Investment Pitches

Pitch Summary:
Ares Management Corp., is a global, diversified alternative asset manager with a focus on credit and debt funds. Among alternative asset managers, Ares has a leading market share in credit products. These credit products generate fee-related revenue, which we believe translates to stable earnings power. Ares is benefiting from increasing investor demand for private credit assets. According to industry data, the gap between current and target allocations for institutions is wider for private credit than for private equity, implying that private credit has substantial opportunity for growth. Ares has generated strong historical returns in private credit. Demand for private credit funding has increased from private equity sponsors, who are Ares's primary customers. This increased demand has resulted in market share gains for private credit against the banks and public markets, and we believe that trend will continue. We think that scale and relationships are Ares' most important competitive advantages and, to the extent these advantages lead to strong returns, this should lead to continued growth in AUM. The alternative asset management space is competitive, but we believe that Ares is well positioned.

BSD Analysis:
Vulcan Value Partners invested in Ares Management as a leading alternative asset manager with particular strength in the growing private credit market. Ares holds a leading market share in credit products, which generate stable fee-related revenue and provide more predictable earnings than performance-based fees. The fund sees significant growth opportunity as institutional investors have a wider allocation gap for private credit versus private equity, indicating substantial room for asset growth. Ares benefits from strong historical returns in private credit and increasing demand from private equity sponsors, their primary customer base. The secular shift of credit market share from traditional banks and public markets to private credit providers creates a powerful tailwind. Ares' competitive advantages center on scale and deep relationships, which enable access to attractive deal flow and superior returns, creating a virtuous cycle of AUM growth. The company's diversified platform across credit strategies and strong track record position it well in the competitive alternative asset management landscape. Growing institutional demand for private credit, combined with Ares' market-leading position and relationship advantages, supports continued AUM growth and fee expansion.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners invested in Sealed Air as a global leader in protective packaging with strong competitive moats across multiple end markets. The company's Cryovac brand represents the gold standard in food packaging, particularly for fresh proteins where food safety is paramount and customers prioritize quality and reliability over price. This creates significant pricing power and customer loyalty in the food and beverage segment. High switching costs and long-term customer relationships provide revenue stability and protect against competitive threats. In e-commerce and industrial markets, Sealed Air's iconic brands like Bubble Wrap and Instapax benefit from similar competitive dynamics including brand recognition, customer stickiness, and switching costs. The company's dual revenue model of equipment sales and consumable packaging provides both upfront revenue and recurring income streams. Sealed Air's global scale, technological leadership, and mission-critical role in food safety and product protection support sustainable competitive advantages. The secular growth in e-commerce and continued focus on food safety provide long-term tailwinds for the business.

Pitch Summary:
Core & Main is a national distributor of water, wastewater, storm drainage and fire protection products to municipalities and contractors across municipal, residential, and non-residential end markets. It is one of two national distributors in the U.S. operating in an otherwise fragmented market. Core & Main holds market share in the mid-teens while approximately 70% of the market is served by regional and mom-and-pop distributors. The company's competitive advantages include national scale, buying power, and sticky customer relationships. America's aging water infrastructure provides a tailwind. The country's average pipe age is 45 years, up from 25 years in 1970, and it is estimated that the U.S. needs to spend $2.2 trillion over the next 20 years in upgrades. We think the company is well positioned to benefit from these tailwinds.

BSD Analysis:
Vulcan Value Partners invested in Core & Main as a consolidation play in the fragmented U.S. water infrastructure distribution market. As one of only two national distributors, Core & Main holds mid-teen market share in a market where 70% is served by regional and local competitors, providing significant consolidation opportunities. The company's competitive advantages include national scale, superior buying power, and sticky customer relationships with municipalities and contractors. The investment thesis is underpinned by America's aging water infrastructure crisis, with average pipe age increasing from 25 years in 1970 to 45 years currently. The massive infrastructure replacement need, estimated at $2.2 trillion over the next 20 years, provides a powerful secular tailwind for water infrastructure spending. Core & Main's national footprint and scale advantages position it to capture disproportionate share of this infrastructure investment cycle. The company's essential role in water infrastructure maintenance and replacement, combined with sticky municipal customer relationships, supports predictable cash flows and market share gains through consolidation.

Pitch Summary:
Acuity Brands is the leading provider of lighting and building management solutions in North America. The company's competitive moat is its scale in manufacturing, distribution, product breadth, product innovation, supply chain, customer servicing and some exclusive supply agreements. Acuity has been able to increase prices to pass through cost increases. Gross margins have been stable in the 40% range for several years. Acuity generates significant free cash flow. We believe the management team are good capital allocators, and the company has repurchased 20% of outstanding shares since 2020.

BSD Analysis:
Vulcan Value Partners invested in Acuity Brands as the leading North American lighting and building management solutions provider with multiple competitive advantages. The company's moat stems from scale benefits across manufacturing, distribution, and supply chain, combined with broad product offerings, innovation capabilities, and exclusive supply agreements. Acuity demonstrates pricing power through its ability to pass through cost increases while maintaining stable gross margins around 40% for several years. The fund appreciates management's capital allocation discipline, evidenced by significant share repurchases totaling 20% of outstanding shares since 2020. Strong free cash flow generation provides flexibility for both growth investments and shareholder returns. The company's market-leading position in North American lighting markets, combined with the secular shift toward LED technology and smart building solutions, supports long-term growth prospects. Acuity's diversified customer base across commercial, institutional, and residential markets provides stability, while its innovation in connected lighting and building management systems positions it well for future market evolution.

Pitch Summary:
We purchased Curtiss-Wright, a company we have owned a number of times over the last decade. The company is a leading provider of highly engineered and mission critical technologies across aerospace and defense, commercial power, and process and industrial markets. These technologies range from propulsion equipment for nuclear submarines to electronics used on aircraft carriers and commercial planes to sensors used in general industrial applications. We have long been attracted to Curtiss-Wright's deep technical expertise, where it holds either the number one or number two positions in the industry across the majority of its niche markets. Two-thirds of its end market exposure is in the aerospace and defense market, with the remainder being tied to commercial markets. Within defense, Curtiss-Wright maintains stable positions with long-term visibility on key U.S. platforms such as aircraft carriers, submarines, and fighter jets. These stable positions are reinforced by the fact that over 50% of its defense revenue is derived from sole source positions. In our opinion, strong secular trends continue to provide tailwinds to its defense business as elevated geopolitical risk is driving urgency for global defense spending and strong shipbuilding activity.

BSD Analysis:
Vulcan Value Partners repurchased Curtiss-Wright, a familiar holding that exemplifies their preference for niche market leaders with sustainable competitive advantages. The company provides highly engineered, mission-critical technologies across aerospace, defense, and industrial markets, holding #1 or #2 positions in most of its specialized niches. With two-thirds of revenue from aerospace and defense, Curtiss-Wright benefits from stable, long-term contracts on key U.S. military platforms including aircraft carriers, submarines, and fighter jets. The competitive moat is strengthened by over 50% of defense revenue coming from sole-source positions, providing pricing power and contract durability. The fund sees strong secular tailwinds from elevated geopolitical tensions driving increased global defense spending and robust shipbuilding activity. Curtiss-Wright's deep technical expertise and entrenched positions on critical defense platforms provide long-term revenue visibility and protection against competitive threats. The company's diversified end markets and mission-critical nature of its products support stable cash flows and returns on invested capital.

Pitch Summary:
We purchased United Parcel Service (UPS) during the quarter. UPS is a global parcel shipment and logistics company which competes in a global oligopoly with high barriers to entry. UPS' integrated network is more efficient than its closest peer, as evidenced by its margin profile, free cash flow conversion, and returns on invested capital. The company's management team is focusing on profitable growth through its Better, not Bigger strategy which should improve margins and future opportunities for the company. The stock price was down due to market concerns about customer concentration and Amazon's potential entry into the parcel delivery and logistics market. Additionally, UPS Teamsters' labor agreement expires on July 31, 2023. The market fears a potential labor strike, significant wage inflation, and shippers moving volume to competitors due to concerns around potential service disruptions. We have incorporated these risks into our value, and we believe its stock price is still discounted.

BSD Analysis:
Vulcan Value Partners initiated a position in UPS, viewing it as a competitively advantaged logistics leader trading at a discount due to temporary concerns. The fund emphasizes UPS's position in a global oligopoly with high barriers to entry and superior operational efficiency compared to peers. Key competitive advantages include an integrated network that delivers better margins, free cash flow conversion, and returns on invested capital than competitors. Management's "Better, not Bigger" strategy focuses on profitable growth and margin improvement rather than pure volume expansion. The fund sees the stock as attractively valued due to market concerns about customer concentration risk from Amazon's logistics expansion and potential labor disruption from the July 2023 Teamsters contract expiration. While acknowledging risks of potential strikes, wage inflation, and customer defection, Vulcan believes these concerns are adequately reflected in the current valuation. The investment thesis relies on UPS's durable competitive position in an oligopolistic industry and management's disciplined approach to profitable growth.

Pitch Summary:
During the quarter, we purchased InterContinental Hotels Group, a company we have owned in the past. IHG is the world's third largest hotel chain with more than 6,000 hotels in more than 100 countries across 18 brands, including Holiday Inn & Holiday Inn Express, InterContinental, and Crowne Plaza. IHG has strong brand recognition, the industry's third largest loyalty program, and global scale. Growth in net rooms is driven by a long-term trend of consolidation around large hotel brands. We admire its asset-light business model where 99% of profits are derived from its managed and franchised hotels, while less than 1% of profits come from its owned and leased hotels portfolio. Long-term revenue per available room (RevPAR) growth is being driven by a rising global middle class with a desire to travel. IHG has a robust pipeline of approximately 280,000 rooms of which 40% are currently under construction. We had the opportunity to purchase IHG again as concerns around a macroeconomic downturn and a long-term impairment of business travel have negatively impacted the company's stock price. Even after taking these headwinds into account, we believe we own the company with a margin of safety.

BSD Analysis:
Vulcan Value Partners initiated a position in InterContinental Hotels Group, viewing it as an attractively valued global hospitality leader. The fund highlights IHG's competitive advantages including strong brand recognition, the industry's third-largest loyalty program, and global scale across 18 brands in over 100 countries. The investment thesis centers on IHG's asset-light business model, with 99% of profits derived from managed and franchised properties rather than owned real estate. This model provides higher returns on invested capital and reduced capital intensity. The fund sees long-term growth drivers in industry consolidation toward large hotel brands and rising global middle-class travel demand driving RevPAR growth. With a robust development pipeline of 280,000 rooms (40% under construction), IHG is well-positioned for expansion. Vulcan purchased the stock at a discount due to market concerns about macroeconomic headwinds and potential permanent impairment of business travel, but believes these risks are adequately reflected in their valuation with an appropriate margin of safety.

Pitch Summary:
Ares Management Corp., is a global, diversified alternative asset manager with a focus on credit and debt funds. Among alternative asset managers, Ares has a leading market share in credit products. These credit products generate fee-related revenue, which we believe translates to stable earnings power. Ares is benefiting from increasing investor demand for private credit assets. According to industry data, the gap between current and target allocations for institutions is wider for private credit than for private equity, implying that private credit has substantial opportunity for growth. Ares has generated strong historical returns in private credit. Demand for private credit funding has increased from private equity sponsors, who are Ares's primary customers. This increased demand has resulted in market share gains for private credit against the banks and public markets, and we believe that trend will continue. We think that scale and relationships are Ares' most important competitive advantages and, to the extent these advantages lead to strong returns, this should lead to continued growth in AUM. The alternative asset management space is competitive, but we believe that Ares is well positioned.

BSD Analysis:
Vulcan Value Partners initiated a position in Ares Management, recognizing the company's leadership position in the rapidly growing private credit market. The investment thesis centers on Ares' leading market share in credit products, which generate stable fee-related revenue streams providing predictable earnings power. Strong secular tailwinds support the investment case, as institutional investors have wider allocation gaps for private credit versus private equity, indicating substantial growth runway. Ares benefits from increasing demand from private equity sponsors (their primary customers) for private credit funding, driving market share gains against traditional banks and public markets. The company's competitive advantages stem from scale and deep relationship networks, which enable superior investment returns and attract additional assets under management. Historical strong performance in private credit reinforces the value proposition for institutional clients. While the alternative asset management industry remains competitive, Ares' specialized focus, market-leading position, and relationship advantages position the company well to capitalize on the structural shift toward private credit allocation.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners invested in Sealed Air, attracted to the company's strong competitive position in protective packaging across food & beverage, industrial, and e-commerce markets. The investment thesis centers on Sealed Air's leading technology and established brand portfolio, particularly the Cryovac brand which represents the gold standard for fresh protein packaging. In food applications, the critical importance of food safety creates customer willingness to pay premium prices for quality and reliability, providing pricing power. High switching costs and sticky, long-term customer relationships create recurring revenue streams and competitive moats. The company's diversified brand portfolio including iconic names like Bubble Wrap and Instapak provides similar competitive advantages across industrial and e-commerce markets. Sealed Air's dual revenue model of equipment sales and consumable packaging creates both initial placement opportunities and ongoing consumable streams. The combination of mission-critical applications, brand strength, switching costs, and diversified end markets creates an attractive investment in a defensive packaging franchise.

Pitch Summary:
Core & Main is a national distributor of water, wastewater, storm drainage and fire protection products to municipalities and contractors across municipal, residential, and non-residential end markets. It is one of two national distributors in the U.S. operating in an otherwise fragmented market. Core & Main holds market share in the mid-teens while approximately 70% of the market is served by regional and mom-and-pop distributors. The company's competitive advantages include national scale, buying power, and sticky customer relationships. America's aging water infrastructure provides a tailwind. The country's average pipe age is 45 years, up from 25 years in 1970, and it is estimated that the U.S. needs to spend $2.2 trillion over the next 20 years in upgrades. We think the company is well positioned to benefit from these tailwinds.

BSD Analysis:
Vulcan Value Partners initiated a position in Core & Main, recognizing the company's advantaged position in the fragmented U.S. water infrastructure distribution market. As one of only two national distributors competing against predominantly regional and local players, Core & Main benefits from significant scale advantages including superior buying power and comprehensive geographic coverage. The company holds mid-teen market share in a market where 70% remains served by smaller, fragmented competitors, providing substantial consolidation opportunities. Sticky customer relationships create switching costs and recurring revenue streams. The investment thesis is underpinned by powerful secular tailwinds from America's aging water infrastructure crisis - average pipe age has increased from 25 to 45 years since 1970, with an estimated $2.2 trillion in required upgrades over the next two decades. This massive infrastructure replacement cycle should drive sustained demand growth for Core & Main's water, wastewater, storm drainage, and fire protection products across municipal and contractor end markets.

Pitch Summary:
Acuity Brands is the leading provider of lighting and building management solutions in North America. The company's competitive moat is its scale in manufacturing, distribution, product breadth, product innovation, supply chain, customer servicing and some exclusive supply agreements. Acuity has been able to increase prices to pass through cost increases. Gross margins have been stable in the 40% range for several years. Acuity generates significant free cash flow. We believe the management team are good capital allocators, and the company has repurchased 20% of outstanding shares since 2020.

BSD Analysis:
Vulcan Value Partners invested in Acuity Brands, recognizing the company's dominant position in the North American lighting and building management solutions market. The investment thesis centers on Acuity's comprehensive competitive moat built through scale advantages across manufacturing, distribution, product breadth, innovation capabilities, supply chain efficiency, and customer service excellence. Some exclusive supply agreements further strengthen the competitive position. The company has demonstrated pricing power by successfully passing through cost increases while maintaining stable gross margins around 40% for several years. Strong free cash flow generation supports the investment case, while management's capital allocation track record is evidenced by repurchasing 20% of outstanding shares since 2020. This combination of market leadership, operational efficiency, pricing power, and shareholder-friendly capital allocation creates an attractive investment opportunity in a stable industrial franchise with sustainable competitive advantages.

Pitch Summary:
We purchased Curtiss-Wright, a company we have owned a number of times over the last decade. The company is a leading provider of highly engineered and mission critical technologies across aerospace and defense, commercial power, and process and industrial markets. These technologies range from propulsion equipment for nuclear submarines to electronics used on aircraft carriers and commercial planes to sensors used in general industrial applications. We have long been attracted to Curtiss-Wright's deep technical expertise, where it holds either the number one or number two positions in the industry across the majority of its niche markets. Two-thirds of its end market exposure is in the aerospace and defense market, with the remainder being tied to commercial markets. Within defense, Curtiss-Wright maintains stable positions with long-term visibility on key U.S. platforms such as aircraft carriers, submarines, and fighter jets. These stable positions are reinforced by the fact that over 50% of its defense revenue is derived from sole source positions. In our opinion, strong secular trends continue to provide tailwinds to its defense business as elevated geopolitical risk is driving urgency for global defense spending and strong shipbuilding activity.

BSD Analysis:
Vulcan Value Partners re-initiated a position in Curtiss-Wright, a company they have owned multiple times over the past decade, highlighting their familiarity with the business model and management. The company operates in highly specialized, mission-critical markets where technical expertise creates sustainable competitive advantages. Curtiss-Wright holds dominant market positions (#1 or #2) across most of its niche markets, providing pricing power and customer stickiness. The defense-heavy exposure (two-thirds of revenue) offers stability through long-term platform visibility on critical U.S. military assets including aircraft carriers, submarines, and fighter jets. Over 50% of defense revenue comes from sole-source positions, creating significant barriers to competition. Current geopolitical tensions and elevated defense spending globally provide strong secular tailwinds for the business. The combination of technical moats, sole-source positions, and favorable defense spending trends creates an attractive investment opportunity in a high-quality industrial franchise with predictable cash flows.

Pitch Summary:
We sold GE HealthCare Technologies during the quarter. GE HealthCare is a recent spin-off from General Electric Company and provides imaging, ultrasound, patient care solutions and pharmaceutical diagnostics to customers around the world. The company is a leader in a global oligopoly and has a massive installed base. Half of the company's revenue is recurring, margins are stable to rising, and it generates significant free cash flow. As a recent operating unit inside of GE, we believe the market has been undervaluing this asset. Although the spin price reflected this under-valuation, after the spin-off, its stock price rose to meet our estimate of its intrinsic value, and we sold the position. GE HealthCare remains on our MVP list.

BSD Analysis:
Vulcan Value Partners exited their position in GE HealthCare Technologies after the stock reached fair value following its spin-off from General Electric. The fund recognized the company's strong competitive position as a leader in the global medical technology oligopoly with a massive installed base providing switching cost advantages. The business model features attractive characteristics including 50% recurring revenue, stable-to-rising margins, and significant free cash flow generation. Vulcan had identified the asset as undervalued while it remained within GE's conglomerate structure, believing the market failed to properly value the standalone entity. The spin-off process initially reflected this undervaluation, but subsequent stock price appreciation brought the shares to fair value, prompting the sale. Despite exiting the position, GE HealthCare remains on Vulcan's MVP (Most Valuable Players) list, indicating continued respect for the business quality and potential future investment consideration at more attractive valuations.

Pitch Summary:
We purchased United Parcel Service (UPS) during the quarter. UPS is a global parcel shipment and logistics company which competes in a global oligopoly with high barriers to entry. UPS' integrated network is more efficient than its closest peer, as evidenced by its margin profile, free cash flow conversion, and returns on invested capital. The company's management team is focusing on profitable growth through its Better, not Bigger strategy which should improve margins and future opportunities for the company. The stock price was down due to market concerns about customer concentration and Amazon's potential entry into the parcel delivery and logistics market. Additionally, UPS Teamsters' labor agreement expires on July 31, 2023. The market fears a potential labor strike, significant wage inflation, and shippers moving volume to competitors due to concerns around potential service disruptions. We have incorporated these risks into our value, and we believe its stock price is still discounted.

BSD Analysis:
Vulcan Value Partners initiated a position in UPS, recognizing the company's competitive advantages within the global logistics oligopoly. The fund emphasizes UPS's superior operational efficiency compared to peers, evidenced by stronger margins, free cash flow conversion, and returns on invested capital. Management's 'Better, not Bigger' strategy focuses on profitable growth rather than volume expansion, which should drive margin improvement. The investment thesis acknowledges significant near-term risks including customer concentration concerns, potential Amazon competition in logistics, and the July 2023 Teamsters labor contract expiration. Market fears around potential strikes, wage inflation, and customer defection have created the valuation opportunity. UPS benefits from high barriers to entry in the logistics industry and its integrated global network provides sustainable competitive advantages. Despite the operational and labor uncertainties, Vulcan believes the current stock price adequately reflects these risks while offering attractive upside potential.

Pitch Summary:
During the quarter, we purchased InterContinental Hotels Group, a company we have owned in the past. IHG is the world's third largest hotel chain with more than 6,000 hotels in more than 100 countries across 18 brands, including Holiday Inn & Holiday Inn Express, InterContinental, and Crowne Plaza. IHG has strong brand recognition, the industry's third largest loyalty program, and global scale. Growth in net rooms is driven by a long-term trend of consolidation around large hotel brands. We admire its asset-light business model where 99% of profits are derived from its managed and franchised hotels, while less than 1% of profits come from its owned and leased hotels portfolio. Long-term revenue per available room (RevPAR) growth is being driven by a rising global middle class with a desire to travel. IHG has a robust pipeline of approximately 280,000 rooms of which 40% are currently under construction. We had the opportunity to purchase IHG again as concerns around a macroeconomic downturn and a long-term impairment of business travel have negatively impacted the company's stock price. Even after taking these headwinds into account, we believe we own the company with a margin of safety.

BSD Analysis:
Vulcan Value Partners initiated a position in InterContinental Hotels Group, viewing it as an attractive opportunity amid market concerns about macroeconomic headwinds and business travel impairment. The fund highlights IHG's compelling asset-light business model, with 99% of profits derived from managed and franchised properties rather than owned real estate. This structure provides strong cash flow generation with minimal capital intensity. The company benefits from secular tailwinds including global middle-class growth driving travel demand and industry consolidation favoring large branded operators. IHG's scale advantages include the world's third-largest hotel loyalty program and strong brand recognition across 18 hotel brands. The robust development pipeline of 280,000 rooms (40% under construction) positions the company for continued growth. Despite near-term headwinds from potential recession and business travel concerns, Vulcan believes the current valuation provides an attractive margin of safety for this high-quality hospitality franchise.

Pitch Summary:
Ares Management Corp., is a global, diversified alternative asset manager with a focus on credit and debt funds. Among alternative asset managers, Ares has a leading market share in credit products. These credit products generate fee-related revenue, which we believe translates to stable earnings power. Ares is benefiting from increasing investor demand for private credit assets. According to industry data, the gap between current and target allocations for institutions is wider for private credit than for private equity, implying that private credit has substantial opportunity for growth. Ares has generated strong historical returns in private credit. Demand for private credit funding has increased from private equity sponsors, who are Ares's primary customers. This increased demand has resulted in market share gains for private credit against the banks and public markets, and we believe that trend will continue. We think that scale and relationships are Ares' most important competitive advantages and, to the extent these advantages lead to strong returns, this should lead to continued growth in AUM. The alternative asset management space is competitive, but we believe that Ares is well positioned.

BSD Analysis:
Vulcan Value Partners initiated a position in Ares Management, recognizing the company's leading position in the rapidly growing private credit market within alternative asset management. The investment thesis centers on Ares's market-leading share in credit products, which generate stable fee-related revenue and provide more predictable earnings compared to performance-dependent fees. The secular growth opportunity is compelling, with institutional investors showing wider allocation gaps for private credit versus private equity, indicating substantial room for asset growth. Ares benefits from strong historical returns in private credit, which drives continued investor confidence and asset inflows. The company's primary customers are private equity sponsors whose increasing demand for private credit funding is driving market share gains from traditional banks and public markets. Ares's competitive advantages stem from scale and deep relationships, which are self-reinforcing as strong returns attract more assets and strengthen client relationships. The alternative asset management industry remains competitive, but Ares's specialized focus, proven track record, and market-leading position in the fastest-growing segment provide sustainable competitive advantages. The shift toward private credit represents a structural change in financing markets that should benefit Ares over the long term.

Pitch Summary:
Sealed Air is a global protective packaging company operating in the food and beverage, industrial, and e-commerce markets. The company sells both packaging equipment and consumable packaging. Sealed Air has a strong market position with leading technology and brands. In the food and beverage market, the Cryovac brand is the gold standard for packaging and shipping fresh, uncooked proteins. Food safety is critically important, and customers are willing to pay for quality and reliability. Additionally, switching costs are high and customer relationships are typically sticky and long term in nature. Sealed Air's brands in e-commerce and industrial include Bubble Wrap and Instapax, and the competitive advantages in these markets are largely similar.

BSD Analysis:
Vulcan Value Partners initiated a position in Sealed Air, recognizing the company's strong competitive position in protective packaging across food and beverage, industrial, and e-commerce markets. The investment thesis emphasizes Sealed Air's leading technology and brand portfolio, particularly the Cryovac brand which represents the gold standard for fresh protein packaging and shipping. In the critical food safety market, customers prioritize quality and reliability over price, providing Sealed Air with pricing power and customer loyalty. The business model benefits from high switching costs and sticky, long-term customer relationships due to the mission-critical nature of food packaging and the complexity of changing packaging systems. Sealed Air's diversified brand portfolio includes iconic products like Bubble Wrap and Instapax in e-commerce and industrial markets, where similar competitive dynamics apply. The company operates in a razor-and-blade model selling both packaging equipment and consumable materials, creating recurring revenue streams and customer lock-in. Growing e-commerce trends and increasing focus on food safety and supply chain efficiency provide secular tailwinds for demand across Sealed Air's end markets.

Pitch Summary:
Core & Main is a national distributor of water, wastewater, storm drainage and fire protection products to municipalities and contractors across municipal, residential, and non-residential end markets. It is one of two national distributors in the U.S. operating in an otherwise fragmented market. Core & Main holds market share in the mid-teens while approximately 70% of the market is served by regional and mom-and-pop distributors. The company's competitive advantages include national scale, buying power, and sticky customer relationships. America's aging water infrastructure provides a tailwind. The country's average pipe age is 45 years, up from 25 years in 1970, and it is estimated that the U.S. needs to spend $2.2 trillion over the next 20 years in upgrades. We think the company is well positioned to benefit from these tailwinds.

BSD Analysis:
Vulcan Value Partners initiated a position in Core & Main, recognizing the company's advantaged position in the fragmented water infrastructure distribution market. The investment thesis centers on Core & Main's status as one of only two national distributors in a market where 70% is served by regional and local competitors, providing significant scale advantages. With mid-teen market share, the company benefits from national scale, superior buying power, and sticky customer relationships that create barriers to entry for smaller competitors. The secular growth opportunity is compelling, driven by America's aging water infrastructure crisis where average pipe age has increased from 25 years in 1970 to 45 years currently. The estimated $2.2 trillion infrastructure investment need over the next 20 years provides a substantial long-term tailwind for water, wastewater, storm drainage, and fire protection product demand. Core & Main's national footprint and scale advantages position it to capture disproportionate share of this infrastructure spending across municipal, residential, and non-residential end markets. The company's sticky customer relationships and essential product offerings provide revenue stability and pricing power in a market with limited national competition.

Pitch Summary:
Acuity Brands is the leading provider of lighting and building management solutions in North America. The company's competitive moat is its scale in manufacturing, distribution, product breadth, product innovation, supply chain, customer servicing and some exclusive supply agreements. Acuity has been able to increase prices to pass through cost increases. Gross margins have been stable in the 40% range for several years. Acuity generates significant free cash flow. We believe the management team are good capital allocators, and the company has repurchased 20% of outstanding shares since 2020.

BSD Analysis:
Vulcan Value Partners initiated a position in Acuity Brands, recognizing the company's dominant market position as the leading provider of lighting and building management solutions in North America. The investment thesis emphasizes Acuity's comprehensive competitive moat built on multiple advantages including manufacturing scale, distribution network, broad product portfolio, innovation capabilities, supply chain efficiency, superior customer service, and exclusive supply agreements. The company has demonstrated pricing power by successfully passing through cost increases while maintaining stable gross margins in the 40% range over several years, indicating strong market position and customer loyalty. Acuity's ability to generate significant free cash flow provides financial flexibility and supports shareholder returns. Management's capital allocation track record appears strong, with the company repurchasing 20% of outstanding shares since 2020, demonstrating commitment to returning capital to shareholders when the stock trades at attractive valuations. The lighting and building management market benefits from ongoing trends toward energy efficiency, smart building technologies, and infrastructure modernization. Vulcan views Acuity as a high-quality industrial company with durable competitive advantages and disciplined management execution in a stable, growing market.

Pitch Summary:
We purchased Curtiss-Wright, a company we have owned a number of times over the last decade. The company is a leading provider of highly engineered and mission critical technologies across aerospace and defense, commercial power, and process and industrial markets. These technologies range from propulsion equipment for nuclear submarines to electronics used on aircraft carriers and commercial planes to sensors used in general industrial applications. We have long been attracted to Curtiss-Wright's deep technical expertise, where it holds either the number one or number two positions in the industry across the majority of its niche markets. Two-thirds of its end market exposure is in the aerospace and defense market, with the remainder being tied to commercial markets. Within defense, Curtiss-Wright maintains stable positions with long-term visibility on key U.S. platforms such as aircraft carriers, submarines, and fighter jets. These stable positions are reinforced by the fact that over 50% of its defense revenue is derived from sole source positions. In our opinion, strong secular trends continue to provide tailwinds to its defense business as elevated geopolitical risk is driving urgency for global defense spending and strong shipbuilding activity.

BSD Analysis:
Vulcan Value Partners re-initiated a position in Curtiss-Wright, a company they have owned multiple times over the past decade, highlighting their familiarity with the business model and management team. The investment thesis centers on the company's leading market positions in highly engineered, mission-critical technologies across aerospace, defense, and industrial markets. Curtiss-Wright's competitive moat stems from deep technical expertise and dominant market share, holding either #1 or #2 positions across most of its niche markets. The defense segment provides significant stability with two-thirds of revenue exposure and over 50% derived from sole-source positions on critical U.S. military platforms including aircraft carriers, submarines, and fighter jets. This creates long-term revenue visibility and pricing power in essential defense applications. Current geopolitical tensions and elevated defense spending globally provide strong secular tailwinds for the business. The company's diversified end-market exposure across defense, commercial power, and industrial applications provides both stability and growth opportunities. Vulcan's repeated ownership suggests confidence in management execution and the durability of Curtiss-Wright's competitive advantages in specialized, high-barrier markets.