Hello and welcome to Wesco's First Quarter 2023 Earnings Call. I would like to remind you that all lines are in a listen-only mode throughout the presentation. [Operator Instructions] Please note that this event is being recorded. I will now hand the call over to Scott Gaffner, SVP, Investor Relations, to begin.

Thank you and good morning, everyone. Before we get started, I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not guarantees of performance and, by their nature, are subject to inherent uncertainties. Actual results may differ materially. Please see our webcast slides as the company's SEC filings for additional risk factors and disclosures. Any forward-looking information relayed on this call speaks only as of this date, and the company undertakes no obligation to update the information to reflect the changed circumstances. Additionally, today, we will use certain non-GAAP financial measures. Required information about these non-GAAP measures is available on our webcast slides and in our press release, both of which are posted on our website at wesco.com. On this call -- on the call this morning, we have John Engel, Wesco's Chairman, President and Chief Executive Officer; and Dave Schulz, Executive Vice President and Chief Financial Officer. And now I'll turn the call over to John.

Thank you, Scott, and good morning, everyone. It's a pleasure to be with you today. We're off to a strong start this year and set a new first quarter company record for sales, backlog, margin and profitability. The power of our increased scale, our industry leading positions and our expanded portfolio of product, services and complete solutions is evident in our continued strong performance. We delivered double-digit organic sales growth driven by secular demand trends, share gains and ongoing improvements in the supply chain. All three of our business units set new records for first quarter sales as well as gross margin. And we delivered another impressive quarter of cross-sell results, which continue to exceed our expectations. We're confident that 2023 will be another transformational year for Wesco. We're making excellent progress on our digital transformation and expect our strong sales growth and margin expansion to continue. As you saw in our release earlier this morning, we reaffirmed our full year outlook, and we expect to generate significant free cash flow in 2023. As Dave will discuss in more detail later in the call, we are focusing our cash generation on debt reduction in the near-term. As a result, we expect to reduce our leverage below 2.75 times, which is the midpoint of our target range by year-end. And that creates increased capital allocation optionality for us in the second half and entering next year. Now turning to page 4. The strength of our business model and the success of our integration efforts since closing the Anixter acquisition in mid-2020 have established a track record of superior results for our company. This page highlights our first quarter record results compared to the pro forma pre-pandemic results of legacy Wesco, plus legacy Anixter in the first quarter of 2019. As you can see, we have clearly outperformed the market, delivering impressive sales growth and margin expansion, and we've achieved record profitability, all while rapidly deleveraging our balance sheet. Most importantly, our dedicated team of Wesco associates continues to provide resilient and critical supply chain solutions for our customers around the world, capturing the benefits of our deep exposure to sustainable secular growth trends that drive our future sales and profitability. So with that, I'll now turn the call over to Dave.

Thanks, John, and good morning, everyone. I'll start on slide 5 with a summary of our first quarter results compared to the prior year. As John mentioned, we delivered first quarter record sales, gross margin, adjusted EBITDA margin and adjusted EPS. Our cross-sell program again exceeded our expectations. Our ability to cross-sell Wesco and Anixter products and services contributed approximately $220 million of sales in the quarter. On an organic basis, sales were up 11% in the quarter driven by a combination of price and volume, along with share gains. We estimate pricing added approximately five points to sales growth with the benefit primarily in our UBS and EES segments. On a reported basis, sales were up 12% as additional sales from Rahi were partially offset by a headwind due to foreign exchange rates in the quarter. Backlog continues to be at historically high levels. In total, backlog was up 21% year-over-year and flat sequentially from the end of December, including backlog associated with the Rahi acquisition. Supply chains have started to heal and, in some instances, have returned to normal. However, we are still experiencing extended lead times in our EES and UBS segments for critical components such as switchgear, breakers and transformers. While an improving supply chain is a positive for Wesco, our customers and suppliers, it has created some near-term timing issues around inventory. Specifically, we are adjusting our order patterns to reflect shorter lead times versus last year. Our current inventory levels support our record backlog and our expectation to deliver 6% to 9% revenue growth in 2023. As we start the second quarter, demand has continued to be resilient on top of a tough base period comparison. In the month of April, growth continues to be led by CSS and UBS, which were both up…

We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Deane Dray with RBC Capital Markets. Please go ahead.

Thank you. Good morning, everyone.

Good morning Deane.

We're hearing lots of consternation about channel inventory and customer inventories and whether there's destocking going on. And I was hoping you could just take us through from your perspective, supply chain normalization is allowing companies and customers to be able to release buffer inventory. They're all talking about that. But anytime you see or hear about destocking, it raises concerns, is that the early sign of a slowdown? So look, you're right in the ground zero of all of this because you're getting inventory from the suppliers, taking that in, you're seeing the pace with the customers as well. So please share with us what you're seeing with regard to that question. Thanks.

Yeah. Deane, very good question. I -- look, I think we had a very strong quarter. We built a plan for the year. We essentially delivered our plan. The mix was a little different than what we thought. UBS and CSS a bit stronger than an EES, a little bit of headwinds there, but still grew in the quarter. So overall, we're seeing very strong demand levels still. Backlog was held flat in the quarter. We do expect because our backlog is running at over two times a normalized rate, and that was built over the last couple of years, and we're running with elevated inventories as well. We expect backlog to start to go down. That's working our business back to a more normalized state, but we did not see that yet in Q1, even with the 12% reported -- 11% organic growth. And that's a reflection of very strong demand levels. Bid activity levels remained at a record high. Our opportunity pipeline continues to grow. The cross-sell synergies we took up meaningfully, again, had terrific cross-sell results in the quarter. So this is really a strong quarter. In terms of the destocking, the only area where we're seeing material destocking at the customer level is in broadband. And I think if you look at some companies that are heavily exposed to broadband value chain, you'll see that in their results, the other publicly traded companies. There was very strong growth last year. And what customers did was run with higher levels of inventory knowing that the secular growth trends are there, but also concerns about the overall supply chain, which was very constrained through the pandemic. So they're working through that a bit. This is for broadband. It's our anticipation -- it will take one to two quarters…

It's really helpful. I appreciate you taking us through all of that. And just if we could drill down a bit on EES, and I like hearing the expectations that second quarter and third quarter are projected to be better. We don't often hear about specialty vehicle and manufactured housing as verticals. But take us through to the extent that, that's meaningful, but more importantly, what you're seeing in the construction markets. Thanks.

Yes. Well, we've got three really -- parts of that business, Industrial, Construction and OEM comprise our EES business. And I'll start with Industrial because up mid-teens, very strong. We're seeing a large number of mega CapEx projects. We've got a record backlog. That backlog includes construction, but it also includes big industrial projects that we do with the end-user customer. The secular trends are very strong and intact, especially reshoring. Remember, we sell to 90% of the Fortune 500 companies directly. I can tell you, all our customers are looking at reshoring, nearshoring as supply chains begin shifting structurally back to North America. I believe fundamentally -- and we're seeing this. We're in the early innings of a multiyear Industrial up cycle or even super cycle. So Industrial, strong momentum theme, that's in EES, again, double digit growth in the quarter. Moving to Construction, up mid-single digits in the quarter, both in US and Canada, record backlog, as I mentioned. The secular trends give us great confidence. Remember, we're non-resi essentially, very little residential construction exposure, but the secular trends of electrification, IoT and automation. Again, the reshoring, very positive drivers of our business. And it's important to understand, too, the big infrastructure spending and investments that have been approved through various bills in Congress, that's not in our numbers yet. That's not driving the market yet. So that's 2024, 2025 and beyond. So really solid start, I think, on construction. It's also important to remember that construction overall for the company is only 17% of our total sales now. So the cyclicality of construction is only 17% when you look at the balance of our business, just incredibly strong secular growth driving most aspects of the business. And then for OEM, that's our value-added assemblies business. That's traditionally been a lumpy business. No structural issues. It's just -- it has been lumpy over time if you were to look at that historically. We remain bullish on OEM ultimately and our value added, though, capabilities. Because when you look at the fundamental drivers for Industrial, they also apply to OEM. When you think about OEM being value-added assemblies that feed a variety of end markets, including Industrial. So that takes you through the pieces, Deane.

Thank you.

The next question is from Sam Darkatsh, and he's with Raymond James. Please go ahead.

Good morning, John. Good morning, Dave. How are you?

Good morning, Sam.

A couple – two, three questions, I suppose. First, I'm trying to reconcile your flat sequential backlogs with the commentary for some of your primary suppliers. Some on Eaton as an example was talking about their backlog sequentially being up high single digit sequentially. Are there certain mega products that your vendors are seeing that are not going through distribution per se that they're more vendor direct, or what else might explain that delta?

I mean, the short answer is no, Sam. And so I think what I'd suggest is take a look at the -- look across the entire electrical, I'll call it, channel or value chain space. There's a number of suppliers. They have different performance levels, and there's a number of distributors. You look at us versus our competitive period, we think we had a very strong quarter, outperformed the market. You look at the suppliers, there's a range of formats. Again, I think what's most important is remembering that our suppliers -- our purchases are our suppliers' sales. And I'm not going to speak to a specific supplier, with respect to how they measure order -- kind of their front-end pipeline or order book. I can tell you what our pipeline looks like. It's at record levels. It continues to expand. Our bid activity levels are very strong. And again, we remain bullish on the secular growth trends as they impact the construction end market vertical and our mix, which is non-resi predominantly.

And then my second question is, I guess, more high level and piggybacks on, I think, what Deane might have been getting at. As it stands right now, are you expecting organic sales growth in 2024? I mean we're seeing, obviously, EES softening a bit, and that's your most economically sensitive segment, but your backlogs are obviously very large and stable. So what would have to realistically happen in '24 not to show organic sales growth?

We'd have to go into a severe economic down cycle. We're not out there with a 2024 guide, except I will tell you that -- or outlook. But I'll tell you, these strong secular growth trends that we're facing into are weak, and they're enduring. These are not short-term, midterm. We believe these are long term. We believe they're structural. We also believe fundamentally, the mix shift of this company to a higher growth set of end markets, and we are a growth company now. When you look at the portfolio evolution and what the mix of our businesses are today and end market exposure today versus pre Anixter and then go back longer term, look at 10, 15, 20 years ago, this has been a fundamental portfolio shift in the higher growth markets. So I remain very bullish on the secular growth trends and our market outperformance. We've done an exceptional drive of cross-sell. We raised it again this quarter. And that's the hardest thing to get when you get -- put through companies together. So I think that speaks to the power of the combination, which is unique to us. That's a special cost driver, plus the rigor of the process we put in place in our operating model that we're figuring out to really leverage our sales force to pull in other aspects and capabilities of our company in each and every customer opportunity to sell a much more complete solution and a more complete basket. And I think -- I've made the statement. I think that's the largest value creation lever as a result of putting these two companies together, and that has tremendous lengths to it. It's the hardest thing to get, and we're still building momentum there with tremendous opportunity for upside execution.

Dave, if I can sneak a real quick one in here. The April, up six. By my math or at least my notes, I think May and June are considerably easier comparisons, maybe like five or 10 points or so. Does that hold?

Yeah. Just to ground everyone on the call, when you take a look at our second quarter of 2022, we had organic sales growth that was up 21%. So again, as we've talked about, if you go back to what we said for April of 2022 on this call, a year ago, we were up 22% in the month of April. So by the math, yes, the comparisons get slightly easier as we progress through May and June.

Thank you both. Appreciate.

The next question is from Nigel Coe with Wolfe Research. Please go ahead.

Hi. Thanks John. Thanks Dave. Thanks Scott. Good morning.

Good morning.

Yeah. So just going back to your questions, Dave, on second quarter free cash flow. So it looks like we're back to neutral, which is I think, where we were initially. So roughly $3 million of free cash flow in the second quarter. Maybe just -- I mean, obviously, I'm assuming ARR will unwind through the second quarter, but what is your ambition on inventory? Do you expect to be cutting inventory through the quarter, or is that still more of a second half phenomenon?

We do anticipate making progress on inventory, primarily as the supply chains continue to heal and our order lead times return back to normal. And so our expectation is that we're going to begin seeing our inventory reduce month-over-month. We actually did see the inventory in the month of March did come down sequentially versus February.

March.

March? March versus February came down sequentially.

Right.

Okay. That's helpful. Thanks. And then on SG&A, you talked -- obviously, you mentioned the pickup in SG&A investments, particularly within ESS. And it looks like we're making some, or rather you're making some adjustments in the second quarter that's going to have second half benefits. Just maybe just talk about some of the investment spending you made there. It sounds like maybe sales -- maybe you're overstaffed or over-invest there. Maybe just talk about some of the adjustments you're making and it will be a good run rate for SG&A in the back half of the year? Thanks.

Significant SG&A increase in EES. We did have across the entire company. We did have both year-over-year and sequential increases. I think the issue that we saw across the entire company was a little bit more severe in EES primarily as we did have to increase some headcount to support the high sales growth. We've also been investing in some new capabilities as well, which has come through. And of course, across the entire company, we continue to invest in our IT and digital transformation. So, not necessarily at the EES level, but you're seeing that at the enterprise level. The other thing I'll highlight is in the first quarter, we did experience some unexpected costs, we would consider onetime in nature, particularly related to benefits. So, we're not expecting that to continue as we enter the second quarter.

Great, Thanks Dave.

The next question is from Tommy Moll with Stephens. Please go ahead.

Good morning and thanks for taking my questions.

Good morning Tommy.

I don't want to make a mountain out of a molehill here on EES, but just I do want to clarify one point. I mean your full year outlook on revenue is unchanged in the mid-singles. And then there was some commentary just around the margin compression and adjustments to the cost structure there. If we think about any change to the revenue trajectory, was it really limited to that weakness in the OEM piece of the business there, or was there anything else you would call out for us?

That was a topic in Q1.

Great. Thank you.

And one other point, Tommy, just to amplify, and I know it's clear, but I want to -- so the cost - - increases a little bit -- got ahead a little bit of where the sales ended up coming in, and I said the sales came in a bit lower, but gross margins, record level, gross margins, the record level for all three SBUs, including EES in Q1. Very important point. Fundamentally, the margin expansion improvement program is enterprise-wide. And I know that's been a question may have had, the proverbial over-earning question. We're thrilled with our gross margin trajectory, and we continue to do a great job executing that enterprise-wide program.

And John, that's where I was headed for my next question, just on price/cost. It sounds like there's little or maybe even no incremental price assumed in your guide for the year. How would you characterize the environment there on price and then also on any inflationary pressures or lack thereof? What can you give us for an update on that side of the equation? Thank you.

Tommy, it's Dave Schulz. So, we did see the number of supplier price increase notifications came down in the first quarter, and the average percentage increase also came down substantially of what was published in the first quarter. So, as we took a look at how pricing impacted each of our business units, we mentioned both UBS and EES experienced most of the benefit, much less so within our CSS business, but I also want to highlight that the pricing benefit that we saw in the first quarter for EES moderated versus what we saw in 2022. And reporting 8s and 6s as a price benefit throughout the quarters in 2022, that came down to a 5, and that came down even more so within our EES business, which, of course, is impacting the sales growth. But overall, we continue to work closely with our suppliers to understand what is their expectation for price increases. There have been some of our large suppliers that have announced that they expect to take additional price increases. But again, we've not included that until we actually see it impacting our revenue. And we just didn't see a lot of incremental pricing in our first quarter results.

Thanks, Dave. I’ll turn it back.

The next question is from Christopher Glynn with Oppenheimer. Please go ahead.

Thank you. Good morning. So got a lot of demand questions. Just wanted to talk about some of the kind of non-operating cost items. On the $30 million to $40 million other expense range, sounds like foreign exchange is a big part of that. But my experience, non-operating FX adjustments are often very unpredictable, period-specific and even end-of-quarter mark. So curious what's going on there with that $30 million to $40 million? And then on interest, with the quarter in the books and better view on the cash flow linearity, curious why that's still a $40 million range interest line item.

Yes. Chris, let me address the other non-operating. So in the first quarter, we recorded $10 million, which was primarily related to the Egyptian pound, where we saw a significant devaluation occur in the beginning of January and then another devaluation 10 days later. So that is the balance sheet revaluation of the assets and liabilities that we have within that market. To put that into context, all of 2022, we had a $10 million other expense non-operating. So we've matched the full year 2022 in just the first quarter. It is an estimate at this point that we are going to continue to see additional devaluation, particularly upon that Egyptian pound currency. Again, it's our estimate at this point. That will be impacting. But as you mentioned, Chris, it is extremely volatile and very difficult to predict, but we at least wanted to call that out that if this continues, we have at least $10 million already in the first quarter. There could be additional risk. We've included that in our assumptions for the outlook. On the interest expense, when you take a look at where we were relative to the guidance we provided in February, we have borrowed more money here in the first quarter. We've also seen interest rates increased about 35 basis points. So from that perspective, we've assumed that we will be carrying higher debt levels in our initial assumption, but then also the interest rate environment continues to be volatile and has been increasing. So we've reflected that appropriately in our assumptions.

Thanks for that Dave. And just to stick with the other expense. Are you hedging against additional Egyptian pound devaluations during the year essentially?

At this point, we are not because it's extremely expensive in order to provide that. And in some cases, the instruments are not even available is our current view of the market.

Sorry. I meant the guidance hedge against that risk. I wasn't talking about a financial hedging instrument.

Yes. We've provided you with what we believe is the appropriate range given that risk. Obviously, the additional non-operating other expense is a headwind to our EPS guide at the midpoint, but we believe we've got the right outlook for EPS for the full year, not changing it this early in the year.

Thank you.

The next question is from David Manthey with Baird. Please go ahead.

Good morning. Thank you. First, I was wondering if you could outline the puts and takes…

Good morning, David.

Good morning. Could you outline the puts and takes relative to the 60 basis points year-to-year gross margin increase? And specifically, can you address, do you think there's any inflationary inventory benefit in the first quarter gross margin? And then secondarily, could you discuss the contribution there from rebates and what's the typical high low range? I know that's a lot, but hopefully, you can touch on those.

Certainly. So the 60 basis point improvement in gross margin year-over-year was -- only had a benefit of about 10 basis points from supplier volume rebates versus the prior year. Remember, when we booked our supplier volume rebates in the first quarter of 2022, we had a much different forecast for the full year, and that contribution of supplier volume rebates as a percentage of sales was increasing throughout the back half of the year. So as we think about the synergies that we've built in to 2023, particularly as it relates to supply chain, and we've built in the expectation on our supplier volume rebates, we've got about a 10-point benefit versus Q1 of 2022. The real driver of the gross margin enhancement has been the gross margin improvement program, and we have continued to push that across our organization, make adjustments and improvements to how our field is able to better understand how to price for value for the products and services that we're providing. So it was really much more of that transactional margin improvement. Going back to your question on are we seeing any of the profit and inventory being one of the drivers, we're not. I think, one of the reasons that our pricing came down is we did see some commodity costs come down in the back half of 2022 and in the beginning of 2023. So actually, we had a headwind on some of our pure commodity categories, again, very small percentage of our business, maybe mid single-digits, but that was a headwind on those commodity-based products given the global market environment. So we don't believe that this is a profit and inventory issue. It's really the benefit we're getting from our margin improvement program.

Okay. Thank you for that. And then second, to hit on the cash conversion cycle here, but my calculation is something like 84 days. It looks like historically, they've been in the 60 to 70 range. I mean how many days do you think you can take out by year end? Is there a target? Do you suppose to get back to that previous range? And maybe you could just discuss where that might come from, where the days will come from, whether it's DSO, DPO inventory days.

Yes. Let me address specifically on inventory. And depending on the calculation that you're looking at, we essentially saw our inventory days increased by 11 days in 2022. We don't believe it's prudent to assume that we can get all of that back in 2023, give some of the challenges with the supply chain. What we are expecting, though, is that we will get about half of that improvement back, and we will continue to grow net working capital at less than half the rate of sales. So our primary focus when it comes to net working capital is really on the inventory. When I take a look at our receivables and our payables days, they've been relatively stable. We know that there were some higher accounts receivable balances through the end of March, just looking at our collections the last two weeks of March versus the first two weeks of April, we saw a nice pickup in our collections in April. So our primary focus when it comes to net working capital is inventory.

I appreciate, Dave. Thank you.

The next question is from Chris Dankert with Loop Capital. Please go ahead.

Yeah. Good morning guys. Thanks for taking the question. I guess, looking at the comments you guys have had on UBS specifically, I mean, you're still expecting high single-digit organic growth for the year. I mean, pretty hot start in the first quarter. I mean, you're implying a pretty sharp deceleration mid-singles for the rest of the year kind of a thing. Is it the broadband piece -- like can you walk us through what you're expecting shape for the year in UBS, just a little of the deceleration is so dramatic?

Yeah. I think what we said specifically, Chris, was high single to low double. And so clearly, we're at a nice double-digit start. It would have been much stronger had it been -- had we not had a low double-digit decline in broadband. Now that's not a large piece of the portfolio, but it's very attractive secular growth trends, and we're very bullish on mid to long-term. So I don't want to guide our guide and tell you where we are in those ranges. But just to put a fine point on it, we have outstanding momentum in our UBS business overall driven by the new part of UBS right now. We're incredibly bullish on utility. I believe it's a secular growth end market now, never used to be if you go decade ago, but clearly is going forward, and so is broadband. We also have our integrated supply business inside UBS, which technically serves in the industrial end market, and we've taken you through this before. Why is it there? Because it's that business model we took as a starting point and evolved it on how we serve these utility, IOU customers and public tower customers directly with a customized integrated supply model utility that we're attempting to bring that into the broadband value chain, too, which we think has tremendous upside. That integrated supply business grew double digits in the quarter, and that's industrial. So I guided the guide, even though I'm not going to technically officially guide the guide. There you go.

No, I really appreciate the color there. Thanks so much for that. And then just secondly, on the digital investment costs, it looks like yields were up $30-ish million year-over-year give or take. Can you just talk us through some of the key priorities on the digital investment side and where you're really focusing the investment there?

Yeah, Chris. It's Dave Schulz. So we have some enterprise programs that we're implementing. We've talked about some of those already. That includes some of the -- our financial systems, along with some of our HR systems. We also have a series of digital applications that we have been working on. So think about this as not only improvements to our margin improvement program, which is heavily digitalized, but there are some other applications that we're providing to our field reps to allow them to better sell our value proposition. So there are a series of investments that we have continued to make in that area. I know we gave you a little bit of an overview of that during the Investor Day. And as we learn more and we're able to provide you more details as they begin to launch, we intend to do so.

Perfect. Thanks so much.

The next question is from Ken Newman with KeyBanc Capital Markets. Please go ahead.

Hey good morning guys. Thanks for squeezing me in.

Good morning, Ken.

Good morning. Dave, curious if you could talk a little bit about -- in the past, on past calls, you talked about the margin profile of some of the new orders that were taken into backlog. I'm curious, any color on whether the orders taken in the first quarter at -- or at or above 1Q corporate margin average?

Hey Ken. I would say that the margins in our backlog are consistent with how we just reported our results. So again, there's some volatility there, depending on the end unit and the type of project. But for the most part, I mean, we're not seeing any significant change of the margin in the backlog.

Got it. And just to clarify on some of the inventory challenges you mentioned earlier. I'm curious if you could just dig into what you're seeing specifically relative to the backlog portion of your business versus the stock and flow portion. Any change in momentum across those, whether it’d be in the quarter or even on April to-date?

We haven't seen any significant change in the composition of our inventory between stock and flow versus project. I would tell you that our expectation is that as these supplier lead times normalize we will be able to be holding less inventory for fewer months in order to ship a complete order. And so a lot of the spike that we've been seeing in our inventory, going back to late 2021, has really been as we have built our backlog, which -- a reminder, our backlog is a firm customer order. So as we built that backlog, and we've got a Stage Kitten store for some of those larger projects, we've had to hold inventory for a longer period of time just to ensure that we can meet the customer service metrics. So as those supply chains normalize, our expectation is that we'll be holding inventory for fewer weeks. And therefore, our net inventory will be coming down. We are always looking at what is the right mix between stock and flow inventory by location, by business. And we are tweaking that all of the time. But right now, I would tell you that our inventory issue is a large number, because we have a large backlog. Those are customer orders that we expect to ship. So that is a key driver of our inventory days reduction plan going through 2023.

Right. That's very helpful. Maybe if I could just squeeze one more in, more higher level. John, looking at slide 14 of the deck, I think these are -- this is helpful to kind of see just the drivers from secular trends. I'm curious if you guys have done any work on just quantifying the actual exposure or benefit you expect from these secular drivers either in 2023 or 2024. You kind of mentioned none of the benefit from infrastructure heading quite yet. How do you guys think about that opportunity going forward?

Yes. Ken, it's a great question. Thanks for that. I'd point you back to our Investor Day because what -- we didn't show you the detail by secular trend, but we did so in aggregate what our outlook was in terms of market growth and market outgrowth, i.e., market outperformance driven -- and that was a result of the secular growth trends as well as our cross-sell execution. And we gave a framework where we increased our expectation of market outperformance, i.e., how much will we outperform the market by. So we've done substantial work and continue to do substantial work internally, but we haven't detailed and taken that externally yet, but you can -- I will tell you that was behind and supporting what we outlined at our Investor Day last year. Good question. Thanks. These are long term in nature, too, Ken. I think just to give you a sense, they are secular. And so I think just as we continue to move forward into 2024, 2025, 2026, because secular trends are enduring, they're strong, they're expanding, and then we have the increased infrastructure investments that are not in our value chain yet. If you look at where we play in the value chain, I put a fine point on it, when ground is broken, our packages go in, typically six, 12, 18 months later, depending on the size and complexity of the project.

That’s helpful. Thank you.

This concludes our question-and-answer session. I'll now turn the conference back over to John Engel for any closing remarks.

So I think we're at the top of hour. I'll bring the call to a close. Thank you all for your support. It's greatly appreciated. We do have a robust calendar this quarter in engagement. We look forward to speaking to many of you. We will be participating in the Oppenheimer Industrial Growth Conference, the Wolfe Research Global Transportations and Industrial Conference as well as the KeyBanc Industrials and Basic Materials Conference during the second quarter. So with that, I know we've got a lot of follow-up calls scheduled. We look forward to engaging with you. Thanks. Have a great day.