECOGNIZED IN GOOD HOUSEKEEPING'S 2023 HOME RENOVATION AWARDS


PR Newswire

October 9, 2023


https://finance.yahoo.com/news/deckorators-voyage-decking-recognized-good-142800731.html


GRAND RAPIDS, Mich., Oct. 9, 2023 /PRNewswire/ -- Deckorators®, a leading brand of UFP Industries, Inc. (Nasdaq: UFPI), announced today that its patented Voyage Mineral-Based Composite Decking has been recognized in the prestigious Good Housekeeping 2023 Home Renovation Awards. A full list of winners can be found at

https://www.goodhousekeeping.com/home/renovation/a44870187/home-renovation-awards-2023/.

"We are honored to have our Voyage Decking line recognized with this award," says Michelle Hendricks, Deckorators Category Marketing Manager. "Voyage was specially designed to provide a timeless, versatile look for outdoor living spaces that will stand the test of time."

Deckorators Voyage Decking features a patented mineral-based composite technology that produces a fiber-like structure like wood. It has unmatched strength yet is nearly 35% lighter than other composites. With unique textured embossing for greater surface traction, Voyage is ideal for decks as well as areas around pools, spas, and hot tubs. Voyage Varied-plank Decking is available in four widths and six hues, allowing contractors and do-it-yourselfers to create custom wood-look floors.

"Homeowners are moving away from playing it safe in their outdoor living designs," Hendricks continues. "Now more than ever, they're seeking opportunities to add personality into those spaces. Our Voyage line was developed with that in mind, offering countless combinations for customization."

Compared to other multi-width decking options composed of PVC, Voyage Varied-plank Decking is stronger, allows less thermal movement and absorbs less moisture allowing Deckorators to back Voyage with industry-leading 50-year structural and 25-year stain-and-fade limited warranties.

Deckorators' growing network of more than 800 contractors across North America brings outdoor living to life nationwide.

About Deckorators

Deckorators, the first name in decking, railing and accessories, invented the low-maintenance aluminum balusters category and has since led the industry with innovative decking and railing products. With dependably on-trend designs, Deckorators lets DIYers and builders extend their creative ideas from a home's interior to its outdoor living spaces. Deckorators is a brand of UFP Retail Solutions, LLC, a UFP Industries company.

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>>> General Electric Company (NYSE:GE) -- Goldman Sachs’ Stake Value: $443,959,690


https://www.insidermonkey.com/blog/goldman-sachs-defense-stocks-top-5-stock-picks-1190422/2/


Number of Hedge Fund Holders: 71

General Electric Company (NYSE:GE) operates as a high-tech industrial company worldwide. It offers gas and steam turbines, power generation solutions, and data-driven software for different sectors. Additionally, General Electric Company (NYSE:GE) designs and produces commercial and military aircraft engines, integrated engine components, electric power, and mechanical aircraft systems. It is one of the best Goldman Sachs defense stocks. In Q2 2023, Goldman Sachs held a $444 million stake in General Electric Company (NYSE:GE).

On July 25, General Electric Company (NYSE:GE) reported a Q2 non-GAAP EPS of $0.68 and a revenue of $16.7 billion, outperforming Wall Street consensus by $0.22 and $1.55 billion, respectively.

According to Insider Monkey’s second quarter database, 71 hedge funds were bullish on General Electric Company (NYSE:GE), up from 59 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the leading stakeholder of the company, with 41.6 million shares worth $4.5 billion.

Vulcan Value Partners made the following comment about General Electric Company (NYSE:GE) in its Q1 2023 investor letter:

“General Electric Company (NYSE:GE) was a material contributor during the quarter. With the successful spin-off of GE HealthCare in early January, the company operates in two major markets: GE Aerospace and GE Vernova. GE Aerospace powers three out of every four commercial flights. GE Vernova helps generate 30% of the world’s electricity and has a meaningful role to play in the energy transition. The company’s service activities, which are higher margin and more resilient, represent approximately 60% of revenue and 85% of its backlog. The company reported strong fourth quarter 2022 results and management’s 2023 outlook is positive.”

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>>> Caterpillar Stock : More Recession-Resistant Than You’d Think


Tip Ranks

by Nikolaos Sismanis

Apr 12, 2023


https://www.tipranks.com/news/article/caterpillar-stock-nysecat-more-recession-resistant-than-youd-think


Story Highlights

Caterpillar is more recession-resistant than investors realize, with strong industry tailwinds shielding its performance against a potential market downturn. Its focus on services and strong backlog should also contribute to this rationale.

Given the cyclical nature of its industry, Caterpillar (NYSE:CAT) is often expected to bear the brunt of a recession, leading to a significant impact on its financial performance. With market uncertainty remaining elevated against the backdrop of a tumultuous macroeconomic environment, it makes sense for investors to consider Caterpillar as a rather risky investment these days. While this is technically true, Caterpillar is more recession-resistant than most investors realize.

Planned infrastructure spending remains elevated, benefiting Caterpillar’s results, while its backlog continues to grow, shielding the company against short-term uncertainties. Furthermore, the company’s focus on services is gradually transitioning its revenue mix to a more predictable one, strengthening its position and making it more resilient to potential market downturns.

Coupled with its commitment to rewarding shareholders and the fact that the stock is trading at a reasonable valuation, I am bullish on Caterpillar.

Strong Infrastructure Spending Drives Solid Results

Caterpillar is enjoying a significant boost in demand thanks to record-high infrastructure spending that stems from the 2021 bipartisan Infrastructure Investment and Jobs Act. The legislation provides $1.2 trillion in funding expected to be spent over a five-year period, with a primary focus on road, bridge, and large-scale projects. In fact, as of October 2022, approximately 60% of the $185 billion infrastructure spending was attributed to these key areas.

Given Caterpillar’s leadership in the production of construction equipment and heavy machinery needed to complete these projects, the company is among the top beneficiaries of the bill. This is evidenced by its recent financial performance.

Caterpillar’s 2022 revenues saw a substantial increase of 17% from the previous year, reaching $59.4 billion. The growth can be attributed to higher sales volumes, boosted by favorable price realization and the impact of changes in dealer inventory.

Importantly, the company’s Q4 revenue growth of 20.3% indicates strong upward momentum for upcoming quarters. This is further evidenced by the fact that the company’s backlog rose by $400 million in Q4, bringing the year-end total to $30.4 billion, a 32% increase from the previous year.

These figures should sufficiently exemplify the company’s continued success in a favorable market environment and potential for sustained growth. Regardless, a potential recession is unlikely to result in worsening financials in the short term, given the planned infrastructure spending and growing backlog.

Growth in Services to Enhance Revenue Mix

Caterpillar has taken another strategic step by focusing on the growth of its Services segment. Growing Services revenues should have a positive impact on the company’s revenue mix and improve cash-flow predictability. This is because, through this initiative, Caterpillar is essentially attempting to convert its equipment sales into a source of recurring revenue. This should enhance Caterpillar’s ability to withstand potential economic downturns, further strengthening its resilience to a potential market downturn.

Last year, Caterpillar experienced a noteworthy surge in its Services revenues, reaching $22 billion, marking a 17% increase from the previous year. This growth was propelled by the company’s persistent drive to promote its services through strategic initiatives and investments, as well as effective price realization.

Caterpillar’s assets also grew, having 1.4 million connected assets, up from 1.2 million in 2021. The launch of the company’s new e-commerce app, Cat Central, further amplified its growth in this area. With the highest level of parts availability to date, along with a robust Services segment, the company projects that its Services revenues will hit $28 billion by 2026.

Strong Profitability Boosts Dividends, Buybacks

With strong revenue growth following favorable pricing and sales volumes, Caterpillar has been able to record a strong boost in its profitability. This growth has allowed the company to achieve impressive economies of scale, reflected in an adjusted operating margin of 15.4% in 2022 compared to 13.7% in 2021. The combination of higher revenues and margins has led to even more impressive earnings growth, with adjusted earnings per share skyrocketing by 28% to $13.84.

Thus, Caterpillar was able to increase its rewards to shareholders rather comfortably. In 2022, the company demonstrated its commitment to creating shareholder value by increasing its dividend for the 29th consecutive year. The noteworthy 8.1% hike led to an annualized dividend rate of $4.80, which currently translates to a yield of 2.2%.

The company also took advantage of its boosted profitability to buy back $4.2 billion worth of stock, significantly more than the $2.7 billion repurchased in 2021. Growing capital returns, coupled with strong revenue and earnings growth visibility, should keep stimulating investor interest in the stock. This is also likely to contribute to the stock potentially outperforming the market in the event of a market downturn.

Is CAT Stock a Buy, According to Analysts?

Turning to Wall Street, Caterpillar has a Hold consensus rating based on five Buys, seven Holds, and three Sells assigned in the past three months. At $243.07, the average Caterpillar stock price target implies 10.2% upside potential.

The Takeaway

Caterpillar is currently benefiting from record infrastructure spending, which has led to growing revenues, expanding margins, and record profits. This trend is expected to last over the next few years, which should shield the company from a potential recession in the near term. In the meantime, Caterpillar’s focus on growing its Services segment should improve its revenue mix, making it a more resilient company to potential market downturns further down the future.

Overall, Caterpillar’s ongoing momentum, strong capital returns, and the fact that shares are trading at about 13.85x this year’s projected earnings (about 22% lower than its five-year average forward earnings multiple) form a bullish blend for the stock, in my view.

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>>> Caterpillar or Deere: Which Is the Better Investment?


Yahoo Finance

by Jonathan Poland

April 26, 2023


https://finance.yahoo.com/news/caterpillar-deere-better-investment-141241587.html


It could be argued that Deere & Co. (NYSE:DE) and Caterpillar Inc. (NYSE:CAT) have a virtual monopoly on the farm and heavy construction equipment market. While there is some overlap in the equipment offered by these companies, each dominates separate industries. However, both have incredible brand power and financial metrics.

About Deere

Deere & Co., commonly known as John Deere, is a leading global manufacturer of agricultural, construction and forestry machinery, diesel engines, drivetrains (axles, transmissions, gearboxes) and precision agriculture technology. The company was founded by John Deere in 1837 and has a strong global presence, with manufacturing facilities in the U.S, Europe, Asia and South America. The companys products are distributed through a vast network of dealers, distributors and retail outlets worldwide. Collectively, these added up to nearly $52 billion in revenue during 2022.

That said, Deere generates the bulk of its revenue (86%) from two primary business segments, Agriculture & Turf Equipment at $34 billion and Construction & Forestry Equipment at $11.3 billion.

The Agriculture & Turf Equipment division is the largest business, accounting for 65% of total revenue. This segment includes the sale of tractors, combines, harvesters and other machinery used to plant, cultivate and harvest crops. The Construction & Forestry Equipment unit accounts for 21% of total revenue. This segment includes the sale of backhoes, excavators, loaders and other machinery used to build and maintain roads, bridges and other infrastructure.

The two other services are worth billions to the company as well. The Financial Services segment accounted for 6% of total revenue, or $3.2 billion in 2022, providing financing and insurance products to Deere's customers. The Other segment accounted for 8% of total revenue, or $4.1 billion, and includes the sale of parts, services and other products and services.

About Caterpillar

Caterpillar Inc. (NYSE:CAT), often referred to simply as "CAT," was created nearly 100 years after Deere in 1925 through the merger of the Holt Manufacturing Co. and the C. L. Best Tractor Co. Today, the company's products are used in a variety of industries, including construction, mining, energy, transportation and agriculture. The revenue breakdown is pretty straightforward, all told adding up to $59.40 billion during 2022.

Machinery is largest source of revenue for Caterpillar, accounting for approximately 70% of total sales. The company sells a wide range of machinery, including construction equipment, mining equipment, diesel engines and natural gas engines. Engine sales account for around 15% of total revenue.

Finally, Caterpillar has a variety of related products and services, accounting for roughly 15% of total revenue.

What's the difference?

While Caterpillar and Deere may sell similar products, the companies are industry leaders by addressing completely separate markets with notable differences that distinguish them.

One of the most significant differences is in agricultural equipment. Deere is a leading manufacturer of agricultural machinery, offering products such as tractors, combines, cotton harvesters, balers, sprayers, planters, tillage equipment and mowers. Caterpillar, on the other hand, has a more limited agricultural product line, primarily offering Challenger tractors and some hay and forage equipment.

Deere also has a dedicated forestry equipment segment, which includes products like forwarders, skidders, feller bunchers and knuckleboom loaders. Caterpillar does offer some forestry equipment, but has a more limited range.

While both Caterpillar and John Deere manufacture construction equipment, their product offerings differ slightly. Caterpillar has a more extensive range of construction machinery, including products such as motor graders, pipelayers and paving equipment, which are not part of Deere's core product lineup. Deere, on the other hand, focuses primarily on equipment like excavators, backhoes, wheel loaders, dozers and compact equipment. One caveat is that in 2017, with its acquisition of Wirtgen, Deere became a more prominent player in this segment behind Caterpillar and Komatsu. Long term, Deere is not likely to surpass Caterpillar, but the acquisition could take market share away from it.

The bottom line is that these companies cater to different end users for the most part and have distinct brand identities. Caterpillar is known for its dominance in the heavy construction, mining and energy sectors, whereas Deere is primarily recognized for its agricultural and landscaping equipment.

Brand dominance

Caterpillar has consistently delivered reliable, top-quality products to its customers, offering the lowest overall cost of ownership throughout its history. This commitment to excellence has placed Caterpillar as one of the world's most valuable brands. The company is well-positioned to benefit from favorable trends in the construction sector with a huge gain from the $1.2 trillion U.S. infrastructure deal, as the nation faces a significant backlog of road construction projects. In the energy industry, the rebound in oil prices since the Covid-19 floor should prompt exploration and production companies to boost capital spending, which is good news for Caterpillar's oil well servicing products.

As for Deere, the same bio applies and so does a wide economic moat with strong durable competitive advantage. The companys dealer network is a huge differentiator, distributing products and proprietary aftermarket parts and services across numerous regions. With over 2,000 dealer locations in North America and around 3,700 worldwide, the company has a significant presence on every continent. More importantly, dealers are typically large organizations dedicated solely to selling Deere products. It would be nearly impossible for anyone, let alone upstarts, to replicate the scope and coverage of this network.

Financial dominance

Caterpillar and Deere are boring companies. Neither will produce 10 times returns. However, they will not destroy shareholder value either. Both have nearly the same market capitalization, gross margins, return on equity and forward earnings multiples. Since 2001, Deere has driven annual revenue up from $13.8 billion to $55.6 billion. Caterpillar has a similar story, growing sales from $20.4 billion to more than $59 billion since the turn of the century.

Deere has a slight advantage in terms of growth potential and current net profit. On the bottom line, it generates $38,000 more per employee, which translated to $8.2 billion in the last 12 months versus Caterpillars $6.7 billion. However, Deere carries significantly more total debt - $55.6 billion versus $37.5 billion.

Further, both companies have paid out dividends for 33 straight years and Caterpillar has recorded 29 years of dividend growth. For me, it is a toss up, which is why investing in both stocks would make the most sense.

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>>> Deere Hoists Guidance After Earnings Beat. Why DE Stock Fell.

Deere earnings topped views on strong farm equipment sales


Investor's Business Daily

APARNA NARAYANAN

05/19/2023


https://www.investors.com/news/deere-earnings-q2-de-stock-caterpillar-outlook/


Deere (DE) guided higher for fiscal 2023 early Friday, after easily topping earnings estimates for its second quarter on healthy equipment demand. DE stock jumped to seize a key level, then reversed lower.

On an earnings call, Deere management indicated that Q2 results benefited from a pull-forward of production from the latter half of 2023.

That led to concerns about a sequential sales decline in the current third quarter, with Q2 marking the year's production peak, analysts said.

Deere may have "to manage inventory levels with lower production, so as to exit the year in good shape given the increasing end market concerns due to lower crop prices," William Blair analyst Lawrence De Maria told IBD in an email.

Tractor maker Deere is seen as a bellwether for the farm economy. It also makes heavy machinery for the construction and forestry markets.

Deere Earnings

Estimates: For the quarter ended April 30, Deere earnings were forecast to grow 26% to $8.58 per share, according to FactSet consensus estimates. Total revenue was seen rising nearly 20% vs. a year earlier to $15.993 billion.

Results: Deere earnings jumped 42% to $9.65 a share, though that's a slowdown from 124% in the first quarter. Revenue swelled 30% to $17.39 billion, above expectations, but still the second straight quarter of slowing sales growth.

Production and precision agriculture sales leapt 53%. Smaller agriculture and turf sales grew 16%. Construction and forestry sales rose 23%.

"Deere continues to benefit from favorable market conditions and an improving operating environment," CEO John May said in the Deere earnings release.

"Though supply-chain constraints continue to present a challenge, we are seeing further improvement," May added.

Outlook: Deere now sees full-year net income of $9.25 billion-$9.50 billion, vs. its prior target of $8.75 billion-$9.25 billion. Analysts had forecast net income of $9.06 billion, FactSet shows.

DE Stock Reverses Lower

Shares of Deere closed down 1.9% to 363.55 on the stock market today, falling back below the 50-day moving average. DE stock had gapped up as much as 6% to 393 in the Friday morning session, clearing the 50-day for the first time since early April.

Deere stock peaked last November and has been trending lower, with the 10-week moving average now below the 40-week line, the MarketSmith chart shows.

Caterpillar (CAT), CNH Industrial (CNHI) and United Rentals (URI) are also heading lower and below key levels. CAT stock was almost unchanged, at 214.79, Friday. CNHI stock lost 0.1% while URI stock rose 1.3%.

'Prudent' Move On Production

Deere management "is prudently limiting production to ensure inventories at the dealer level remain lean," Edward Jones analyst Matt Arnold told IBD Friday.

That "should set up another solid year in 2024," he added.

The move comes with the outlook for Deere's end markets under scrutiny.

The World Bank projects agricultural commodity prices will drop 7% this year and will likely fall again in 2024, the Texas Farm Bureau said on May 18.

Prices for all types of farm equipment soared in recent years for reasons very similar to those that drove automobile prices to record levels. As supply chain issues and demand begin to balance, lower farm commodity prices could place additional pressure on farm equipment sales.

In April, construction giant Caterpillar gave a lackluster outlook for equipment sales as well. United Rentals, which rents out scissor lifts and a range of heavy equipment, turned in a mixed report the same month.

Year to date, Deere stock is down around 15%. It pays a 1.3% dividend yield.

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>>> Builders FirstSource Reports First Quarter 2023 Results


Business Wire

May 3, 2023


https://finance.yahoo.com/news/builders-firstsource-reports-first-quarter-110000182.html


Net sales of $3.9 billion, a decrease of 31.6%

Net income of $333.8 million

Earnings per diluted share of $2.41 per share

Adjusted EBITDA of $631.7 million at a margin of 16.3%

Repurchased 7.5 million common shares totaling $627.6 million, a 5.4% reduction of shares outstanding


DALLAS, May 03, 2023--(BUSINESS WIRE)--Builders FirstSource, Inc. (NYSE: BLDR) today reported its results for the first quarter ended March 31, 2023.

First Quarter 2023 Highlights

All Year-Over-Year Comparisons Unless Otherwise Noted:

Net sales decreased 31.6% to $3.9 billion driven by declining single-family starts and commodity deflation, partially offset by growth from acquisitions and one additional selling day.

Gross profit margin percentage increased 300 basis points to 35.3% primarily driven by increased Multi-Family value-added product category mix.

Net income decreased 47.8% to $333.8 million, or $2.41 per diluted share compared to $3.56 in the prior year period, and adjusted net income decreased 41.5% to $410.3 million, or $2.96 per diluted share compared to $3.90 in the prior year period.

Adjusted EBITDA decreased 36.9% to $631.7 million, mainly driven by a decline in net sales and commodity deflation. Adjusted EBITDA margin declined by 130 basis points to 16.3%.

Cash provided by operating activities was $654.4 million, up $474.6 million compared to the prior year period, while free cash flow was $554.5 million, up $423.0 million compared to the prior year period.

Strong quarter-end balance sheet with liquidity of $1.4 billion and a net debt to LTM Adjusted EBITDA ratio of 0.8x.

Repurchased 7.5 million shares of common stock at an average price of $83.17 for $627.6 million, inclusive of fees and taxes.

"We are proud of our results for the first quarter given the challenging macro backdrop. We were able to exceed our forecasts through the strength of our product portfolio, continued execution of our strategic priorities, and the tireless effort of our team members," commented Dave Rush, CEO of Builders FirstSource. "Our best-in-class end market exposure and distribution footprint, in addition to our unrelenting focus on operational excellence, are guiding us through this complex operating environment. We remain committed to enhancing our customer relationships by being the easiest to do business with. Our continued investments in value-added products, productivity initiatives, and digital solutions all work to reduce cycle times and costs, making homebuilding more affordable and efficient. Given our differentiated platform, experienced management team, and clear focus on delivering value-added solutions to our customers, we are well-positioned to outperform."

Mr. Rush continued, "In addition to our focus on profitable organic growth and improving mix, we remain committed to growing through accretive acquisitions. Our recent tuck-in acquisitions allow us to further expand our value-added offerings and reach a more diverse customer base in what we consider to be very attractive markets."

Peter Jackson, CFO of Builders FirstSource, added, "I am pleased with our results in the first quarter. We generated free cash flow of approximately $554.5 million as we leveraged our best-in-class operating platform and extended our track record of effective cost containment and working capital management. We remain disciplined stewards of capital, making another valuable acquisition, and repurchasing $627.6 million of shares during the quarter while maintaining a strong balance sheet and substantial financial flexibility. As we continue to see the benefits of our transformed business, I am increasingly confident that our long-term normalized gross margin percentage is now at 28% or higher versus our previous expectation of 27% or higher. We also believe that we can sustain a double-digit Adjusted EBITDA margin this year. Looking forward, we believe our robust financial position, industry-leading products and solutions, and reputation for providing excellent customer service will allow us to successfully navigate macro volatility and position ourselves for above market growth in the years to come."

Financial Performance Highlights - First Quarter 2023 Compared to First Quarter 2022

Net Sales

Net sales for the period were $3.9 billion, a 31.6% decrease amid a weaker housing environment and commodity deflation of 11.8%, partially offset by acquisitions contributing 5.5% growth and one additional selling day contributing 1.0%. Core organic sales declined by 26.3%.

Core organic sales in value-added products decreased 16.9%.

Core organic sales for Single-Family decreased 34.1%, Multi-Family increased 11.5%, and Repair and Remodel ("R&R")/Other increased 3.1%.

Gross Profit

Gross profit was $1.4 billion, a decrease of 25.2% compared to the prior year period. The gross profit margin percentage increased 300 basis points to 35.3%, primarily driven by increased Multi-Family value-added product category mix.

Selling, General and Administrative Expenses

SG&A was $904.2 million, a decrease of approximately $64.4 million, or 6.6%, driven primarily by lower variable compensation due to lower volume, partially offset by additional expenses from operations acquired within the last twelve months. As a percentage of net sales, total SG&A increased by 630 basis points to 23.3% primarily attributable to decreased leverage to net sales.

Interest Expense

Interest expense increased $0.8 million to $42.1 million, primarily due to higher outstanding debt balances and higher interest rates.

Income Tax Expense

Income tax expense was $91.3 million, compared to $182.9 million in the prior year period, and the effective tax rate in the first quarter decreased 70 basis points to 21.5% year-over-year.

Net Income

Net income was $333.8 million, or $2.41 earnings per diluted share, compared to net income of $639.6 million, or $3.56 earnings per diluted share, in the same period a year ago.

Adjusted Net Income

Adjusted net income was $410.3 million, or $2.96 adjusted earnings per diluted share, compared to adjusted net income of $700.8 million, or $3.90 adjusted earnings per diluted share, in the same period a year ago. The 41.5% decrease in adjusted net income was primarily driven by a decrease in net sales amid a slowing housing environment and commodity deflation.

Adjusted EBITDA

Adjusted EBITDA decreased 36.9% to $631.7 million, primarily driven by lower net sales including a decline in core organic products amid a slowing housing market and commodity deflation.

Adjusted EBITDA margin declined by 130 basis points from the prior year period to 16.3%.

Capital Structure, Leverage, and Liquidity Information

For the three months ended March 31, 2023, cash provided by operating activities was $654.4 million, and cash used in investing activities was $178.9 million. The Company’s free cash was an inflow of $554.5 million.

Liquidity as of March 31, 2023 was $1.4 billion, consisting of $1.2 billion in net borrowing availability under the revolving credit facility and approximately $0.2 billion of cash on hand.

As of March 31, 2023, LTM Adjusted EBITDA was $4.0 billion and net debt was $3.1 billion, resulting in the net debt to LTM Adjusted EBITDA ratio decreasing to 0.8x, compared to 0.9x in the prior year period.

In the first quarter, the Company repurchased approximately 7.5 million shares of its common stock at an average price of $83.17 per share for $627.6 million, inclusive of fees and taxes.

In addition, the Company repurchased approximately 3.8 million shares in April 2023 for $348.4 million at an average price of $91.90 per share, inclusive of estimated fees and taxes. The Company has completed its expanded share repurchase authorization from November 2022 totaling approximately $1.5 billion.

Since the inception of our buyback program in August 2021, the Company has repurchased approximately 80.7 million shares of its common stock, or approximately 39.1% of its total shares outstanding, at an average price of $65.84 per share for a total cost of $5.3 billion. As of April 28, 2023, shares outstanding were approximately 128 million.

In April, the Board of Directors approved a share repurchase authorization in the amount of $1 billion of the Company's common shares.

Operational Excellence Productivity

In the first quarter, the Company delivered approximately $34 million in productivity savings.

The Company continues to believe it can deliver $90 million to $110 million in productivity savings in 2023.

Q2 2023 Company Guidance

The Company expects challenging conditions in housing amid elevated mortgage rates and general uncertainty in economic conditions that may significantly impact the business. As a result, the Company is not currently providing guidance for the full year 2023 but will continue to reassess each quarter.

For the second quarter of 2023, the Company expects to achieve the financial performance highlighted below. Projected net sales and Adjusted EBITDA include the expected benefit of price, commodity, and margin impacts for Q2 2023.

Net Sales to be in a range of $4.0 billion to $4.2 billion.

Adjusted EBITDA to be in a range of $525 million to $575 million.

Adjusted EBITDA margin to be in a range of 13.1% to 13.7%.

2023 Full Year Assumptions

The Company’s anticipated 2023 performance is based on several assumptions for the full year, including the following:

Total capital expenditures in the range of $325 million to $375 million.

Interest expense in the range of $150 million to $170 million.

An effective tax rate of 23.0% to 25.0%.

Depreciation and amortization expenses in the range of $525 million to $575 million, including approximately $160 million of amortization related to intangible assets acquired in the BMC merger. Total depreciation projected to be $220 million and total amortization projected to be $325 million.

No change in selling days in 2023 versus 2022.

Productivity savings in the range of $90 million to $110 million.

Conference Call

Builders FirstSource will host a conference call and webcast on Wednesday, May 3, 2023, to discuss the Company’s financial results and other business matters. The teleconference will begin at 8:00 a.m. Central Time and will be hosted by Dave Rush, Chief Executive Officer, and Peter Jackson, Chief Financial Officer.

To participate in the teleconference, please dial into the call a few minutes before the start time: 800-225-9448 (U.S. and Canada) and 203-518-9708 (international), Conference ID: BLDRQ123. A replay of the call will be available at 12:00 p.m. Central Time through Wednesday, May 10, 2023. To access the replay, please dial 800-839-2434 (U.S. and Canada) or 402-220-7211 (international). The live webcast and archived replay can also be accessed on the Company's website at www.bldr.com under the Investors section. The online archive of the webcast will be available for approximately 90 days.

About Builders FirstSource

Headquartered in Dallas, Texas, Builders FirstSource is the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery and installation of a full range of structural and related building products. We operate in 42 states with over 550 locations and have a market presence in 47 of the top 50 and 86 of the top 100 MSAs, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution and manufacturing facilities (some of which are co-located) that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other specialty building products. www.bldr.com

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>>> Trane Technologies Reports Strong First-Quarter 2023 Results; Raises 2023 Guidance


Business Wire

Wed, May 3, 2023


https://finance.yahoo.com/news/trane-technologies-reports-strong-first-103000025.html


Highlights (first-quarter 2023 versus first-quarter 2022, unless otherwise noted):

Reported revenues of $3.7 billion, up 9 percent; organic revenues* up 9 percent

GAAP operating margin up 90 bps; adjusted operating margin* up 140 bps

GAAP continuing EPS of $1.35; adjusted continuing EPS* of $1.41, up 26 percent

Reported bookings of $4.3 billion, down 1 percent; organic bookings* down 1 percent

Strong first-quarter book-to-bill ratio of 117 percent

Record backlog of $7.3 billion, up $400 million from year-end 2022

*This news release contains non-GAAP financial measures. Definitions of the non-GAAP financial measures can be found in the footnotes of this news release. See attached tables for additional details and reconciliations.


SWORDS, Ireland, May 03, 2023--(BUSINESS WIRE)--Trane Technologies plc (NYSE:TT), a global climate innovator, today reported diluted earnings per share (EPS) from continuing operations of $1.35 for the first quarter of 2023. Adjusted continuing EPS was $1.41, up 26 percent, excluding $15.6 million of pre-tax non-GAAP adjustments.

First-Quarter 2023 Results

"In the first quarter, we continued our track record of strong financial results and expect our performance to once again rank in the top quartile among industrials," said Dave Regnery, chair and CEO, Trane Technologies. "Our global team delivered robust bookings, organic revenue growth of 9 percent, adjusted EBITDA margin expansion of 100 basis points and adjusted EPS growth of 26 percent.

"Our strong first-quarter performance, diverse and resilient portfolio and unprecedented backlog give us confidence in raising our full-year guidance for organic revenue and adjusted EPS growth. With our focused sustainability strategy, leading innovation and uplifting culture, we are well positioned to continue delivering superior growth and differentiated shareholder returns over the long term."

Highlights from the First Quarter of 2023 (all comparisons against first-quarter 2022 unless otherwise noted)

Delivered strong first-quarter revenue, operating income, EBITDA and EPS growth.

Enterprise reported and organic bookings were both down 1 percent.

Enterprise reported and organic revenues were both up 9 percent.

Strong book-to-bill ratio of 117 percent.

GAAP operating margin was up 90 basis points, adjusted operating margin was up 140 basis points and adjusted EBITDA margin was up 100 basis points.

Strong positive price realization, volume and productivity more than offset inflation related to supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.

Enterprise exited the first quarter of 2023 with backlog more than 2.5 times historical norms.

First-Quarter Business Review (all comparisons against first-quarter 2022 unless otherwise noted)

Americas Segment: innovates for customers in the North America and Latin America regions. The Americas segment encompasses commercial heating, cooling and ventilation systems, building controls, and energy services and solutions; residential heating and cooling; and transport refrigeration systems and solutions.

Reported and organic bookings were both down 4 percent.

Reported revenues were up 9 percent; organic revenues were up 8 percent.

Strong book-to-bill ratio of 116 percent.

Americas segment exited the first quarter of 2023 with backlog at approximately 3 times historical norms.

GAAP operating margin was up 40 basis points, adjusted operating margin was up 90 basis points and adjusted EBITDA margin was up 50 basis points.

Strong positive price realization, volume and productivity more than offset inflation related to supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.

Europe, Middle East and Africa (EMEA) Segment: innovates for customers in the Europe, Middle East and Africa region. The EMEA segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.

Reported and organic bookings were both up 10 percent.

Reported revenues were up 16 percent, including approximately 6 percentage points related to acquisitions offset by approximately 6 percentage points of negative foreign exchange impact. Organic revenues were up 15 percent.

Strong book-to-bill ratio of 116 percent.

EMEA segment exited the first quarter of 2023 with backlog approximately 60 percent more than historical norms.

GAAP operating margin was up 530 basis points, adjusted operating margin was up 540 basis points and adjusted EBITDA margin was up 510 basis points.

Strong positive price realization, volume and productivity more than offset inflation related to supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.

Asia Pacific Segment: innovates for customers throughout the Asia Pacific region. The Asia Pacific segment encompasses heating, cooling and ventilation systems, services and solutions for commercial buildings and transport refrigeration systems and solutions.

Reported bookings were up 11 percent; organic bookings were up 13 percent.

Reported revenues were up 5 percent including approximately 3 percentage points related to acquisitions offset by approximately 6 percentage points of negative foreign exchange impact. Organic revenues were up 8 percent.

Strong book-to-bill ratio of 133 percent.

Asia Pacific segment exited the first quarter of 2023 with backlog approximately 70 percent more than historical norms.

GAAP operating margin was up 310 basis points, adjusted operating margin was up 340 basis points and EBITDA margin was up 390 basis points.

Strong positive price realization, volume and productivity more than offset inflation related to supply chain challenges and higher costs to serve customers. The Company also continued high levels of business reinvestment.

First quarter of 2023 cash flow from continuing operating activities was $17 million and free cash flow use was $52 million. Working capital levels ended the first quarter as expected, reflecting seasonal inventory build.

Year-to-date through May, the Company deployed approximately $720 million, including $170 million in dividends, $300 million for share repurchases, and approximately $250 million for M&A.

The Company expects to continue to pay a competitive and growing dividend and to deploy 100 percent of excess cash to shareholders over time. In the first quarter of 2023, the Company increased its annual dividend by 12 percent to $3.00 per share annualized. Since launching Trane Technologies in March of 2020, the Company has raised the quarterly dividend by 42 percent.

Raising Full-Year 2023 Revenue and EPS Guidance

The Company expects full-year reported revenue growth of approximately 9 percent to 10 percent; organic revenue growth of approximately 7 percent to 8 percent versus full-year 2022.

The Company expects GAAP continuing EPS for full-year 2023 of $8.20 to $8.40. This includes EPS of $0.10 for non-GAAP adjustments. The Company expects adjusted continuing EPS for full-year 2023 of $8.30 to $8.50.

Additional information regarding the Company's 2023 guidance is included in the Company's earnings presentation found at www.tranetechnologies.com in the Investor Relations section.

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>>> Exponent Reports First Quarter 2023 Financial Results


GlobeNewswire

Exponent, Inc.

April 27, 2023


https://finance.yahoo.com/news/exponent-reports-first-quarter-2023-200100014.html


MENLO PARK, Calif., April 27, 2023 (GLOBE NEWSWIRE) -- Exponent, Inc. (Nasdaq: EXPO) today reported financial results for the first quarter of fiscal year 2023 ended March 31, 2023.

“Exponent had a solid start to the year, growing revenues by over 9% on a year-over-year basis. This is a testament to the strength and resiliency of our business model, which is built upon a highly diversified portfolio of critical and integrated services,” commented Dr. Catherine Corrigan, President and Chief Executive Officer. “We continue to position ourselves for future growth by adding to our world-class team of scientists and engineers, increasing headcount year-over-year by 12% through strong talent acquisition and improved retention.”

“Increased demand for our reactive services, which have been foundational to Exponent since our inception, supported our results in the first quarter. This work includes robust litigation-related activity as well as product safety- and recall-related work. Our proactive engagements were driven by work in the consumer products, chemicals, utilities, automotive and life sciences sectors,” continued Dr. Corrigan. “As we look ahead, our expertise will be increasingly sought after as the world places greater emphasis on safety, health, and environmental issues. Exponent remains well positioned to address our clients’ needs across the product lifecycle, developing solutions for today while empowering innovations for tomorrow.”

First Quarter Financial Results

Total revenues and revenues before reimbursements for the first quarter of 2023 increased 9.2% to $140.3 million and $128.7 million, respectively, as compared to $128.5 million and $117.9 million in the first quarter of 2022, respectively.

Net income was $29.1 million, or $0.56 per diluted share, in the first quarter of 2023, as compared to $29.6 million, or $0.56 per diluted share, in the same period of 2022. The tax benefit for the classification of tax adjustments associated with share-based awards realized in the first quarter of 2023 was $3.6 million, or $0.07 per diluted share, as compared to $6.0 million or $0.11 per diluted share, in the first quarter of 2022. Including the tax benefit, Exponent’s consolidated tax rate was 18% in the first quarter of 2023, as compared to 9.7% for the same period in 2022.

EBITDA1 increased to $35.8 million, or 27.8% of revenues before reimbursements, in the first quarter of 2023, as compared to $34.5 million, or 29.2% of revenues before reimbursements in the first quarter of 2022.

In a separate press release today, Exponent announced its quarterly cash dividend of $0.26 to be paid on June 23, 2023, and reiterated its intent to continue to pay quarterly dividends. During the first quarter of 2023, Exponent paid $14.5 million in dividends and closed the period with $125.6 million in cash and cash equivalents.

Business Overview

Exponent’s engineering and other scientific segment represented 83% of the Company’s revenues before reimbursements in the first quarter of 2023. Revenues before reimbursements in this segment increased 11% in the first quarter as compared to the prior year period. Growth during the quarter was driven by continued strong demand for Exponent's services from the transportation, utilities, consumer electronics, and life sciences industries.

Exponent’s environmental and health segment represented 17% of the Company’s revenues before reimbursements in the first quarter. Revenues before reimbursements in this segment decreased 1% in the first quarter as compared to the prior year period. Excluding the impact of foreign exchange of $478,000, revenues before reimbursements for the environmental and health segment increased 2% in the first quarter as compared to the prior year period. Work in this segment was primarily driven by Exponent’s safety-related engagements evaluating the impacts of chemicals on human health and the environment, as well as activity in the life sciences industry.

Business Outlook

“Our accelerated recruiting efforts over the last year have strengthened our unique position to meet the complex and dynamic needs of our clients. As always, we will continue to strategically manage headcount and balance utilization based on market demand, which will support our business model over the long term,” commented Richard Schlenker, Executive Vice President and Chief Financial Officer.

Our full year 2023 guidance is unchanged. For the second quarter of 2023, as compared to the same period one year prior, Exponent anticipates:

Revenues before reimbursements to grow in the high-single to low-double digits; and,

EBITDA1 to be 27.5% to 28.5% of revenues before reimbursements.

For the full year 2023 as compared to the same period one year prior, Exponent anticipates:

Revenues before reimbursements to grow in the high-single to low-double digits; and,

EBITDA1 to be 28.0% to 28.5% of revenues before reimbursements.

“For over five decades, Exponent has stood firmly at the cornerstone of engineering and scientific excellence, connecting the lessons of past failures with tomorrow's solutions to create a safer, healthier, and more sustainable world. Our first quarter results demonstrate Exponent's resilient business model and continued financial strength. Backed by our world class talent, multidisciplinary capabilities, and diverse client relationships, we remain confident in our ability to grow Exponent profitably and drive long-term value for our shareholders,” concluded Dr. Corrigan.

Today's Conference Call Information

Exponent will discuss its financial results in more detail on a conference call today, Thursday, April 27, 2023, starting at 4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time. The audio of the conference call is available by dialing [phone] or [phone]. A live webcast of the call will be available on the Investor Relations section of the Company's website at www.exponent.com/investors. For those unable to listen to the live webcast, a replay of the call will also be available on the Exponent website, or by dialing [phone] or [phone] and entering passcode 6019209#.

Footnotes

1 EBITDA is a non-GAAP financial measure defined by the Company as net income before income taxes, interest income, depreciation and amortization. EBITDAS is a non-GAAP financial measure defined by the Company as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance and cash flow to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. These measures, however, should be considered in addition to, and not as a substitute or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the measures to GAAP is set forth below.

About Exponent

Exponent is an engineering and scientific consulting firm providing solutions to complex problems. Exponent's interdisciplinary organization of scientists, physicians, engineers, and business consultants draws from more than 90 technical disciplines to solve the most pressing and complicated challenges facing stakeholders today. The firm leverages over 50 years of experience in analyzing accidents and failures to advise clients as they innovate their technologically complex products and processes, ensure the safety and health of their users, and address the challenges of sustainability.

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>>> Comfort Systems USA Reports First Quarter 2023 Results


Business Wire

April 26, 2023


https://finance.yahoo.com/news/comfort-systems-usa-reports-first-201000627.html


HOUSTON, April 26, 2023--(BUSINESS WIRE)--Comfort Systems USA, Inc. (NYSE: FIX) (the "Company") today reported results for the quarter ended March 31, 2023.

For the quarter ended March 31, 2023, net income was $57.2 million, or $1.59 per diluted share, as compared to $86.8 million, or $2.40 per diluted share, for the quarter ended March 31, 2022. The first quarter of 2023 included a diluted per share net gain of $0.12, including $0.08 related to prior tax years, due to a tax change and $0.15 from the favorable resolution of certain litigation matters. The first quarter of 2022 included a diluted per share net tax gain of $1.49 related to prior years. Revenue for the first quarter of 2023 was $1,174.6 million compared to $885.2 million in 2022. The Company reported operating cash flow of $126.9 million in the current quarter compared to $63.7 million in 2022.

Backlog as of March 31, 2023 was $4.44 billion as compared to $4.06 billion as of December 31, 2022 and $2.73 billion as of March 31, 2022. On a same-store basis, backlog increased from $2.73 billion as of March 31, 2022 to $4.32 billion as of March 31, 2023.

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, "We started 2023 on a very positive note, with remarkable increases in revenue and earnings per share. Our mechanical operations again performed at high levels and our electrical segment continued its trend of improving profitability. Cash flow was unusually strong, especially for a first quarter, and our backlog increased yet again, reflecting good ongoing demand in traditional and modular construction. Our already strong quarterly earnings were further increased by favorable resolution of certain litigation matters."

Mr. Lane concluded, "Our teams across the country continue to execute. Thanks to their excellence, and in light of the strong ongoing demand that we are experiencing, we remain optimistic about our prospects for continued growth and strong profitability in 2023."

The Company will host a webcast and conference call to discuss its financial results and position on Thursday, April 27, 2023 at 10:30 a.m. Central Time. To register for the call, please visit

https://register.vevent.com/register/BI9b57002f12ed44b78143f9dedccc3592.

Upon registering, participants will receive dial-in information and a unique PIN to join the call. The call and the slide presentation to accompany the remarks can be accessed on the Company’s website at www.comfortsystemsusa.com under the "Investor" tab. A replay of the entire call will be available on the Company’s website on the next business day following the call.

Comfort Systems USA® is a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, with 173 locations in 132 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.

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Alamo Group - >>> These three businesses can carry on growing even in the face of a mild recession.


https://www.fool.com/investing/2023/03/28/these-3-growth-stocks-are-screaming-buys-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Given the uncertainty in the markets and the economy now, it makes sense to start looking at some under-the-radar stocks with growth prospects that don't rely strongly on the economy.

That's the case for buying stocks like infrastructure and vegetation management equipment company Alamo Group (ALG), aviation services company AAR (AIR -1.21%), and electrical products company nVent Electric (NVT 0.19%). All three have solid growth prospects that should tide them through a difficult economy. Here's why.

1. Alamo Group: Don't forget it

It's no secret that the industrial sector has battled surging prices in raw materials and logistics over the last few years, and Alamo Group is not immune to these factors. Moreover, supply chain disruptions and labor shortages have hurt Alamo's ability to deliver products.

Should you invest $1,000 in Alamo Group right now?

For reference, Alamo operates in two divisions. Its vegetation management business supplies mowers and cutters to governmental, agricultural, and commercial turf markets. The industrial equipment division provides infrastructure-maintenance equipment (for snow- and ice-clearing, road sweepers, and the like). As such, Alamo is a play on the need to maintain infrastructure and public spaces.

The key to the investment case for the stock rests on the idea that its end-market demand is likely to hold up relatively well in an economic slowdown. Meanwhile, its cost and supply chain pressures will ease if a slowing economy alleviates stress on the supply chain.

That argument is strengthened by Alamo Group's $1 billion backlog as of the end of the year -- a figure equivalent to 63% of the $1.6 billion in revenue that Wall Street analysts expect for 2023.

Meanwhile, a combination of mid-single-digit sales growth and margin expansion leads Wall Street to expect double-digit earnings growth for the next few years. Trading at 17.6 times earnings estimates for 2023, Alamo Group looks to be an excellent value.

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>>> Generac Holdings Inc. (NYSE:GNRC) - Number of Hedge Fund Holders: 31


https://finance.yahoo.com/news/14-stocks-pop-according-jim-150048076.html


6-Month Performance as of March 30 (Relative to SPY): -47.00%

One of Jim Cramer's top picks from October 2022 was Generac Holdings Inc. (NYSE:GNRC). The company is an American manufacturer of backup power generation facilities Cramer said that the he liked how low the stock was, enough to add it to his charitable trust. Shares of Generac Holdings Inc. (NYSE:GNRC) have lost 47% over the past 6 months, relative to the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), as of March 30.

At the end of Q4 2022, 31 hedge funds were bullish on Generac Holdings Inc. (NYSE:GNRC) and held stakes worth $588.2 million in the company. Of those, Ariel Investments was the top investor in the company and held a stake worth $132 million.

Meridian Funds made the following comment about Generac Holdings Inc. (NYSE:GNRC) in its Q4 2022 investor letter:

“Generac Holdings Inc. (NYSE:GNRC), is a manufacturer of power generation equipment with a leading position in home standby generators. Generac also offers consumers a home energy management system that harnesses and stores power from the sun to be used for backup during utility power outages. Severe weather events that strained already-overburdened power grids in California, Texas, and other key markets have created a significant opportunity for home power generation equipment manufacturers. Moreover, with the future potential to aggregate these distributed energy resources through the company’s grid services business, homeowners have the potential to monetize these assets. The stock declined during the quarter as the company reduced its full-year revenue guidance due largely to labor shortages in Generac’s dealer network which resulted in a slowdown in installations and implementations. As a consequence, dealers have reduced their on-site inventory. During the period, we exited our position in the company.”

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Quanta Services (PWR) - >>> Quanta is a leading national provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry. Quanta has operations in the United States, Canada, Australia and other selected international markets.


https://finance.yahoo.com/news/growth-investor-1-stock-could-134501559.html


PWR is a Zacks Rank #3 (Hold) stock, with a Growth Style Score of A and VGM Score of A. Earnings are expected to grow 10.3% year-over-year for the current fiscal year, with sales growth of 9%.

Five analysts revised their earnings estimate higher in the last 60 days for fiscal 2023, while the Zacks Consensus Estimate has increased $0.24 to $6.99 per share. PWR also boasts an average earnings surprise of 4.7%.

Looking at cash flow, Quanta Services is expected to report cash flow growth of 41.3% this year; PWR has generated cash flow growth of 25.1% over the past three to five years.

Investors should take the time to consider PWR for their portfolios due to its solid Zacks Rank rating, notable growth metrics, and impressive Growth and VGM Style Scores.

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Quanta Services, Inc. (NYSE:PWR) - >>> Navellier & Associates’ Stake Value: $10 million


https://finance.yahoo.com/news/louis-navellier-top-10-stock-160351252.html


Percentage of Navellier & Associates’ 13F Portfolio: 2.23%

Number of Hedge Fund Holders: 47

Quanta Services, Inc. (NYSE:PWR) is an American contracting services corporation that provides infrastructure services for electric power, pipeline, industrial and communications industries. Louis Navellier's hedge fund owned a $10 million stake in Quanta Services, Inc. (NYSE:PWR) as part of its portfolio for the third quarter of this year. The stake came through the fund owning 78,928 shares of the company, and it represented 2.23% of its investment portfolio.

On November 8, KeyBanc analyst Sean Eastman raised the price target on Quanta Services, Inc. (NYSE:PWR) to $174 from $156 alongside an Overweight rating on the company's shares based on what he calls greater confidence in the multiyear, mid-teens EPS growth algorithm.

Insider Monkey’s Q3 2022 920 hedge fund survey outlined that 47 funds had invested in the firm, a jump from just 34 in the previous quarter. William Harnisch's Peconic Partners LLC is the company's largest shareholder for the quarter, with approximately 5.53 million shares worth $1.3 billion.

Similar to NVIDIA Corporation (NASDAQ:NVDA), Costco Wholesale Corporation (NASDAQ:COST), CF Industries Holdings, Inc. (NYSE:CF), and ConocoPhillips (NYSE:COP), Quanta Services, Inc. (NYSE:PWR) is one of Louis Navellier's top stock picks.

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>>> Quanta Services Selected for Colorado's Power Pathway Transmission Project


PR Newswire

December 22, 2022


https://finance.yahoo.com/news/quanta-services-selected-colorados-power-115500892.html


Project Expected to Extend Through 2027, Supporting Multi-Year Visibility and Growth Opportunities

HOUSTON, Dec. 22, 2022 /PRNewswire/ -- Quanta Services, Inc. (NYSE: PWR) announced today that it has been selected by Xcel Energy as its prime constructor to manage all construction activities for the Colorado's Power Pathway high-voltage electric transmission project in Colorado. Quanta's scope of work on the project consists of the construction of approximately 610 miles of 345 kV transmission infrastructure, consisting of up to six segments and spanning more than a dozen counties, primarily in eastern Colorado, and includes the installation of four new substations and the expansion of four existing substations. The project is designed to increase the reliability of the state's power grid and enable future renewable energy development in Colorado, including approximately 5,500 megawatts of new wind, solar and other resources that Xcel Energy plans to add through 2030.

Duke Austin, President and Chief Executive Officer of Quanta Services commented, "Quanta has enjoyed a long-standing relationship with Xcel Energy and this project builds on our partnership. The project represents an innovative model and collaborative approach with Xcel Energy that we believe is a ground-breaking path for Quanta to continue to provide collaborative infrastructure solutions to our customers. As a result, we believe our design and constructability plan enhances safety during construction and positions us to provide schedule, quality and cost certainty for this important project."

"We are excited to move forward with Quanta Services on the Colorado's Power Pathway project, a monumental investment to build reliability in our transmission system and enable access to significant renewable energy resources in Colorado," said Robert Kenney, president of Xcel Energy-Colorado. "We look forward to collaborating with Quanta as we advance this critical project."

Certain segments of the project are expected to be completed in 2025, with other segments expected to be completed in 2026 and 2027. Preconstruction activities are expected to begin immediately, with construction on the first segment scheduled to begin in mid-2023. Quanta expects to include the estimated revenue for the project in the remaining performance obligations and backlog associated with its Renewable Energy Infrastructure Solutions segment for the fourth quarter of 2022.

About Quanta Services

Quanta is a leading specialized contracting services company, delivering comprehensive infrastructure solutions for the utility, renewable energy, communications, pipeline and energy industries. Quanta's comprehensive services include designing, installing, repairing and maintaining energy and communications infrastructure. With operations throughout the United States, Canada, Australia and select other international markets, Quanta has the manpower, resources and expertise to safely complete projects that are local, regional, national or international in scope. For more information, visit www.quantaservices.com.

About Xcel Energy

Xcel Energy (NASDAQ: XEL) provides the energy that powers millions of homes and businesses across eight Western and Midwestern states. Headquartered in Minneapolis, the company is an industry leader in responsibly reducing carbon emissions and producing and delivering clean energy solutions from a variety of renewable sources at competitive prices. For more information, visit xcelenergy.com or follow us on Twitter and Facebook.

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AAON, BLDR -


https://finance.yahoo.com/news/7-american-manufacturing-stocks-buy-185641230.html


>>> Builders FirstSource (BLDR) - This likely isn’t a name consumers know offhand, since it’s fundamentally a supplier to the homebuilding market, supplying goods such as roof and floor trusses, vinyl windows, drywall and lumber.

But it is a Fortune 500 company and does about $7 billion worth of business across more than 400 locations around the US.

Again, you’re not going to see a lot of advertising on television for BLDR, but it is a major homebuilding supplier in the U.S. That means when housing is growing, so is BLDR.

The stock has been on a ride in the past year, growing well through the second half of 2019, only to erase much of those gains in March this year. But BLDR is up 80% in the past 3 months and still up 22% in the past 12 months.


AAON Inc (AAON)

This firm specializes in commercial, industrial and residential HVAC. This is another sector that goes hand in hand with an expanding economy. New facilities need new equipment.

Also, with low-cost loans available, upgrading old, inefficient equipment for more efficient HVAC can actually be cost-reducing in the long term. That also goes along with businesses that are expanding or downsizing their plants and offices.

Remember, the locksdowns have sent many people home to work, which is also an ideal time to do the necessary upgrades to HVAC units. Work-from-home, to a much greater extent than it was pre-pandemic, is here to stay, and that’s been a source of great buys for Growth Investor.

AAON stock has stayed positive throughout the COVID-19 troubles and currently is up 10% year to date. It also offers a small 0.7% dividend, which is still better than a lot of CDs out there.

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>>> Builders FirstSource, Inc. (BLDR), together with its subsidiaries, manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. It offers lumber and lumber sheet goods comprising dimensional lumber, plywood, and oriented strand board products that are used in on-site house framing; manufactured products, such as wood floor and roof trusses, steel roof trusses, wall panels, stairs, and engineered wood products; and windows, and interior and exterior door units, as well as interior trims and custom products comprising intricate mouldings, stair parts, and columns under the Synboard brand name.

The company also provides specialty building products and services, including vinyl, composite and wood siding, exterior trims, metal studs, cement, roofing, insulation, wallboards, ceilings, cabinets, and hardware products; products turn-key framing, shell construction, design assistance, and professional installation services.

In addition, it offers software products, such as drafting, estimating, quoting, and virtual home design services, which provide software solutions to retailers, distributors, manufacturers, and homebuilders. The company was formerly known as BSL Holdings, Inc. and changed its name to Builders FirstSource, Inc. in October 1999. Builders FirstSource, Inc. was incorporated in 1998 and is based in Dallas, Texas.

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>>> Why Shares in AAON Surged in February


Motley Fool

By Lee Samaha

Mar 2, 2023


https://www.fool.com/investing/2023/03/02/why-shares-in-aaon-surged-in-february/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


KEY POINTS

The commercial and industrial HVAC market remains in growth mode, despite a slowdown in the residential market.

Demand for premium HVAC is growing given increased regulatory requirements and the need for healthier buildings.


What happened

Shares in premium heating, ventilation, and air conditioning (HVAC) company AAON (AAON) rose 19.2% in February, according to data provided by S&P Global Market Intelligence. The move comes mainly from an excellent set of fourth-quarter 2022 earnings that dispelled fears investors might have had over its trading conditions.

Specifically, AAON operates in the commercial, industrial, data center, and cleanroom end markets. However, the company is relatively less exposed to the residential HVAC market compared to other providers. Given the pressure homeowners face in the rising rate environment, that's a good thing right now. For example, its competitor Carrier's residential and light commercial HVAC orders declined 30% in its fourth quarter, and Trane's residential HVAC bookings in the Americas were down by a mid 20% percentage in the fourth quarter.

Still, Carrier's commercial HVAC orders were up by over 10%, and Trane's Americas bookings were up by a low-teens percentage.

The tale of two HVAC markets continued with AAON reporting strong orders and backlog -- organic bookings were up 45%, and its backlog grew a whopping 110% on a year-over-year basis in the quarter. In fact, as management noted on the earnings call, "Our biggest challenge right now continues to be ramping up production fast enough."

So what

AAON's management argues that nonresidential construction data remains strong, and it's not seeing any sign of a slowdown in its end markets. Moreover, the price increases pushed through in 2022 should flow into its profit margins as it delivers on its backlog in 2023.

That said, a lot of commercial construction activity tends to lag behind residential construction activity. For example, commercial facilities tend to be built around expanding housing communities. Moreover, they may well be a pull forward in orders from customers due to the difficulty in fulfilling orders in the current environment due to ongoing supply chain issues.

Now what

As ever, investors need to watch the overall economy. A protracted period of weakness in housing, caused by rising rates, will inevitably have some impact on AAON's commercial markets.

On the other hand, demand for commercial HVAC has strengthened in recent years because of regulatory requirements around emissions and increased awareness of the need for healthy, clean buildings. Don't be surprised if AAON has another strong year in 2023.

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>>> AAON, Inc.(AAON), together with its subsidiaries, engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada. The company operates through three segments: AAON Oklahoma, AAON Coil Products, and BASX. It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. The company markets and sells its products to retail, manufacturing, educational, lodging, supermarket, data centers, medical and pharmaceutical, and other commercial industries. It sells its products through a network of independent manufacturer representative organizations and internal sales force, as well as online. The company was incorporated in 1987 and is based in Tulsa, Oklahoma.

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>>> ALAMO GROUP ANNOUNCES RECORD 2022 FOURTH QUARTER AND YEAR END RESULTS


Yahoo Finance

PR Newswire

February 23, 2023


https://finance.yahoo.com/news/alamo-group-announces-record-2022-211500924.html


SEGUIN, Texas, Feb. 23, 2023 /PRNewswire/ -- Alamo Group Inc. (NYSE: ALG) today reported results for the fourth quarter and year ended December 31, 2022.

Highlights

Fourth quarter net sales of $386.6 million, up 15%

Fourth quarter operating income of $42.7 million, up 53%

Fourth quarter net income of $29.2 million, or $2.44 per diluted share, up 52%

Full year net sales of $1.5 billion, up 13% year over year

Full year operating income of $148.6 million, up 27%

Full year net income of $101.9 million, up 27%

Full year diluted EPS was $8.54, up 27%

Record EBITDA of $195.9 million, up 21% year over year(1)

Backlog of $1.0 billion, up 26% compared to year-end 2021


Fourth Quarter Results

Fourth quarter 2022 net sales were $386.6 million compared to $337.2 million in the fourth quarter of 2021, an increase of 15%. Gross margin improved in the quarter versus the fourth quarter of 2021 by $14.1 million or 17%. Fourth quarter net income improved 52% to $29.2 million, or $2.44 per diluted share, compared to net income of $19.2 million, or $1.62 per diluted share in the fourth quarter of 2021. The Company's backlog at the end of 2022 was in excess of $1.0 billion, an increase of $205.7 million, or 26%, from the backlog at the end of 2021.

The positive results reported for the quarter were achieved as a result of improved product deliveries, as well as a combination of effective price management, an improvement in manufacturing efficiencies, and disciplined control of operating expenses. These results were achieved despite continued headwinds directly related to supply chain disruptions and skilled labor shortages, as well as the negative impact of currency exchange rates on our consolidated financial results.

Full Year Results

Full year 2022 net sales increased to $1.5 billion, up 13% compared to $1.3 billion for the full year 2021. Net income for the year was $101.9 million, or $8.54 per diluted share, compared to net income of $80.2 million, or $6.75 per diluted share in 2021, a year-over-year improvement of 27%.

Throughout 2022, the Company experienced strong demand for its products with the Company setting records for net sales and earnings in each quarter of the year. The Company's record performance was achieved despite the significant material cost increases, supply chain disruptions and skilled labor shortages that the Company experienced during the year. Our results were also negatively impacted by currency translation as the U.S. dollar strengthened against the currencies of international countries where we operate.

Division Results

Vegetation Management

The Vegetation Management Division's fourth quarter 2022 net sales were $232.5 million, up 14% compared to $204.3 million for the same period in 2021. Full year 2022 net sales in this Division were $937.1 million, compared to $812.7 million for the full year 2021, up 15%. The increase in net sales for both the fourth quarter and the full year was driven by strong customer demand for forestry, tree care, agricultural, and governmental mowing products in both North America and Europe.

The Division's fourth quarter operating income for 2022 was $30.2 million, up 67% compared to $18.1 million for the fourth quarter of 2021. Full year 2022 operating income was $108.5 million versus $78.9 million for the full year 2021, an increase of 37%. The Division benefited from strong sales, improved pricing, and effective control of costs and expenses despite ongoing supply chain disruptions, higher material and inbound freight costs, and labor shortages. Outstanding performance in the Division's North American operations was complemented by strong results during the year in the United Kingdom, France, Brazil, and Australia.

Industrial Equipment

The Industrial Equipment Division's fourth quarter 2022 net sales were $154.1 million, up 16% compared to $132.8 million during the same period in 2021. The increase was primarily attributable to higher sales of snow removal products and, to a lesser extent, other product lines within the Division. Insufficient availability of truck chassis and other industrial components continued to constrain the Division's sales growth during the fourth quarter of 2022.

Full year 2022 net sales were $576.6 million compared to $521.5 million for the full year 2021, an 11% increase. Excavators and vacuum trucks were the primary drivers of the sales increase, but all product lines contributed.

The Division's fourth quarter operating income was $12.5 million, up 28% compared to $9.7 million for the fourth quarter of 2021. Full year 2022 operating income was $40.1 million compared to $38.0 million for the full year 2021, an increase of 5%. The Division was negatively impacted throughout 2022 by supply chain disruptions, constrained chassis deliveries, labor shortages, and higher material and inbound freight costs.

Comments on Results

Jeff Leonard, Alamo Group's President and Chief Executive Officer, commented, "It was gratifying to achieve very solid results in the fourth quarter despite the persistent supply chain, cost inflation, and labor shortage headwinds we experienced throughout the year. Our teams once again worked through these challenges and produced record setting results to cap off the best year for sales and earnings in Company history. I'm very proud of our employees and take this opportunity to offer thanks and special recognition for their dedication, persistence, and ingenuity that largely overcame these obstacles and produced nice results in the fourth quarter and for 2022.

"As they had throughout the year, our markets continued to display strength during the fourth quarter. Governmental agencies at the state, county and municipal levels remained in good fiscal health and continued to invest in upgrading their infrastructure maintenance fleets. Activity in our forestry and tree care segment was also strong and demand from the agricultural sector was good, especially for a fourth quarter. Order bookings in the quarter, while down 2% from prior year, were at a very good level. Bookings in our Industrial Equipment Division were sharply higher, while those in our Vegetation Management Division decreased. We ended 2022 with a backlog in excess of $1.0 billion for the first time which provides us good visibility for the first half of 2023.

"Our supply chain performance also improved modestly relative to the third quarter, although more improvement is needed to support accelerated sales growth over the next several quarters. Truck chassis deliveries remained constrained by allocations from the major OEM's, and although the allocation quantities are slowly increasing, they are not yet keeping pace with our requirements. This has driven the backlog in our Industrial Equipment Division higher, and it may be several more quarters before a balance is achieved. Other supply chain bottlenecks in components such as engines, hydraulics and wiring harnesses are easing and our Vegetation Management Division clearly benefited from this in the fourth quarter. Our labor situation also improved during the quarter, although we continue to have many open positions, particularly in manufacturing.

"Throughout 2022, our teams effectively managed pricing to stay ahead of material cost inflation. During the fourth quarter, we benefited demonstrably from this good price stewardship as our operating margin reached 11%, a record for a fourth quarter and, more importantly, the highest level of the year. Our teams also maintained good expense discipline and total fourth quarter operating expenses declined compared to the prior year.

"The combination of double-digit sales growth, price leverage, improving efficiencies, and spending restraint produced the highest quarterly earnings per share in our history. For the full year 2022, the Company also set new records for both sales and earnings. As we look ahead to the balance of 2023, we continue to have confidence in our team's ability to drive further performance improvements. The continued strength of our markets, combined with the size and quality of our backlog supports that confidence, and we believe the Company is well positioned for future success."

Earnings Conference Call

The Company will host a conference call to discuss fourth quarter and year end 2022 financial results on Friday, February 24, 2023 at 10:00 a.m. ET. Hosting the call will be members of senior management.

Individuals wishing to participate in the conference call should dial 877-407-0789 (domestic) or 201-689-8562 (international). For interested individuals unable to join the call, a replay will be available until Friday, March 03, 2023 by dialing 844-512-2921 (domestic) or 412-317-6671 (internationally), passcode 13734940.

The live broadcast of Alamo Group Inc.'s quarterly conference call will be available online at the Company's website, www.alamo-group.com (under "Investor Relations/Events & and Presentations") on Friday, February 24, 2023, beginning at 10:00 a.m. ET. The online replay will follow shortly after the call ends and will be archived on the Company's website for 60 days.

About Alamo Group

Alamo Group is a leader in the design, manufacture, distribution and service of high quality equipment for vegetation management, infrastructure maintenance and other applications. Our products include truck and tractor mounted mowing and other vegetation maintenance equipment, street sweepers, snow removal equipment, excavators, vacuum trucks, other industrial equipment, agricultural implements, forestry equipment and related after-market parts and services. The Company, founded in 1969, has approximately 4,200 employees and operates 28 plants in North America, Europe, Australia and Brazil as of December 31, 2022. The corporate offices of Alamo Group Inc. are located in Seguin, Texas.

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Cintas - >>> Cintas has grown sales and adjusted earnings per share (EPS) in 51 of the last 53 years by providing its 1 million business customers with uniforms, restroom supplies, first aid and safety equipment, safety training, and fire extinguishers.


https://www.fool.com/investing/2023/03/21/history-suggests-these-4-sp-500-stocks-could-soar/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


As wildly unexciting as this sounds, Cintas stock rose 1,000% over the last decade.

Powering this incredible performance is the company's ROIC of 21%, 16th best of the 69 industrial stocks in the S&P 500. Operating in a highly fragmented niche, Cintas uses a strategy of making tuck-in acquisitions to complement its organic growth in the mid to high single digits, delivering results that might be hard to believe.

Across the last decade, the company's sales, net income, and dividends grew annually by 7%, 20%, and 26%, respectively. Cintas has a payout ratio of only 35%, showing that it should easily be able to continue increasing its dividend (currently yielding 1%), just as it has since 1983.

Although the company trades at a premium P/E of 35, it only counts 6% of the total businesses in North America as customers, leaving a massive runway for growth.

Opportunistic investors might want to take advantage of any short-term dips in the share price to build a position in this operations-crucial business over time.

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Louisiana-Pacific - >>> Warren Buffett's current investment in Louisiana-Pacific (LPX) is valued at $339 million. While that would be a whopping investment for most, this position only constitutes roughly 0.1% of Buffett's overall equity portfolio, its 38th biggest holding.


https://finance.yahoo.com/m/b6aa7a04-2450-3273-aae3-a4758c72e87e/want-passive-income-in-a-bear.html


Notably, this rather small position for Buffett still amounts to an ownership stake of roughly 7.3% in Louisiana-Pacific, based on its price at the time of acquisition. This purchase is unique, in that Buffett appears to be taking a stake in another economically sensitive company at a time when most investors are looking to play defense. This provider of building materials such as engineered wood products, siding, and other construction-related items utilized in commercial and residential projects, has somewhat stagnated over the past year, following a post-pandemic boom.

What does Buffett know that we don't? I guess we'll find out. Many know that Buffett is a perma-bull when it comes to the economic outlook for America. This bet, while small in the grand scheme of Berkshire's overall portfolio, appears to reaffirm this view. If homebuilding activity picks up (whether due to a drop in interest rates, or the need to fulfill surging demand from Millennial home buyers), Buffett could be due for a big win.

Louisiana-Pacific has been moving toward a more comprehensive business strategy, increasing its involvement in the repair and renovation market and creating value-enhancing products. Buffett's previous investments in mobile home producers and other companies in this sector suggest he believes the future may be bright for this company.

In the last quarter, Louisiana-Pacific increased its quarterly distribution by more than 9% to $0.24 per share, bringing the stock's overall dividend yield to 1.7%. For those bullish on the company's business model looking forward, this is a company that could be poised for continued dividend growth over time, making Louisiana-Pacific an intriguing passive income stock from this perspective right now.

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>>> Tetra Tech Wins $105 Million EPA Watershed Assessment and Protection BPA


Business Wire

March 7, 2023


https://finance.yahoo.com/news/tetra-tech-wins-105-million-140000089.html


PASADENA, Calif., March 07, 2023--(BUSINESS WIRE)--Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services, announced today that the U.S. Environmental Protection Agency (EPA) Office of Water awarded the Company a five-year, $105 million Blanket Purchase Agreement (BPA) to restore and protect watersheds and water bodies throughout the United States.

Tetra Tech will identify, analyze, and evaluate surface water and coastal ecosystems to protect human health and aquatic environments from the impacts of pollution and the effects of climate change, including ocean acidification. Tetra Tech’s scientists will design monitoring programs, develop predictive models, and prepare technical guidance documents to assess chemical, physical, and biological integrity of water bodies. Our technical specialists will analyze model results and manage spatial datasets to develop effective management strategies for inland and coastal regions impacted by land-use related activities, stormwater and runoff, habitat loss, and invasive species.

"Tetra Tech has supported EPA’s Office of Water in developing science-based solutions for more than 40 years," said Dan Batrack, Tetra Tech Chairman and CEO. "This is Tetra Tech’s tenth consecutive EPA watershed management contract, supporting EPA in analytics, guidance, and training associated with the development and execution of watershed protection programs. We are pleased to continue using our Leading with Science® approach and Tetra Tech Delta technologies to assess and protect water bodies throughout the United States."

About Tetra Tech

Tetra Tech is a leading provider of high-end consulting and engineering services for projects worldwide. With 27,000 employees working together, Tetra Tech provides clear solutions to complex problems in water, environment, sustainable infrastructure, renewable energy, and international development. We are Leading with Science® to provide sustainable and resilient solutions for our clients. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn, Twitter, and Facebook.

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Trex - >>> Operating in more of a niche within the home improvement space, Trex (TREX) produces composite decking material that has become a very popular alternative to wood. In fact, Trex has reached "verb status" for many who refer to any non-wood deck as a "Trex deck".


https://www.fool.com/investing/2023/03/15/3-growth-stocks-to-buy-now-if-interest-rates-remai/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


Trex also appeals to consumers interested in environmental issues. Trex decking is comprised of a blend of scrap wood fibers and recycled polyethylene film. Trex can use these scrap products that would otherwise be filling landfills to create beautiful decking.

Despite the potential tailwind of more homeowners opting for improvement projects over moving, Trex products are more expensive than wood, so there's a potential that a slowing economy presents a challenge for the company. However, management spent the past year rightsizing its inventory and expenses and began to see results in Q4 2022 as its gross margin improved to 34.1%, up from 38.9% in the year-ago quarter.

2023 could be a challenging year for the company, but there's reason to buy now for the long term. Trex is still the leader in non-wood decking, and much like Home Depot and Target, it also reduced its shares outstanding by more than 20% over the past 10 years. Trex has been a long-term market-beating investment, and is positioned to remain one over time.

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