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spk03: I would like to welcome everyone to ADCOR's third quarter fiscal year 2024 earnings conference call. All lines have been placed in a listen-only mode. After the speakers remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press star one. As a reminder, this conference is being recorded. Thank you. I would now like to turn the conference over to your host Matt Lang, Vice President of Treasury and Press Relations. Thank you. You may begin, sir.
spk04: Thank you. Good morning, everyone. I'm joined today by Bill Waltz, President and CEO, as well as David Johnson, Chief Financial Officer. We will take your questions after comments by Bill and David. I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or financial performance of the company. Such statements involve risks and uncertainties such that actual results may differ materially. Please refer to our SEC filing in today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. In addition, any reference in our discussion today to EBITDA means adjusted EBITDA, and any reference to EPS or adjusted EPS means adjusted diluted earnings per share. Adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures. Reconciliation of non-GAAP measures and a presentation of the most comparable GAAP measures are available in the appendix to today's presentation. With that, I'll turn it over to Bill.
spk07: Thanks, Matt, and good morning, everyone. Starting on slide three, in the third quarter, organic volume was essentially flat year over year. We saw strength in our construction services business due to large megaprojects and from solar due to increased production in our Hobart, Indiana facility. These gains were all set by broad pricing softness across most of the electrical business. We did not see a noticeable summer construction uptick in demand as is generally the case. Pricing was softer than expected due to the slower end markets, particularly for our PVC conduit business and higher concentration of large projects where pricing tends to be more competitive. Overall, selling prices were also down 4% sequentially from the second quarter. Volume grew 8% sequentially and 4% year to date. The third quarter proved to be more challenging than we initially projected while our net sales were within the range of the outlook we presented back in May. Adjusted EBITDA and adjusted diluted EPS were both off the midpoint by 4%. Our lower than projected EBITDA was due to overall softer than expected market conditions. We believe the current market is flat to slightly lower than last year. However, this trend varies by major business. Another challenge we are facing is an increasing amount of imported steel conduit coming primarily from Mexico. There are currently provisions in place between both countries that are meant to limit the amount of steel conduit imports. However, the statistics reveal the amount of conduit shipped from Mexico into the United States far exceeds these negotiated limits. This reality has been acknowledged by others within the industry, prompting a call to action. These increased amounts of foreign steel conduit natively impact our volume year over year, while the overall market inclusive of imports has grown year over year. We also continue to experience softness in the telecom and the utility markets. Despite the challenges we are facing in the market, we are progressing well in our own operations and are confident in our long-term opportunities. We are pleased to share that our production and shipments of solar torque tubes at our Hobart, Indiana facility improved meaningfully from the second quarter to the third quarter. We continued executing our capital deployment strategy during the quarter by repurchasing $125 million in shares, bringing our -to-date total for shares repurchase to more than $280 million. On that note, I want to remind everyone that as we near the end of our previously approved multi-year $1.3 billion share repurchase authorization, our board of directors authorize a new $500 million buyback program in May, which will be available upon the completion of our existing plan. This new authorization is consistent with our commitment to returning capital to shareholders and reflects the board's continued confidence in the compelling value of ACOR shares. In light of the challenging market environment, we are adjusting the midpoint of our fourth quarter EBITDA outlook. However, we remain confident in the long-term opportunities for our diversified product portfolio. Overall, our broad product portfolio provides essential elements for nearly all types of construction, especially those that support secular trends including solar power, data centers, artificial intelligence, infrastructure digitization, grid hardening, and support for the energy transition. The breadth of our product portfolio enables ACOR to be resilient to changing end market demand while remaining a supplier-age voice across our channel partners. With that, I'll turn the call over to David to talk through the results from this quarter.
spk11: Thank you, Bill, and good morning, everyone. Moving to our consolidated results on slide four. In the third quarter, net sales were $822 million, and our adjusted EBITDA was $206 million. We delivered a strong adjusted EBITDA margin of over 25%. Our tax rate decor was just under 22%. As a reminder regarding the -over-year comparison of our tax rate and adjusted diluted EPS, the change in our accounting treatment for the solar credits associated with the IRA in the third quarter of fiscal 2023 drove a tax benefit that lowered our effective tax rate to less than 9% as we recognized three quarters of the expected benefits in Q3 of 2023. During the third quarter last year, we changed the accounting treatment from what we had recorded in the first two quarters. This change reflected the benefit of the credits as a reduction of tax provision rather than a reduction in cost of sales. This lower tax rate also helped contribute 50 cents to our higher than expected adjusted EPS of $5.72 last year. Turning to slide five in our consolidated bridges, our volume in the quarter was essentially flat compared to the prior year while net sales were at the midpoint of our guide. Our third quarter results were below expectations. While we saw sequential growth in net sales during the quarter, we did not see a lift from the seasonal construction demand. Typically, our third quarter benefits from the seasonality and we see sequential profit growth. The net impact from solar credits was a reduction in EPS of 37 cents -over-year. As mentioned in my comments on the previous slide, our change in accounting a year ago added 50 cents to EPS. Moving to slide six, our -to-date volume increased 4% compared to the prior year with contributions across the portfolio. We continue to see growth in our overall PVC products category. Our metal framing products also contribute to growth as they benefit from data center expansion. Our -to-date performance has been impacted by continued softness in the telecom market. As Bill outlined earlier, our steel conduit business has met resistance from a significant increase in imported conduit. Our -to-date volume has been negatively impacted by this surge in imports. That said, we remain confident in the long-term potential of our Diverse 5 portfolio. We expect that our portfolio of value-added products along with our resilient business model will continue to provide us with sustainable growth opportunities as our markets stabilize. Turning to slide seven, those segments had strong EVO margin performance in the third quarter. Our electrical segment achieved 30% margins. Price versus cost continues to be unfavorable on a -over-year basis. Last quarter, we acknowledged that in addition to PVC price compression, we also experienced -over-year declines from our HCP business which continued this quarter. Our S&I segment EVO margins continued the trend of sequential improvement since the quarter, achieving just under 14% in the third quarter. This improvement is due in part to better operational performance at our Hobart, Indiana facility. Turning to slide eight, we continue to execute our capital deployment model supported by robust cash flow generation. The strength of our balance sheet allows us to be flexible in the ways we deploy capital to deliver value for our shareholders. With that, I'll turn it back to Bill to talk through some updates relating to our FY2024 outlook as well as our views on FY2025.
spk07: Thank you, David. Turning to slide nine, while we achieved three consecutive quarters of adjusted EBITDA over $200 million in fiscal 2024, we currently believe that Q4 will be lower than this trend due to ongoing softness in the overall market which has led to a more challenging pricing environment. As we look forward to the fourth quarter of fiscal 2024, we are amending the midpoint of our adjusted EBITDA outlook to $145 million. Our fourth quarter outlook reflects a continuation of or an acceleration of several factors that have impacted us, most notably the pricing dynamics in PVC and import issues in steel conduit, in addition to the overall soft markets diminishing volume growth. As I've discussed at the start of the call, we expect the softness in overall market to continue into the fourth quarter, which impacts both volume and price. Further, domestic manufacturers of steel conduit are likely to face continued pricing pressures to compete with these elevated and increasing steel conduit imports. Turning to slide 10, we have updated our key bridging assumptions for the full year, which is reflective of the items mentioned earlier, which are likely to impact our fourth quarter performance. We are currently in our annual planning process. As we look beyond fiscal year 2024, we now believe that FY25 will be our new earnings base. We expect to see EBITDA improvements from some of our growth initiatives related to solar, HDPE, water, construction, and our regional service centers. Some of these initiatives are still significantly below our original expectations and where we expect these businesses to operate in the midterm, but we do anticipate them to contribute positively year over year. For the remainder of the business, we expect to see continued productivity improvements and overall modest volume growth in the low single digits with the possibility of higher growth as new switchgear capacity comes on board and further supported by the prospect of a lower interest rate environment. The larger question that remains is what the pricing environment will be as we progress through FY25. We expect the environment to remain challenged through the remainder of this year and into FY25. Although there are many uncertainties at this time, we will have a more important perspective in November for our initial EBITDA estimate for FY25 would be around $650 million given the market environment. However, this estimate could go higher if construction activity in the area such as residential and utility starts to improve. We anticipate having strong free cash flow and will continue to be investor-centric in our capital deployment strategy. We remain focused on preserving our history of transparency and will continue to update on key topics that impact our business. Before we go into Q&A, I also want to address the announcement we made relative to David's departure. ACOR has been extremely fortunate to have David's leadership over the past six years. Under his leadership, ACOR has created a balanced capital deployment model enabling acquisitions, internal investments, stock repurchases, and quarterly dividends to drive value creation for our shareholders. David will be missed, both as a colleague and an ACOR teammate, and we truly wish him the best in his next chapter. Thank you, David. Looking ahead, ACOR has a strong model for organizational leadership succession planning, which enables a smooth transition. We are fortunate to have two incredibly strong leaders in John Deicher and James Alvey, who will assume the roles of chief financial officer and chief accounting officer, respectively, as of August 9th. We look forward to all that is to come with this new phase in ACOR leadership. John and James are working closely with David to ensure a seamless transition, and we are fortunate to have a deep and talented financial team that will help support John and James as they get up and running in their new roles. With that, we'll turn the call over to the operator to
spk10: open the line for your questions.
spk03: At this time, I would like to remind everyone in order to ask a question, press start, then the number on your telephone keypad. We'll pause for just a moment to compile the Q&A. Your first question comes from the line of Andy Doplowitz with CD Group. Andy, your line is now open.
spk01: Good morning, everyone. David, thanks for all your help.
spk11: Thank
spk01: you, Andy.
spk11: Appreciate it.
spk01: So obviously, you revised higher the amount of price versus cost normalization to $325 million this year versus the initial $250 million, but could you give us latest thoughts on what the overall price cost normalization could end up being versus that initial estimate you gave us of $585 million? I think you said, Bill, $650 million is your initial estimate of EBITDA for $25 million. When we think about the exit rating, Q4 of $145 million, can you give us some color? What would be the puts and takes versus that run rate in $25 million? Anything to quantify would be helpful.
spk11: Sorry, Andy. Obviously, two very important questions. I think when you look at the $325 million this year, I will remind everyone that a portion of that does include HTPE, which would not have been in our original estimate of the $585 million. So if you assume somewhere around $35 million plus or so of that price cost is in the $325 million, we would have been just under $300 million this year. So you add that to the $250 million last year year at $550 million or so against the $585 million. Given where we are right now, what we saw last quarter and what's built into our Q4 forecast, you would expect next year to be over $200 million, $250 million type of range. And then you will see some benefits from our initiatives coming up. Obviously, you'll see some from solar year over year, our global megaprojects, so on and so forth. Andy, very modest kind of volume built into that $650 million number, which is what Bill mentioned. So hopefully that helps out.
spk01: It does. And then, Bill, maybe you could elaborate a little more on what changed in the environment between last quarter and this quarter. I think last quarter you did talk about a weaker start to the construction season, but it seems like conditions on the ground got a fair amount worse. Did you see any more project delays than you thought? Did your customers start destocking? And then you do have pretty severe decrementals in Q4 versus Q3. Is that just all prices or something else going on?
spk07: Yeah, Andy. I'll say yes to all the bugs. So in other words, you have to remember kind of either our products or our markets. And we serve all markets, and we're proud of that. And things like data centers are really strong and moving ahead and David just spoke about as we go into next year and solar and so forth. But obviously markets, whether it's commercial construction, I assume from you or other shareholders and so forth, that utility markets are weak right now. Again, that should bounce back. Hopefully as we get into the second half and all the other long-term secular trends. But right now, for most of our markets, and especially we call down the one page to the deck where we show the percent, the one or two key markets. But that's where like, okay, we serve everything. But if you're PVC, hey, it's utility and residential and they're just not sub-developments being built at this stage. And obviously multifamily home is down. So the specific markets that drive us most are much quieter. I do think there's job delays. I would have to start speculating on how much when the Fed starts cutting interest rates, that that should pick up even into next year. But the markets and whether you look at public companies, whether a distributor or others that have commented in our markets, but I can tell you from talking without naming them, these two of the top 10 largest distributors that are private are seeing the same thing we're seeing, quite frankly, I think worse than we're seeing. So there is a little bit of us using our RSCs and so forth that it's a down market and the end market in the markets we serve right now. And that is driving more price competition, Andy, than we thought that, again, I can't control obviously what our competitors do as they try to fill factories or listen to somebody else saying here's the price you need and reacting to that. David did call that out I think in our prepared earnings as we looked at this quarter. You know, to say hey if the markets are weaker and they are and as you know obviously it's a crystal ball but as we go into next quarter I'd rather get out in front of it now and pick numbers that obviously it's a forecast but we expect to hit or exceed probably like every quarter and then just focus on our fundamentals, which I'm absolutely so convinced of our people and the long-term strategies.
spk01: Bill, one just one more quick one for me. You mentioned increased import pressure and steel condo. Can you give us a little more perspective on how much of an impact that is happening on the business? We know metal condo is 20% of your business but since you called it out is it having an even bigger impact on your business than that and I think you are seeing increased competition within core PVC but is it really the steel stuff that hits you more this quarter?
spk07: Yeah Andy, that's where again I assume every company has been trying to be transparent but as we go from our fiscal Q3 to Q4 I don't want to rank but I'll just say it's in the top two of challenges in the following way. Just give more color here. There's always almost for every product when customers ask is there an import? Well yeah there's a little bit of like cable I'm making up a number but one low single digits 1% or something coming from Canada. Steel conduit has been that way and it's grown over 10 years or so from 3 to 5% now to quite frankly somewhere around 20% and there still is a preference for Made in the USA, the quality of the products and everything else. We're doing electrical contractors here you know that appreciate our brands and want to support American Made but it's grown to the point that whether I moved first or my domestic competitors have moved to the point that you just can't tolerate a 15% price decline in that product line and these are all rough numbers it's on the quote job so as we factor that back into our business here to respond you know at some point you can ignore 5% market share you can't you know at some point you just can't ignore competition coming in and undercutting the market. So I appreciate the comment. Yeah thank you sir. Thanks guys. Thanks Andy.
spk03: Your next question comes from the line of David Tarantino with K-Bank Capital Markets. David your is now open.
spk05: Hey good morning everyone. Good morning David. Maybe just to start out to put a little bit of finer point on the price normalization can you give us some color on kind of the incremental 50 million of headwind in the outlook just kind of how you would how you think the breakdown is by the incremental headwinds like how much is kind of the import headwind versus incremental PVC and HDPE pressures?
spk07: Yeah so I'll try to and then David can give me more color or whatever or ask more color but I do think it's probably split if I had to like cradle it I'd give a little bit more to metal conduit that Andy just asked about I mean and that is a it's a trend that I mentioned to Andy that it's not like these guys came out of nowhere but it's just the reflection even in last quarter the guy I mean hey we have to start reacting to this and we are and our you know customers too so that's probably first then it's probably PVC and HDPE again I want to emphasize a little bit beyond is there other products dropping five percent like year over year yes but there's also products going up five so you know almost a long-term normalization you know a bunch of our products do move around a small sign wave and when again I reference almost David's comment from last quarter volumes pick up into next year it's a lot of people expect I'm assuming a stronger market and you know we actually could get priced but right now going into the year or even next fiscal year in this quarter it's tougher than we expected at the moment
spk05: okay great thank you and then maybe could you give us an update on the ramp of the solar torque to facility how has it progressed versus expectations from last quarter I know it's early but maybe could you frame how you're thinking about this into next year
spk07: yeah it's positive with I'll do this and that the challenge first the challenge the only challenge which is not a new thing is we expected to be here pick a time nine months ago but from the point of and don't hold exact what quarter and so forth but we're ramping up at double digit percent you know our customers are still out there I think some of the customers I don't want to speak for them have a little bit of challenges you know on getting utility hookup with solar and stuff like that but there's enough opportunity out there we're watching those things but there's enough opportunity for us that you know we're growing I'm really proud of the team I mean albeit that we have been here before but at this stage we're ramping up in every facet as expected and then David to your kind of follow-on question is our my our David CFO reference as we look into next year yes we may have pricing headwinds but we do have a lot of these growth initiatives that should add off it's not in the prepared remarks but at least 50 million dollars if not more of incremental EBITDA going into next year so you know we're on track out of the team and obviously there's still pressure to continue to pick up on that number but things are going well if I look at quarter over quarter for the last couple quarters
spk05: okay great thank you thank you David
spk10: thank you
spk03: your next question come from the line of Alex Rigel with B Riley Alex your line is now open
spk08: thank you good morning you referenced the softness in the telecom and utility market I suspect that was year over year but my question is how are these markets performing sequentially
spk11: um I'll really flat flat I mean minor little bits of increasing in quotes which I think maybe is a precursor for a better volume kind of going into maybe next quarter next year but as we sit here today I would say not a meaningful sequentially
spk07: and
spk10: then
spk07: I don't know Alex David just answered for us that's what's most important but just to triangulate it without um obviously any other companies there are distributors and so forth that mentioned their weakness in this market if you looked at dodge they're predicting utility be down six percent this year so um yeah and again I don't think anyone's going to question the long-term secular trend of electrical and heavy utilities and solar and everything else suggests right right now and as we go into next fiscal year it's a little bit more challenging than what we probably expected a year ago
spk08: and then can you talk a bit about inventory on hand or in the channel and where that stands and is some of the price weakness due to excessive inventories and all sort of demand driven based competition and imports
spk07: I'll start here's where I would say the following now I'll almost fight back to utilities because one of it again the well two of the top largest customers just talking talking to customers all the time is with specifically utility they actually figure again lots of things hooking up to the grid weather putting in trenches that contractors are backed up and that's what's even slowing down distributors but overall my sense is that if you were to look back let's say two or three years ago or whenever normal was before covid the actual inventories out there are bowed in line now that said with pricing pressure no distributors would like the worst thing they can do is buy indie value stock they just don't make enough money to have that happen so I think distributors in general are trying to wait and even cut below normal level so I wouldn't say there's extra inventory but I would say if you could round off a week right now distributors and again we're delivering well but frankly so is our competition delivering well that you just don't need to have quite the level of
spk11: stock now like I would say that going into the quarter I think everyone felt like their inventory levels were somewhat normal under their set but I just feel like their activity going out the door is than they expected and therefore they I do think that they have a little bit more inventory than they did so I think they felt like they were kind of in the middle of that right now and they're probably want to leak a little bit of that out
spk10: if that makes sense helpful thank you thanks Alex
spk03: your next question comes from the line of dindray with rbc din your line is now open
spk09: thank you good morning everyone also add my congrats to David that sounds like a fabulous opportunity and then congrats to John and James
spk07: thank you thanks for David thank you I
spk09: want to circle back on the situation on the Mexican steel conduit I guess that constitutes dumping and just make sure I the number correctly bill you said it's now represents 20 percent of the market is that the right number and if the if the direction okay but if the tariffs were enforced what would that number be
spk07: oh so um let me go without getting too geeky here because I could go for hours on this one um it's around 20 obviously you can go from there down is it Mexico versus a little from some other country all those other factors in two minutes or less what happened when NAFTA switched the usmc they took down the 25 percent tariff that was part of NAFTA and they agreed to not have quote unquote a word any surging occurring and over since that was done and that they picked baseline of 2015 to 2017 were up around and again depends on what year and things sevenfold since then so it's grown you know 50 percent a year but it's compounded to the point of being significant so if you go forward dean and say that hypothetically the current administration or new administer at different ministrations was to implement back to what usmca requires already written into contracts or to put a tariff in that number could drop substantially and that's why it's hard to gauge next year with pricing we don't have that built into our you know where we did mention the 650 so again that's where in november we'll have a little bit more buoyancy on administrations interest rates and things like that it's a little tougher to predict forecasts right now
spk09: got it but still i know you've got a lot of moving parts between tvc and the steel situation the previous expectation was price normalization might be reached towards the end of calendar 24 that now feels like that's being pushed out based upon what you know today where do you see the best case price normalization that would happen look i know it's not a fair question yes the mexico where and you know from what you know today where would normalization happen
spk07: here's how i would answer dean yeah with the first the caveat but then i'll get to your question is i and david have mentioned for six years now on calls you know we we live in a world with two weeks or less backlog and pricing changes every day but with you know the fine print there of a forecast one of the comments i made in my prepared remarks is that we think next year would be the baseline so to say could some pricing drag on up down maybe but i think as you look forward say organic growth one of the things we didn't call out as much as productivity that's actually strong higher than budgets even with slightly more inflation we have strong net productivity and you'll look at our growth initiatives that will you know as the gentleman earlier david asked like about hobart that are kicking in place in our global mega projects that i think next year is the baseline so i'm not going to put up in in pricing but i think it will become the minimus enough that the other things will drive ahead and you know we get back on track of growing earnings which obviously will be a strong reflection point for our stock that goes with every other fundamental of our company
spk09: all right i appreciate that just last question what do you have any comments on some of the noise we're hearing about pricing and pvc i hate to use that word collusion but it really trying to figure out is this can this be substantiated maybe if you just start with some comments there
spk07: yeah so i'm going to tell you first is if you saw some of this stuff going around it's from a short seller says they're short seller and dean to your question you've asked over the decade i am so proud of our internal pricing mechanisms weekly calls scatter diagrams apps that is probably seen that we drive our business and i'm going to claim that report is unsubstantiated from the conclusions it tries to make
spk09: we would agree thank you
spk02: thanks
spk07: thanks
spk02: team
spk03: your next question comes from the line of chris more with cj s securities
spk06: chris
spk03: your line is now open
spk06: hey good morning and congratulations as well to david most been answered maybe just one more on on pricing certainly seems like on a relative basis since the pandemic began pricing on on pvc has you know increased more than than any other product obviously it's come down significantly when you look at relative price risk for fiscal 25 is it still fair to think that that pvc pricing you know still represents you know kind of the biggest pricing risk moving forward
spk07: yeah and give i'll give it a little bit more color but the end answer is yes chris and again if you go back to covid time all with supply demand constraints which drives our business this has been a constant theme since reac or existed um all of our products that i can think of all went up in margin so did both our competitors and other industries maybe not as much but then with pvc if you go back around covid you also had a hurricane hit and at my timing it could be a little off here but four six months later you had the freeze in texas that we just had an abnormal thing that therefore allowed
spk00: more
spk07: opportunity for someone to say hey drop your price pick it three percent five percent try to fill my factory then if you're up ten percent you know there isn't as much opportunity for somebody to try to drop their price so long-winded reason that's the dramatic thing that's happening in pvc but yes i do think it's pvc and then you know we'll see almetal condo plays out but at least in this quarter i think we appropriately scope that and to dean's earlier question or i'm going to put words in dean's mouth you know administration's focus on the future on just and forcing a contract that's already been there that quite frankly some of our very large corporate competitors ceos have called out in their earnings
spk11: so and chris one other thing to remember during that covid times not only was there a supply chain disruption but there was very strong demand
spk00: yeah for me
spk11: i think that's we don't enough about the end aspect of pricing if we had that type of demand right now i don't think we'd be talking about pricing like we're talking about today so i think in that regards the reason why we would say pvc for next year is probably just more uncertainty around the pvc market for next year as it goes in
spk07: and affects pricing
spk11: yeah
spk07: david and i don't have the number in front of me but just to echo that and again everybody these are public stuff but to go single-family homes it's an average market if you look at some of the information but no sub-developments are being built and i'm winging a number here but you get back to 1.2 million a year starts versus 900 000 starts that all this stuff people unfortunately look at you know how are they going on volume what did they estimate whoever their bosses and stuff above them and you start getting the fed dropping rates and residential picking up some ifs there that way we didn't pay fees into forecast for next year but pricing could easily go up but at this stage you know i want to still stay around what we just said at the 650th
spk11: stage and chris one other aspect and bill references a little bit is opening comments when you look at the market right now kind of the overall construction market it is made up of large projects becoming a larger piece of the overall activity and when that happens two things happen one typically the larger projects are a little bit more price competitive to begin with but when there's not all these other opportunities kind of broad construction activity it gives you less opportunity to do your your pricing by location and so on so forth so i think that element right now we're feeling that in in q3 and going into q4 extremely
spk06: helpful guys maybe just the last one for me so 650 is obviously a target could come up could come down any you know kind of ebony margin range that accompanies that
spk11: hey hey david do you want i think basically the way that we try to approach the 650 we felt like that's kind of the minimum base chris going into next year so i think that's you know our viewpoint as we said right now i do believe that going into november we'll know a lot more or the team here will know a lot more going into november you know with you know the uncertainties that exist right now yeah but
spk07: i think to the margin thing we focus more on year over year and quarter you know questions that we answered earlier versus trying to do a margin depending on you know obviously margins somewhat depend on this could help us on what our revenue is and you know things like steel costs again i want to emphasize really cost is the least factor of things of market demand competitor actions and you know our value prop but like steel costs are dropping so one could think revenue could be down if we make even the same price per ton but again chris the specifics will get into the broadly speaking not too far out of no i'm not sure shadowing
spk11: anything correct okay
spk06: i appreciate that i mean one thing i mean
spk11: one thing we could mention i mean f and i is starting to get up into that mid teens again which i think is certainly helpful also for the enterprise is
spk10: got it i appreciate it i will leave it there oh thank you chris
spk03: your final question comes from the line of chris denkert with loop capital chris your line is now
spk02: open hey thanks i just uh i could go again congratulations david and then thanks for all your help here um i guess you know first off and sorry for specifics but i guess as far as the robot ramp goes any sense that you can give us for you know kind of what the utilization rate is today obviously you said you know we're hoping to get there sooner but are we at 50 utilization today and that continues to ramp fully into 25
spk07: yeah no it's higher in that chris without getting into a precise number and then you got two things going so definitely north of 50 percent but i'm plus your mind so i'm going to give you a wide range here but like to use the 70% so yeah but i don't want a lot because chris there's a little bit with almost like my answer to the um mexico with dean and so forth is you know we get in this thing called o e e the account the fact that prevented maintenance in that number the account that we're not working we're you know starting a third shift but we're not working four shifts i.e. around the clock with weekends and you know smet event or you know how quick we change over and so forth so we're ramping up definitely above your 50 number but as we go into next year there's still growth again not lucky numbers but could we grow 20 30 percent the answer is absolutely that volume
spk02: god that's extremely helpful thank you um and then just you know finally for me i guess any update on kind of bead program funding timing i know you know new york and california have finally some stuff stood up any anecdotal commentary there or kind of how that could impact hdpe volumes into into next year
spk07: yeah so great question chris all the questions are great but i can't imagine if we would have went through the sell side questions and not hit that um i think cautious optimism i'm going to put it which we've always said in 25 i'm going to put it because it all gets on when you know like what's the ramping call of success i'm going to put it more into calendar 25 than fiscal 25 but your point two states have approved it other states are closed whether it's the people making the fiber optic or um one of our very large competitors in that segment you are all saying the end of this calendar year and so forth so i i think we've been cautiously optimistic in our guide we're going to expect to see profit pickups from next year um but i will say you know it's definitely going to be a ramp through 25 and 26
spk10: yeah thanks again so much for the color yeah thank you chris
spk03: this concludes the question and answer session i would now like to turn the call back over to bill waltz for closing remarks
spk07: we share today our perspective on several challenges that are impacting us and they may continue to impact us in the midterm despite these challenges we have conviction in our people our strategy in our processes which are the three fundamentals of our business system and enable us to remain resilient and focused on the future with that thank you for your support and interest in our company we look forward to speaking with you during the fourth quarter call in november this concludes the call for today
spk03: this concludes this conference call you may now
spk07: disconnect
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