Investment Pitches

Pitch Summary:
Bunzl, the UK based distributor, sells a broad range of "goods not for resale" including packaging for grocers, cleaning equipment in canteens and health and safety equipment in warehouses. The key competitive advantage for Bunzl is the ability to be a one stop shop for all products in one delivery reducing customers costs and complexity, whilst also reducing the need for customers to hold inventory. Bunzl's end markets are growing over time, at 2-3% per annum, weighed down by exposure to retail end markets. Despite this, the company has consistently delivered per-share growth in revenue, profits, and dividends of 8–9% per year over the past two decades. This has been driven by a disciplined and repeatable acquisition strategy focused on very fragmented markets across many countries. With a pipeline of around 1,000 potential targets, Bunzl still sees ample room for continued consolidation-led growth. Bunzl generated around £600m of free cash flow last year, equivalent to a free cash flow yield of almost 8%. Historically Bunzl traded on a 5-6% free cash flow yield, implying upside of around 45%.

BSD Analysis:
Overstone identifies Bunzl as an attractive consolidation play in the fragmented distribution market for non-food consumables. The company's competitive moat stems from its one-stop-shop model, reducing customer costs and inventory requirements across packaging, cleaning, and safety products. Despite modest 2-3% end market growth constrained by retail exposure, Bunzl has delivered impressive 8-9% annual per-share growth over two decades through disciplined acquisitions. The manager highlights a substantial pipeline of 1,000 potential targets, suggesting continued consolidation opportunities in fragmented markets globally. At an 8% free cash flow yield versus historical 5-6% levels, the valuation appears compelling with 45% implied upside. The £600m annual free cash generation provides substantial firepower for continued acquisitions while supporting dividend growth. This represents a quality compounder trading at an attractive valuation with clear visibility into future growth drivers.

Pitch Summary:
Kyocera, a Japanese conglomerate, possess all the qualities and vices that we have come to expect from Japanese companies. It is a conglomerate structure with industrial assets that span semiconductor components, printing solutions, pneumatic tools, and mobile phones. It also maintains a pristine balance sheet and significant cross-shareholdings, most notably in KDDI, the Japanese telecom firm. The company appears to be at an inflection point. While it has acknowledged the need for reform, the market remains sceptical. A significant restructuring is underway, which is unsurprising considering the difficulties facing Kyocera's core operations. The biggest risk is a return to past habits of poor capital allocation and a disregard for shareholders. However, the current valuation —0.7x price to book— broadly reflects this outcome and ignores the potential for change. Our fair value of 1x price to book implies over 40% upside.

BSD Analysis:
Overstone presents a classic Japanese turnaround story with Kyocera, betting on corporate reform at an attractive valuation. The manager acknowledges the company's conglomerate structure spanning semiconductors, printing, tools, and mobile phones, while highlighting its strong balance sheet and strategic KDDI stake. The investment thesis centers on a significant restructuring currently underway, with management finally acknowledging the need for reform after years of poor capital allocation. At 0.7x price-to-book, the valuation appears to price in continued underperformance while ignoring transformation potential. The manager's 1x P/B fair value target implies over 40% upside, suggesting the market is overly pessimistic about the company's ability to change. This represents a classic value play on Japanese corporate governance improvement, though execution risk remains substantial given the company's historical track record.

Pitch Summary:
Western Digital Corp. (WDC) 4.750% Senior Unsecured Bonds due 2026 - Western Digital is a $30 billion enterprise value global leader in data storage solutions, manufacturing both hard disk drives (HDD) and NAND/flash-based solid-state drives (SSD). The company entered the SSD market through its $19 billion acquisition of SanDisk in 2016—a deal that ultimately underperformed expectations. After years of operational challenges and mounting activist investor pressure, Western Digital announced a plan in 2023 to spin off the SanDisk business. Due to the complexity of separating the businesses, regulatory hurdles, and operational integration, there was limited visibility on the transaction's completion until late 2024, when meaningful progress emerged and we initiated our investment thesis. Our analysis concluded that the SSD segment was the primary driver of historical operating losses. SSD is a more volatile, consumer-exposed business with cyclical pricing and capital-intensive manufacturing. In contrast, the legacy HDD business is less cyclical, benefits from growing enterprise demand, and historically generated 20%+ returns on invested capital prior to the SanDisk acquisition. We believe that, post-spin-off, Western Digital will emerge as a higher-margin, more stable business with improved credit quality—potentially upgrading from BB to investment grade. As part of the spin-off, SanDisk raised its own debt and paid a $1.45 bn dividend to Western Digital, enabling further de-leveraging, as part of a $2.0 bn leveraged loan financing (which we looked at and passed on). We began accumulating Western Digital's 4.750% Senior Unsecured Bonds due 2026—its nearest maturity—in late 4Q24 and continued through 1Q25 at prices below par. Our average yield-to-maturity was approximately 5.3%, consistent with our short-term high yield strategy. On March 13, Western Digital announced a partial redemption of 78% of the 2026 bonds at par, effective April 14. This early repayment significantly accelerated our return realization and increased our expected total return by 210 basis points due to our discount purchases.

BSD Analysis:
CrossingBridge presents a compelling credit thesis on Western Digital's corporate bonds, centered on the company's strategic spin-off of its underperforming SanDisk SSD business. The manager's analysis identifies the SSD segment as the primary drag on profitability, characterized by volatile consumer exposure and capital-intensive manufacturing. Post-separation, Western Digital's legacy HDD business is expected to benefit from stable enterprise demand and historically strong 20%+ returns on invested capital. The spin-off structure provided immediate deleveraging benefits through a $1.45 billion dividend from SanDisk's debt financing. CrossingBridge's tactical execution was exemplary, accumulating bonds below par at a 5.3% yield-to-maturity before Western Digital announced an early redemption at par. This timing generated an additional 210 basis points of return, demonstrating the value of credit-focused fundamental analysis combined with opportunistic entry points.

Pitch Summary:
Warner Music Group. Last year, we published a report on Universal Music Group, a competitor to Warner Music Group, highlighting the power labels have in the music industry. Warner Music Group has a similar hold on the industry with artists like Prince, Madonna, and Ed Sheeran. While platforms like Spotify and Apple Music offer a platform for music listeners, record labels control the content on those platforms and, as a result, bring home the lion's share of the industry's profits.

BSD Analysis:
Broyhill's investment in Warner Music Group reflects their conviction in the structural advantages of major record labels within the music industry ecosystem. The manager leverages their previous research on Universal Music Group to identify similar value creation opportunities at Warner, emphasizing the oligopolistic nature of the music label industry. Warner's roster of iconic artists including Prince, Madonna, and Ed Sheeran provides durable competitive moats through exclusive content ownership and long-term revenue streams. While streaming platforms like Spotify and Apple Music facilitate distribution, Broyhill correctly identifies that content owners capture the majority of industry economics. This represents a classic example of identifying where value accrues in a value chain, with record labels maintaining pricing power over distribution platforms. The investment thesis centers on Warner's ability to monetize its content library across multiple channels while benefiting from the secular growth in music streaming globally.

Pitch Summary:
Shares of Fidelity National Information Services continued a steady ascent since their recent bottom in October 2023, returning 24% in Q1. In February, FIS completed the sale of a majority stake in Worldpay to GTCR and began using the proceeds to pay down debt and buy back shares. The stock rallied after the company's most recent earnings report when management increased its buyback goal for 2024. Fidelity's self-help story is playing out nicely.

BSD Analysis:
Broyhill views FIS as a successful self-help story with management executing a clear value creation strategy through portfolio optimization and capital allocation. The sale of a majority stake in Worldpay to GTCR represents strategic focus, allowing FIS to monetize a non-core asset while reducing complexity. Management's disciplined use of proceeds for debt reduction and share buybacks demonstrates commitment to strengthening the balance sheet and returning capital to shareholders. The increased 2024 buyback target signals management confidence in the business trajectory and their ability to generate excess cash flow. The 24% quarterly return reflects market recognition of the turnaround progress since the October 2023 trough. FIS appears to be successfully navigating the transition from a sprawling conglomerate to a more focused, higher-quality financial technology provider. The combination of operational improvements and aggressive capital returns creates a compelling value proposition for shareholders.

Pitch Summary:
Shares of Avantor gained 12% in Q1. We initiated a position in Avantor, a life sciences and tools company, in November 2023. After the company's private equity-backed management team made a significant acquisition pre-COVID and increased leverage to 7-8x, the business hit a wall. Now, with each of these headwinds set to reverse, we expect the business to make a comeback, yet management and the Street have been hesitant to forecast a recovery. Several analysts on the company's most recent earnings call questioned whether the 2024 guide was too conservative. Their inquiries were met with the diplomatic: "Our initial guidance is based on a continuation of trends from the last several quarters, giving us upside if recovery does materialize within the year." We've invested across enough similar setups to know that waiting around for tangible evidence of a recovery is a sure way to miss the recovery. And while the market waited, we continued building our position in the stock.

BSD Analysis:
Broyhill presents a compelling turnaround thesis on Avantor, positioning it as a classic contrarian value opportunity in life sciences tools. The manager identifies the core issue as excessive leverage (7-8x) from a pre-COVID acquisition that created operational headwinds when market conditions deteriorated. With these headwinds now reversing, Broyhill sees significant upside potential that both management and Wall Street analysts are underestimating. The conservative 2024 guidance provides meaningful upside optionality if recovery materializes, creating an asymmetric risk-reward profile. Broyhill's experience with similar turnaround situations gives them confidence to build positions before tangible evidence emerges, capitalizing on market skepticism. The 12% quarterly gain suggests early validation of their thesis, though the manager continues accumulating shares while the broader market remains cautious. This represents a classic special situation where operational improvements and deleveraging could drive substantial returns.

Pitch Summary:
Shares of Fiserv gained 20% in Q1. This is the second quarter in a row where Fiserv has earned the title of top contributor. Clover volume continues to gain momentum, translating to operating leverage on the company's fixed cost base and robust free cash flow generation. Fiserv recently reported its fifth straight quarter of buybacks over $1 billion. We expect Fiserv to continue making smaller bolt-on acquisitions and returning excess cash to shareholders.

BSD Analysis:
Broyhill maintains a bullish stance on Fiserv, highlighting the company's strong operational momentum and capital allocation strategy. The manager emphasizes Fiserv's Clover payment platform as a key growth driver, with increasing volume translating to meaningful operating leverage given the company's fixed cost structure. The consistent $1+ billion quarterly share buyback program demonstrates management's commitment to returning capital to shareholders while maintaining financial flexibility. Fiserv's strategy of pursuing smaller bolt-on acquisitions suggests disciplined growth initiatives that can enhance their technology platform without overleveraging the balance sheet. The 20% quarterly gain reflects market recognition of the company's execution on both organic growth and capital returns. The manager's confidence in continued outperformance is supported by the sustainable nature of Fiserv's competitive advantages in payment processing. This represents a classic quality compounder with strong free cash flow generation and shareholder-friendly management.

Pitch Summary:
Increased: Ingevity Corporation (NGVT) – We added to NGVT on weakness, as we believe the sum of the parts is attractive. While the performance chemicals division has been weak, we believe the performance materials division should be strong driven by more restrictive global emission standards for vehicles.

BSD Analysis:
The London Company added to NGVT during a period of weakness, viewing the selloff as an opportunity to acquire shares at attractive valuations. The manager employs a sum-of-the-parts analysis that suggests the current market price undervalues NGVT's business segments. While acknowledging weakness in the performance chemicals division, the firm expects the performance materials segment to drive growth through exposure to increasingly stringent global vehicle emission standards. Regulatory tailwinds from environmental regulations create sustained demand for NGVT's emission control technologies and materials. The company's specialized products serve critical functions in automotive emission systems, providing defensive characteristics and pricing power. The London Company appears confident that the performance materials division's strength will offset challenges in performance chemicals over time. This contrarian approach reflects the firm's value-oriented investment philosophy of buying quality companies during temporary weakness when fundamental drivers remain intact.

Pitch Summary:
Increased: UniFirst Corporation (UNF) – We added to UNF as we believe there is a high likelihood of margin improvement along with solid revenue growth in the years ahead. Separately, Cintas has made an offer to buy UNF at a higher price and could increase the bid in the future.

BSD Analysis:
The London Company increased its UNF position based on expectations for operational improvements and potential M&A upside. The manager anticipates margin expansion opportunities alongside solid revenue growth, suggesting UNF can improve profitability while maintaining market share in the uniform rental industry. The investment thesis benefits from both fundamental improvement potential and takeover speculation, as Cintas has made a formal acquisition offer at a premium to market prices. The possibility of Cintas increasing its bid provides additional upside protection and validates UNF's strategic value within the industry consolidation theme. UNF's position in the fragmented uniform rental market makes it an attractive acquisition target for larger competitors seeking scale advantages and market expansion. The combination of operational improvement potential and M&A optionality creates a compelling risk-adjusted return profile. The London Company appears confident that UNF's fundamental business trends support higher valuations regardless of takeover outcomes.

Pitch Summary:
Initiated: Atkore Inc (ATKR) – ATKR dominates the electrical conduit market with 35% market share, offering bundled products – conduits, PVC, HDPE pipes, and other electrical raceway products. ATKR benefits from oligopolistic industry dynamics with only 2 competitors possessing comparable scale, translating to scale advantages. It operates mainly in U.S. non-residential construction and is levered to trends like electrification and data center growth. The company has improved margins (5% to -11% normalized) and ROIC (>14%) through diversification and proactive pricing strategies. ATKR requires minimal capex and generates strong cash flow. Most of the cash generated is used for effective share repurchases, a small dividend, and acquisitions. ATKR has retired more than 45% of outstanding shares since 2017.

BSD Analysis:
The London Company initiated a position in ATKR based on the company's dominant market position and attractive industry structure. With 35% market share in electrical conduits and only two comparable competitors, ATKR operates in an oligopolistic market that provides pricing power and sustainable competitive advantages. The company's bundled product offering across conduits, PVC, and HDPE pipes creates customer stickiness and cross-selling opportunities. ATKR is well-positioned to benefit from secular growth trends including electrification and data center expansion, which drive increased demand for electrical infrastructure. Management has successfully improved margins from 5% to 11% normalized levels while achieving ROIC above 14% through strategic diversification and pricing discipline. The asset-light business model requires minimal capital expenditure while generating strong free cash flows. Exceptional capital allocation includes aggressive share repurchases that have reduced the share count by over 45% since 2017, demonstrating management's commitment to shareholder value creation.

Pitch Summary:
Revolve Group, Inc (RVLV) – RVLV sold off heavily in the first quarter as tariff developments pressured sentiment. The company reported notable sales and margin momentum. We remain confident in the company due to its premium-priced retailer status, high full-price sell-through rate, and proven ability to pass through tariffs in 2019. Additionally, RVLV's self-help initiatives targeting operating expenses should help offset any gross margin challenges.

BSD Analysis:
The London Company views RVLV's Q1 selloff as a sentiment-driven overreaction to tariff concerns rather than fundamental deterioration. The manager highlights the company's recent operational momentum with notable improvements in both sales and margins, demonstrating underlying business strength. RVLV's premium positioning in the fashion retail market provides pricing power and customer loyalty that supports margin protection during challenging periods. The high full-price sell-through rate indicates strong demand for RVLV's curated product selection and effective inventory management. Historical precedent from 2019 demonstrates RVLV's ability to successfully pass through tariff costs to consumers without significant demand destruction. The company's self-help initiatives focused on operating expense reduction provide additional margin protection and operational efficiency improvements. The London Company appears confident that RVLV's premium brand positioning and operational improvements will enable the company to navigate tariff headwinds while maintaining profitability and market share.

Pitch Summary:
Moelis & Co. Class A (MC) – MC shares were weak, reflecting uncertainty in the market, impacting the M&A environment. We continue to like MC's debt-free balance sheet, strong shareholder focus, and willingness to reinvest in the business.

BSD Analysis:
The London Company maintains a bullish view on MC despite recent weakness driven by M&A market uncertainty and challenging transaction volumes. The manager emphasizes MC's strong balance sheet position with zero debt, providing financial flexibility and downside protection during volatile periods. The firm's shareholder-focused capital allocation approach demonstrates management's commitment to creating value for investors through dividends and share repurchases. MC's willingness to reinvest in the business during downturns positions the company to capture market share when M&A activity recovers. As an independent investment bank, MC benefits from its boutique model that allows for higher fee margins and closer client relationships compared to bulge bracket competitors. The debt-free structure enables MC to maintain operations and talent during market downturns without financial stress. The London Company appears confident that MC's fundamental strengths will drive outperformance when M&A markets normalize and transaction activity increases.

Pitch Summary:
DoubleVerify Holdings, Inc. (DV) – DV shares were weak due to customer-specific issues, as pullbacks from major global brand clients with large ad budgets heavily impacted growth. We remain optimistic about DV's near-term stabilization, driven by a high-profile product launch earlier this year and emerging cross-sell opportunities, bolstered by its strong competitive position in a favorable market structure that supports profitable long-term growth.

BSD Analysis:
The London Company acknowledges DV's recent weakness stemming from customer concentration risk, as major global brand clients reduced advertising spending significantly. Despite near-term headwinds, the manager maintains a bullish stance based on several catalysts for recovery. A high-profile product launch earlier in 2025 positions DV to capture market share and drive revenue growth as advertising markets stabilize. Emerging cross-sell opportunities within the existing client base provide additional revenue expansion potential without requiring new customer acquisition. The firm emphasizes DV's strong competitive positioning within the digital advertising verification market, which benefits from favorable industry dynamics. The market structure supports profitable long-term growth as advertisers increasingly demand transparency and measurement in digital campaigns. The London Company appears confident that current customer-specific issues are temporary and that DV's fundamental competitive advantages will drive outperformance as market conditions improve.

Pitch Summary:
Somnigroup International (SGI) – SGI continues to perform well despite weak industry demand. The approval of the Mattress Firm deal during the quarter is a major development, offering long-term benefits through vertical integration and enhancing its competitive position. Valuation remains compelling and our investment thesis is supported by robust free cash flow generation, strong brand equity, and solid management execution.

BSD Analysis:
The London Company maintains conviction in SGI despite challenging industry conditions, highlighting the company's ability to outperform weak sector demand. The Mattress Firm acquisition approval represents a transformative strategic development that creates vertical integration benefits and strengthens SGI's competitive moat. This deal enhances the company's distribution capabilities and market positioning within the fragmented mattress industry. The manager emphasizes SGI's strong fundamental profile, including robust free cash flow generation that provides financial flexibility and supports shareholder returns. Strong brand equity serves as a competitive differentiator, enabling pricing power and customer loyalty in a commoditized market. Management execution quality appears solid, successfully navigating industry headwinds while pursuing strategic growth initiatives. The compelling valuation provides an attractive risk-adjusted return opportunity, though the firm has begun trimming the position as SGI's market cap exceeds small-cap parameters.

Pitch Summary:
Hanover Insurance Group, Inc. (THG) – THG outperformed in the quarter due to strong 4Q24 earnings and 2025 outlook. The thesis is playing out as the company is trending towards high-teens ROE as margins normalize following a flurry of underwriting actions. We like the underwriting-focused culture, niche competitive positioning, and astute management team.

BSD Analysis:
The London Company's THG investment thesis is materializing as the insurer executes on margin normalization following strategic underwriting actions. The manager expects THG to achieve high-teens return on equity as the company's disciplined underwriting approach drives profitability improvements. Strong Q4 2024 earnings and positive 2025 guidance validate the investment case and demonstrate management's execution capabilities. The firm values THG's underwriting-focused culture, which prioritizes profitability over growth, creating sustainable competitive advantages. The company's niche market positioning provides pricing power and reduces competitive pressures compared to broader market insurers. Management quality appears to be a key differentiator, with the team demonstrating strategic acumen in navigating challenging market conditions. The London Company views THG as well-positioned to deliver superior returns through disciplined capital allocation and operational excellence.

Pitch Summary:
ACI Worldwide, Inc. (ACIW) – ACIW yielded resiliency in a down market. The business is quite stable, with a high rate of recurring revenues and -12-month visibility on revenues due to the backlog. The organic growth rate of the company continues to persist at structurally higher rates. ACIW is a cash generative business that has recently seen improved cash conversion and subsequently we have benefitted from increased shareholder returns.

BSD Analysis:
The London Company highlights ACIW's defensive characteristics and stable business model as key investment drivers. The manager emphasizes the company's high recurring revenue base and 12-month revenue visibility from backlog, providing predictable cash flows. The thesis centers on ACIW's ability to maintain structurally higher organic growth rates while generating strong cash flows. Recent improvements in cash conversion have enabled enhanced shareholder returns through increased capital allocation. The manager views ACIW as a resilient holding that can outperform during market downturns due to its stable, recurring revenue model. The pitch suggests confidence in the company's ability to continue delivering consistent performance regardless of broader market conditions. This defensive positioning aligns with The London Company's quality-focused investment approach in small-cap equities.

Pitch Summary:
Initiated: Saia, Inc. (SAIA) – The company is a leading less-than-truckload (LTL) carrier, providing freight transportation services across the U.S. Operating in a consolidating industry, SAIA is the sixth largest player in the market and has a non-unionized workforce. With some weaker players (Yellow and UPS) out of the market, industry dynamics should improve. SAIA's strategy emphasizes on-time delivery, low claims, network expansion, and value pricing—helping set it apart. Operating margins are attractive at over 15% and the balance sheet is strong with almost no net debt. We believe SAIA's outlook is positive, fueled by onshoring trends, ecommerce growth, and industry pricing stability. Its valuation is reasonable, with room for multiple expansion as estimates rise. Downside protection comes from a robust network and premium service levels.

BSD Analysis:
The London Company initiated a position in Saia based on favorable industry consolidation dynamics and the company's competitive positioning as the sixth largest LTL carrier. The manager highlights SAIA's non-unionized workforce advantage and benefits from weaker competitors like Yellow and UPS exiting the market. The investment thesis centers on operational excellence through on-time delivery, low claims, and value pricing strategy. With operating margins exceeding 15% and minimal net debt, SAIA demonstrates strong financial metrics. The manager sees multiple growth catalysts including onshoring trends, e-commerce expansion, and industry pricing stability. The valuation appears reasonable with potential for multiple expansion as earnings estimates increase. Downside protection is provided by SAIA's robust network infrastructure and premium service differentiation.

Pitch Summary:
Novo Nordisk is a Denmark-based, global pharmaceutical company focused on diabetes and obesity care. We have owned Novo for about 12 years in the International All Company strategy. Currently, its emerging weight-loss franchise is driving significant growth, building on the company's century-long record of success. Novo is one of two leaders in obesity treatment with blockbuster GLP-1 drugs Ozempic and Wegovy. While its diabetes franchise still accounts for approximately 70% of sales, Novo Nordisk has captured a significant share of the $15 billion global obesity market, which is growing more than 25% annually. Novo Nordisk's stock price has declined meaningfully over the last six months following disappointing clinical trial results from its highly anticipated REDEFINE study for the next-generation obesity drug, CagriSema. The trial raises questions about Novo's ability to respond to Eli Lilly's Zepbound, which has been gaining market share. Investors are concerned about Novo's competitive position, given Zepbound's potentially easier manufacturing process. We think that Novo remains a strong player in the weight-loss-drug market, which is effectively a duopoly. With potential new competitors at least three years away and Novo Nordisk and Eli Lilly securing the majority of global protein manufacturing capacity for GLP-1 production, barriers to entry exist. This competitive advantage, coupled with the vast market opportunity, reinforces our optimism about Novo Nordisk.

BSD Analysis:
Brown Capital Management maintains conviction in Novo Nordisk despite recent setbacks, emphasizing the company's duopoly position in the rapidly growing obesity treatment market. The 12-year holding period reflects deep conviction in the diabetes franchise (70% of sales) and emerging weight-loss opportunity. The manager highlights Novo's leadership in the $15 billion obesity market growing 25%+ annually through blockbuster GLP-1 drugs Ozempic and Wegovy. Recent stock price weakness following disappointing REDEFINE study results for next-generation CagriSema has created competitive concerns versus Eli Lilly's Zepbound. However, the investment thesis rests on effective duopoly market structure with significant barriers to entry. Both Novo and Eli Lilly have secured majority global protein manufacturing capacity for GLP-1 production, creating supply chain moats. New competitors face at least three-year development timelines, protecting the duopoly structure. The vast addressable market opportunity in obesity treatment, combined with manufacturing barriers and Novo's century-long pharmaceutical expertise, supports long-term optimism despite near-term competitive pressures.

Pitch Summary:
ICON is an Ireland-domiciled global provider of outsourced development and commercialization services to pharmaceutical, biotechnology and medical-device companies. ICON is one of the largest providers of clinical-trial and related services to support the development of new medicines and devices. Services include the management of clinical trials across all phases (I – IV) needed to collect and analyze data, establishing product efficacy and safety for regulatory filings, bioanalytical and clinical lab services, data analytics and technology for trial design, regulatory consulting and marketing strategies. It has been owned successfully in the International All Company strategy for more than a decade. During the quarter, we had an informative meeting with ICON CEO Steve Cutler at the company's U.S. headquarters in Pennsylvania. While ICON continues to solidify its position as one of the top three contract research organizations (CROs), competing directly with IQVIA and Thermo Fisher's PPD, there is significant near-term uncertainty surrounding the industry. Among the unknowns are the Inflation Reduction Act's impact on ICON's drug company customers, changing U.S. Food and Drug Administration policies, and fluctuating governmental and industry funding. In this environment, ICON's revenue has flattened, causing it to be a detractor in the quarter. We think that the company can return to 7% to 10% revenue growth and 10% to 14% earnings per share growth, but the current industry uncertainty makes it a low probability that it will meet these growth ranges over the next 12 to 24 months.

BSD Analysis:
Brown Capital Management expresses cautious optimism about ICON despite significant near-term industry headwinds affecting the contract research organization sector. The manager emphasizes ICON's strong competitive positioning as one of the top three CROs globally, competing directly with IQVIA and Thermo Fisher's PPD across comprehensive clinical trial services. The decade-plus holding period demonstrates historical conviction in the business model and market position. However, multiple regulatory and policy uncertainties are creating revenue headwinds, including Inflation Reduction Act impacts on pharmaceutical customers, changing FDA policies, and fluctuating government funding. Recent management meetings with CEO Steve Cutler provide direct insight into operational challenges and strategic positioning. While maintaining long-term growth targets of 7-10% revenue growth and 10-14% EPS growth, the manager acknowledges low probability of achieving these metrics over the next 12-24 months due to industry uncertainty. The flattening revenue environment has made ICON a portfolio detractor, requiring close monitoring of industry recovery timing.

Pitch Summary:
Carl Zeiss Meditec is a German medical-technology company focused on ophthalmology and microsurgery, which represent about three-quarters and one-quarter of its revenue, respectively. Carl Zeiss is a market leader in various ophthalmic segments, resulting from innovative products, a customer-centric culture and an ability to establish and sustain longstanding relationships with healthcare professionals in new and existing markets. Disorders of the eye, such as glaucoma, cataracts and macular degeneration, often correlate with age. An aging global population and rising per-capita income are two demographic factors in the company's favor. During the March quarter, the company reported December quarter revenue of €490.5 million, a 3.3% year-over-year increase, which was slightly ahead of the consensus of €481.6 million and above the 1% decline in revenue in fiscal year September 2024. Management also affirmed guidance for a return to moderate growth in the September 2025 fiscal year. Although the current results remain sluggish, they, along with a recovering order book, marked a sign of improvement in equipment and consumable demand, notably in China. We still believe in our long-term thesis for Carl Zeiss, but are monitoring its progress closely.

BSD Analysis:
Brown Capital Management maintains conviction in Carl Zeiss Meditec despite near-term headwinds, emphasizing the company's market leadership in ophthalmology equipment and favorable demographic tailwinds. The manager highlights the company's dominant position across various ophthalmic segments, supported by innovative products and strong healthcare professional relationships. Key demographic drivers include global aging populations and rising per-capita income, which should increase demand for eye care treatments including glaucoma, cataracts, and macular degeneration procedures. Recent financial performance shows signs of stabilization with Q1 revenue of €490.5 million (3.3% growth) beating consensus expectations of €481.6 million and improving from prior year declines. Management guidance for moderate growth resumption in fiscal 2025 provides forward visibility. The recovering order book and improved equipment demand, particularly in China, suggest cyclical recovery is underway. While acknowledging current sluggish results, the manager maintains long-term conviction in the demographic-driven thesis while closely monitoring execution progress.