Oct 20, 2026 earnings call — Utility backlog and capacity ramp drive results
Company raised full year adjusted diluted earnings per share guidance to $22.75 to $23.75.
Revenue $1.1B (est $1.1B) · EPS $6.24 (est $5.70) · Next-quarter revenue outlook $4.3B–$4.5B
Key quotes
"This quarter, more of those opportunities converted into orders bringing the infrastructure backlog to $1.8 billion"
"When input costs stabilize, we expect pricing will catch up and support infrastructure margin expansion. This usually takes 2 to 3 quarters to fully realize."
"We also saw continued growth in our higher value offerings with aftermarket parts sales increasing approximately 12% and technology services growing 7%."
Analyst Q&A 7
price and input cost impact on margins
Q (Nathan Jones · Stifel): How did steel, freight and other input cost inflation affect margins and earnings in Q3? Will it get worse in Q4 before price catches up? Also, how much did storm-related ag revenue contribute to the quarter and to margins?
A: Management said Q3 saw modest margin impacts from higher input costs and there was no negative dollar impact, but they expect more pressure in Q4 as input cost inflation accelerated. They said price mechanisms usually take 2 to 3 quarters to flow through, so moderation would bring margin improvement over time. On ag, storms drove North American strength; there were about $7 million of one-time recoveries and adjusted operating margin was just north of 14% after removing those items.
"As we look to Q4, we expect that to get a little more pressured." — John L. Schwietz (CFO)
why backlog grew and competition
Q (Tomohiko Sano · JPMorgan): What is driving the infrastructure backlog increase to $1.8 billion across customers, and what is the competitive landscape? For North America utility up 23% in Q3, how much came from volume versus price and how to think about Q4?
A: They said the majority of the backlog increase is related to utility customers and the pipeline has strengthened, with orders converting from the pipeline into backlog. The market remains robust, customers are increasing spend, and the company is booking well into 2028 with expanding pipeline through 2029. For the 23% North America utility growth in Q3, management said the majority was volume while price was right at double digits, and they expect mid-twenties full-year utility growth and double-digit volume growth for the year.
"So, for the majority of the increase, majority of the backlog is related to our utility customers." — Avner Applbaum (CEO)
North Africa project timing and margins
Q (Brian Drab · William Blair): When will revenue start on the North Africa project, what is the cadence and duration, and how do its margins compare to typical ag margins? Also, has utility outlook and visibility to the $6.7 billion target changed since Investor Day?
A: They said they expect to start delivery on the North Africa project in the first half of 27 and it will run about 18 months up to 2 years, supported from Dubai and other global facilities. Margins for the project are slightly below baseline operating profit margin, but not significantly and not expected to have a material impact. On utility, management said confidence has increased, the pipeline and backlog have grown, they are shipping against the $6.7 billion and booking well into 2028 with visibility extending toward 2030 and beyond.
"This particular project, like most large projects, is slightly below baseline operating profit margin." — John L. Schwietz (CFO)
pricing sustainment and telecom outlook
Q (Brent Thielman · Oppenheimer and Company): Will North American utility pricing sustain at a double-digit run rate into 2027? And when might the telecom business see a recovery and what could catalyze it?
A: John said yes, pricing at a double-digit run rate is expected to sustain for North American utility into 2027. For telecom, they said visibility is poor as customers are more selective after the 5G peak, some site work has shifted into 2027 and any recovery is a matter of timing with potential signs toward the latter half of 2027. Meanwhile they are focusing on cost control, new product development and areas like private networks while conditions remain uncertain.
"At telecom, we do not have great visibility into the market." — Avner Applbaum (CEO)
steel normalization and competitor capacity
Q (Chris Moore · CJS): If steel pricing normalizes, when might margins start to improve—Q2 or later? And does Nucor adding capacity affect the infrastructure supply/demand balance?
A: They said timing for margin expansion depends on how quickly input costs accelerate or stabilize and Q2 is too far out to be certain; actions to expand margins and improve operating leverage and SG&A are taking hold. Management noted pricing actions mostly offset costs and higher pricing next year will not all flow to the bottom line. On competitor capacity, they monitor the industry and said even with capacity adds there is still more demand than supply, and customers choose them for engineering, reliability and on-time delivery, so they are comfortable with the market balance.
"Even with all the capacity adds, there is still more demand than supply in the industry." — Avner Applbaum (CEO)
ag margin carryover and regional headwinds
Q (Brent Thielman · Oppenheimer and Company): Why would ag margins not carry over from Q3 into Q4? And how large a headwind has the Middle East facility closure and other regional issues been this year?
A: They said Q3 ag margins were unusually strong because of a higher North America mix driven by storm demand and preferred pricing, and Q4 is expected to return to a more normal mix which will put pressure on margins. On regional headwinds, management said the biggest top-line delta versus last year was the lack of project revenue from the Middle East, with additional softness in Brazil; North America has been near the bottom but showed strength in Q3 and has upside potential.
"If we look to Q4 to your point, it is that we are expecting sort of a more normal return to the business mix between North America and that will put some pressures on the margins compared to Q3." — John L. Schwietz (CFO)
forward-looking statement and risks
Q (Video): No question; this is the closing forward-looking legal and risk statement.
A: They said the slides and oral discussion contain forward-looking statements based on management assumptions and perceptions of trends and conditions. They emphasized these statements are not guarantees of future performance and involve risks and uncertainties beyond the company's control, noted the guidance includes non-GAAP measures, and explained reconciliations are not provided because the company cannot do so without unreasonable effort given the uncertainty.