Investment Pitches

Pitch Summary:
The market environment remains challenging for CABO with greater competition and lower move activity. While the competitive threats from fixed wireless and fiber-to-the-home are not affecting CABO's existing customer base, the market's perception is that it will limit the growth opportunities for the broadband provider going forward. CABO's recent subscriber growth was driven by new pricing schemes and promotions, which negatively affected ARPU (average revenue per user) during the quarter. While investors fear this trend will continue, management remains disciplined with its pricing strategy to ensure durable free cash flow growth over the long-term. CABO remains well positioned as an advantaged provider of high-speed internet in rural markets. We believe its relatively low penetration, superior service, and M&A prowess are supportive of long-term earnings growth.

BSD Analysis:
Despite near-term headwinds, The London Company maintains a constructive view on Cable One, acknowledging the challenging competitive environment while emphasizing the company's defensive positioning. The manager notes that while fixed wireless and fiber-to-the-home competition creates market perception issues, these threats are not materially impacting CABO's existing customer base. Recent subscriber growth through promotional pricing has pressured ARPU, but management's disciplined long-term pricing strategy is viewed favorably for sustainable free cash flow generation. The investment thesis rests on CABO's advantaged position in rural high-speed internet markets, characterized by low penetration rates, superior service quality, and proven M&A execution capabilities. These competitive moats are expected to drive long-term earnings growth despite current market skepticism.

Pitch Summary:
AWI was up 27% in 1Q after reporting strong quarterly results while providing solid guidance. AWI is executing effectively on key growth initiatives, leveraging pricing power, and demonstrating earnings resiliency. We remain attracted to the business because of its strong pricing power, annuity-like nature of the remodel portion of the business (roughly 70% of revenue), and management's excellent capital allocation.

BSD Analysis:
The London Company expresses strong conviction in Armstrong World Industries following impressive quarterly performance and solid forward guidance. The manager highlights AWI's effective execution on growth initiatives and its ability to leverage pricing power while maintaining earnings resilience. The investment thesis is anchored on three key attributes: strong pricing power, the annuity-like characteristics of the remodel business which comprises approximately 70% of revenue, and management's excellent capital allocation track record. The recurring nature of the remodel revenue stream provides predictable cash flows and defensive characteristics. The 27% quarterly gain reflects market recognition of the company's operational excellence and strategic positioning in the building products sector.

Pitch Summary:
VNT outperformed to start the year as the company continues to show progress on its portfolio transformation efforts and drive efficiencies across the core business. Underlying demand has been stronger than expected, driven by industry consolidation, site buildouts, and technology modernization. Management has made encouraging progress optimizing the cost structure, and opportunity remains to improve profitability over the medium-term. We believe VNT's portfolio of resilient franchises remains well positioned to serve its large customer base with a variety of value-added solutions to capitalize on emerging trends within the mobility market.

BSD Analysis:
The London Company maintains a bullish stance on Vontier, highlighting the company's successful portfolio transformation and operational efficiency improvements. The manager emphasizes stronger-than-expected underlying demand driven by industry consolidation, site buildouts, and technology modernization trends. Management's progress in cost structure optimization is viewed favorably, with additional profitability improvement opportunities identified for the medium term. The investment thesis centers on VNT's resilient franchise portfolio and its strategic positioning to serve a large customer base with value-added solutions. The company appears well-positioned to capitalize on emerging mobility market trends, suggesting sustainable competitive advantages in the industrial technology space.

Pitch Summary:
A handful of revenue headwinds weighed on SBUX's results in the quarter. Boycotts due to conflict in the Middle East should be a shorter-term headwind to traffic. The dynamics in the China market may take a bit longer to shake out. That said, as the China consumer gains strength there should be plenty of whitespace for a more rational, tiered market to prosper. The U.S. loyalty base remains strong as ever, cost cutting measures are being pulled forward to counter deleverage from lower revenue, and cash flow is healthy and growing (>4% FCF yield).

BSD Analysis:
The London Company maintains a constructive view on Starbucks despite acknowledging multiple near-term revenue headwinds impacting quarterly results. The manager characterizes Middle East-related boycotts as temporary disruptions that should normalize over time. While China market dynamics present ongoing challenges, the manager sees long-term opportunity as consumer spending recovers and market structure rationalizes. The emphasis on U.S. loyalty program strength highlights Starbucks' defensive customer base and recurring revenue characteristics. Management's proactive cost reduction measures demonstrate operational flexibility to maintain margins during revenue pressure. The healthy and growing free cash flow profile, yielding over 4%, provides attractive shareholder returns and financial stability. The manager's bullish stance reflects confidence in Starbucks' brand strength, operational adaptability, and long-term growth prospects across key markets. This position aligns with The London Company's focus on quality companies with strong competitive moats and cash generation capabilities.

Pitch Summary:
Stock weakness continued in 1Q as slower industrial production in the China and semis markets is weighing on the base business. APD's multiple compressed significantly in past months to 19.5x PE (vs. close peer Linde {LND} at 30.5x) which points to investor skepticism in both management's ability to execute competitively in the core business and in the capital allocation strategy focused on clean energy megaprojects. In Q1, we spoke with the CEO and he is prioritizing the restoration of investor trust while also protecting APD's long-term strategy. We believe the stock is positioned to both re-rate as APD delivers consistent execution in the base business, and compound over time as offtake agreements offer tangible return for megaprojects. Addition follows recent weakness reflecting headwinds from higher inflationary costs and the associated impact potential on expected returns from some of APD's largest projects. Fundamentally, APD is in a strong position to capitalize on the clean energy revolution due to their scale, experience, technology, and customer relationships. Management has shown they will allocate capital efficiently and effectively by walking away from deals that do not meet return thresholds, while taking advantage of government policies, tax credits, and favorable green bond prices. We remain confident in the long-term outlook, and a recent large share purchase by the CEO is a strong sign of conviction.

BSD Analysis:
The London Company views Air Products' recent weakness as a compelling opportunity, emphasizing the significant valuation discount to peer Linde as evidence of oversold conditions. The manager acknowledges near-term headwinds from China industrial slowdown and semiconductor market weakness but maintains conviction in the long-term clean energy thesis. APD's compressed 19.5x PE multiple versus Linde's 30.5x suggests excessive pessimism regarding management execution and capital allocation strategy. The direct CEO engagement provides confidence in management's focus on restoring investor trust while maintaining strategic direction. The manager highlights APD's competitive advantages in clean energy including scale, technology, and established customer relationships. Government policy support through tax credits and favorable financing conditions enhance project economics. The CEO's significant share purchase demonstrates management conviction and alignment with shareholders. This contrarian position reflects The London Company's value-oriented approach to quality companies facing temporary challenges.

Pitch Summary:
Sentiment across the packaged food space is low as it emerges from two years of unprecedented food price inflation (not seen since the 1970s). High prices pressured volumes and margins industry-wide, and caused consumers to trade-down to value and private label. We view NSRGY as attractively positioned in categories that have stable, long-term volume tailwinds such as coffee, pet food, and nutritional health. We believe the stock can re-rate as volume-led growth returns, and the company continues to execute against profitability and operational goals.

BSD Analysis:
The London Company maintains conviction in Nestle despite near-term headwinds from food price inflation and consumer trade-down behavior. The manager recognizes the challenging industry dynamics but emphasizes Nestle's strategic positioning in resilient categories with favorable long-term demographics. Coffee, pet food, and nutritional health represent defensive end markets with stable demand characteristics and pricing power. The current negative sentiment creates an attractive entry point for a quality operator with strong brand portfolio and global distribution capabilities. The manager expects a re-rating opportunity as volume growth normalizes and the company demonstrates operational execution. Nestle's diversified portfolio and premium brand positioning should enable margin recovery as inflationary pressures subside. This contrarian position reflects The London Company's willingness to invest in quality companies during temporary cyclical weakness.

Pitch Summary:
Insurance was once again a bright spot in Berkshire Hathaway's (BRK.B) 4Q earnings; GEICO showed meaningful margin improvement. The company once again sold some securities in the quarter, resulting in near all-time highs in the balance of cash & short-term investments. Overall, we continue to appreciate BRK.B for their financial strength, investment acumen, and disciplined management.

BSD Analysis:
The London Company maintains a positive view on Berkshire Hathaway, emphasizing the conglomerate's operational improvements and financial strength. The manager highlights GEICO's margin recovery as evidence of effective operational management within the insurance segment. Berkshire's continued security sales and resulting cash accumulation demonstrate disciplined capital allocation and opportunistic positioning for future investments. The near all-time high cash levels provide significant optionality and defensive characteristics in uncertain market conditions. The manager values Berkshire's proven investment acumen and conservative management approach, which aligns with The London Company's quality-focused investment philosophy. The combination of operational improvements, strong balance sheet, and experienced management team supports the bullish stance. This position represents a classic quality holding with multiple sources of value creation and downside protection.

Pitch Summary:
MLM reached all-time highs during the quarter as the company executes on its value-over-volume strategy, exhibiting strong pricing power and margin expansion. The company continues to increase its leading position in aggregates by adding strategic assets that will be beneficial to overall profitability. Strategic M&A, strong financials, and resilient end market outlooks gives us confidence that the company will benefit from growth in infrastructure and construction spending for many years.

BSD Analysis:
The London Company praises Martin Marietta's strategic execution of a value-over-volume approach, which has driven significant pricing power and margin expansion. The manager highlights the company's disciplined capital allocation through strategic acquisitions that enhance profitability rather than simply scale. MLM's market-leading position in aggregates provides defensive characteristics and pricing leverage in local markets. The company's strong balance sheet enables opportunistic M&A while maintaining financial flexibility. The manager expresses confidence in long-term secular tailwinds from infrastructure investment and construction activity. The stock reaching all-time highs reflects market recognition of MLM's operational excellence and strategic positioning. This investment aligns with The London Company's preference for quality operators with durable competitive advantages and strong cash generation capabilities.

Pitch Summary:
PGR was up 31% during 1Q as it continues to report better margins and faster growth compared to the industry. PGR's policy in force (PIF) delivered positive growth, and it achieved necessary pricing actions with existing customers. Profitability remains better than peers as PGR has been successful at lowering ad spending while growing its mix of preferred customers. PGR's underwriting risk segmentation continues to be a competitive advantage as it has delivered industry-leading accident frequency results.

BSD Analysis:
The London Company highlights Progressive's strong operational execution and competitive positioning in the auto insurance market. The manager emphasizes PGR's superior margin performance and growth trajectory relative to industry peers, driven by effective pricing discipline and customer mix optimization. The company's ability to reduce advertising expenses while simultaneously growing its preferred customer base demonstrates operational efficiency and brand strength. Progressive's advanced underwriting risk segmentation capabilities provide a sustainable competitive moat, evidenced by industry-leading accident frequency metrics. The 31% quarterly gain reflects market recognition of these fundamental improvements. The manager's bullish stance appears justified by Progressive's demonstrated pricing power and operational leverage. This position aligns with The London Company's quality-focused investment approach, targeting companies with strong competitive advantages and superior execution.

Pitch Summary:
Reduced: Microsoft (MSFT) – Reduction reflects strong performance in 2023 and resulting elevated valuation. We remain confident in the outlook driven by the shift to cloud computing and growth in Azure products. MSFT should also benefit from the utilization of AI in various products. While future earnings growth should be solid, we felt it was prudent to reduce the position size based on risks to valuation.

BSD Analysis:
The London Company maintains a positive long-term outlook on Microsoft while implementing prudent position management due to valuation concerns following strong 2023 performance. The investment thesis centers on Microsoft's leadership position in cloud computing, with Azure representing a significant growth driver as enterprises continue digital transformation initiatives. The manager highlights Microsoft's strategic positioning in artificial intelligence integration across its product portfolio, which should enhance competitive advantages and drive incremental revenue growth. Despite reducing position size, the fundamental outlook remains constructive with expectations for solid earnings growth driven by cloud adoption trends. Microsoft's diversified technology platform, including productivity software, cloud infrastructure, and emerging AI capabilities, provides multiple growth vectors. The position reduction reflects disciplined portfolio management rather than fundamental concerns about the business model or competitive position. Management's decision to trim the holding demonstrates risk awareness while maintaining exposure to Microsoft's long-term growth opportunities in cloud computing and artificial intelligence applications.

Pitch Summary:
Starbucks (SBUX) – A handful of revenue headwinds weighed on SBUX's results in the quarter. Boycotts due to conflict in the Middle East should be a shorter-term headwind to traffic. The dynamics in the China market may take a bit longer to shake out. Coffee entrants aggressively built up in China in the past few years, and since consumer spending has been slow to rebound, there is a level of irrationality starting to creep into the market. That said, as the China consumer gains strength there should be plenty of whitespace for a more rational, tiered market to prosper. The U.S. loyalty base remains strong as ever, cost cutting measures are being pulled forward to counter deleverage from lower revenue, and cash flow is healthy and growing (>4% FCF yield).

BSD Analysis:
The London Company maintains a bullish stance on Starbucks despite acknowledging multiple near-term revenue headwinds affecting quarterly performance. The manager views geopolitical boycotts as temporary disruptions that should normalize over time, while China market challenges may persist longer due to aggressive competitive dynamics and weak consumer spending. However, the investment thesis remains anchored on Starbucks' strong U.S. market position, with the loyalty program providing customer retention and pricing power. Management's proactive cost-cutting measures demonstrate operational flexibility to maintain margins during revenue pressure periods. The company's healthy cash flow generation, yielding over 4%, provides financial stability and supports shareholder returns. Long-term China opportunity remains intact, with the manager expecting market rationalization as consumer spending recovers and competitive dynamics stabilize. Starbucks' brand strength and operational capabilities position the company to benefit from eventual market normalization. The combination of defensive U.S. operations, operational flexibility, and long-term China growth potential supports the continued investment despite near-term challenges.

Pitch Summary:
Apple (AAPL) – 1Q was a very busy quarter of news flow, and most of it resulted in negative sentiment for the stock. Despite announcing the availability of the long-awaited Vision Pro in early February, AAPL's stock underperformed following increasing scrutiny from US and EU regulators and an earnings report that failed to inspire the masses. Add in weakness in AAPL device sales in China, and the market capitulated on the stock. Furthermore, the halo of artificial intelligence exposure that was bestowed on so many companies by the market failed to touch AAPL, as the company's AI plans remain shrouded in development and mystery. We remain attracted to AAPL's growing services business, its strong balance sheet, excellent cash flow generation and capital allocation. Reduced: Apple (AAPL) – Reduction reflects strong performance in 2023 and resulting elevated valuation. We believe the outlook for AAPL remains strong with slow growth in iPhone (now #1 global market share) and faster growth in the higher margin services business. R&D will continue to drive new products and AAPL now has over 2 billion installed devices around the world. While near term earnings expectations appear reasonable, we felt it was prudent to reduce the position size based on risks to valuation.

BSD Analysis:
Despite near-term headwinds, The London Company maintains a constructive long-term view on Apple, though with reduced position sizing due to valuation concerns. The manager acknowledges multiple challenges including regulatory scrutiny, China market weakness, and lack of clear AI strategy, which contributed to underperformance despite the Vision Pro launch. However, the investment thesis remains anchored on Apple's growing services business, which offers higher margins than hardware sales. The company's financial strength is emphasized through strong balance sheet metrics and excellent cash flow generation capabilities. Apple's global market leadership in smartphones, with over 2 billion installed devices, provides a massive installed base for services monetization. The manager views the current valuation as elevated following strong 2023 performance, prompting position reduction as a risk management measure. Continued R&D investment should drive new product innovation, while the services business provides recurring revenue growth. The combination of market leadership, financial strength, and services growth supports long-term value creation despite near-term challenges.

Pitch Summary:
Fidelity National Information Services (FIS) – FIS shares outperformed during 1Q as the new management team continues to execute on its turnaround plan. FIS sold its majority ownership stake in the Merchant Solutions business earlier this year, which has enabled greater financial flexibility and operational focus. Quarterly results demonstrated early progress on its growth and productivity initiatives, and guidance suggests further margin expansion and demand acceleration this year. We remain attracted to FIS's durable business model with its leadership position across its core segments & provides mission critical services to its customers.

BSD Analysis:
The London Company expresses confidence in FIS's turnaround story under new management leadership. The strategic divestiture of the Merchant Solutions business represents a pivotal restructuring move that enhances financial flexibility and allows management to focus on core competencies. Early progress on growth and productivity initiatives validates the new management team's execution capabilities, with guidance indicating continued margin expansion and demand acceleration. The manager values FIS's durable business model, emphasizing the company's leadership positions across core segments and the mission-critical nature of its services to financial institution clients. This defensive characteristic provides revenue stability and customer retention advantages. The combination of strategic refocusing, operational improvements, and strong market positions supports the investment thesis. FIS's transformation from a diversified fintech conglomerate to a focused financial technology provider appears to be gaining traction with investors and customers alike.

Pitch Summary:
Progressive (PGR) – PGR was up 31% during 1Q as it continues to report better margins and faster growth compared to the industry. PGR's policy in force (PIF) delivered positive growth, and it achieved necessary pricing actions with existing customers. Profitability remains better than peers as PGR has been successful at lowering ad spending while growing its mix of preferred customers. PGR's underwriting risk segmentation continues to be a competitive advantage as it has delivered industry-leading accident frequency results.

BSD Analysis:
The London Company maintains a bullish stance on Progressive, highlighting the company's superior operational execution relative to industry peers. The manager emphasizes PGR's ability to achieve positive policy growth while implementing necessary pricing increases, demonstrating pricing power in a competitive market. The 31% quarterly gain reflects market recognition of the company's margin expansion and growth acceleration. Progressive's competitive advantage lies in its sophisticated underwriting risk segmentation capabilities, which have translated into industry-leading accident frequency metrics. The company's operational efficiency is further evidenced by reduced advertising spending while simultaneously improving customer mix quality. Management's ability to balance growth with profitability positions Progressive favorably in the property & casualty insurance sector. The combination of strong fundamentals and market-leading metrics supports the manager's positive investment thesis.

Pitch Summary:
MGP Ingredients Inc. (MGPI), a leading provider of distilled spirits, branded spirits and food ingredient solutions, was one of the top detractors in the Small Cap strategy in the first quarter. During the quarter, MGPI reported strong fourth quarter results including gross margin expansion in all three of its business segments, and sales of brown goods were up 26% in 2023. Management noted that 2023 new distillate sales outpaced aged distillate sales for the first time since 2020, and they expect this trend to continue. New distillate carries a lower gross margin profile than aged, but customers contract for new distillate volumes for several years as opposed to aged distillate, which is primarily sold in the spot market. Management believes the shift to more new distillate sales will provide greater visibility into cash flows and lower the risk profile of the distilling solutions segment. However, the market seemed to react negatively to this news based on the slightly lower gross margin expectations. We recently visited with Brandon Gall, CFO, and Chief Commercial Officer, Amel Pasagic, at the company's Lux Row Distillery in Bardstown, KY, to discuss MGPI's path to continued margin expansion for the overall business. We believe the company has ample opportunity to grow both the top line and margins, as the team continues to build out the portfolio of premium, super premium and ultra premium products in its branded spirits segment. Additionally, while the ingredient solutions segment is a smaller piece of the overall business, we believe the company is poised to grow sales of specialty wheat proteins and starches as it ramps up production at its recently completed texturized protein production facility in Atchison, KS. We expect 2024 to be another year of investment as the company builds new warehouses to support growth in both the distilling solutions and branded spirits segments. These investments are supported by strong cash generated by the business, and we believe they will produce even stronger cash flow in 2025 and beyond.

BSD Analysis:
Despite recent market weakness, SouthernSun maintains a bullish outlook on MGP Ingredients, viewing the company's strategic shift toward contracted new distillate sales as a positive development for cash flow predictability. While new distillate carries lower margins than aged products, the multi-year contract structure reduces business risk and provides greater revenue visibility compared to spot market sales. The manager's recent site visit to the Lux Row Distillery reinforces their confidence in management's execution capabilities and growth strategy. Key growth drivers include the expansion of premium branded spirits portfolio and the ramp-up of the new texturized protein facility in Kansas, which should drive growth in the ingredient solutions segment. The company's strong cash generation supports ongoing warehouse investments without compromising financial flexibility. SouthernSun expects these capital investments to drive accelerated cash flow growth in 2025 and beyond. The 26% growth in brown goods sales demonstrates strong underlying demand, while gross margin expansion across all segments validates the company's operational improvements and premium positioning strategy.

Pitch Summary:
Malibu Boats, Inc. (MBUU), a leading manufacturer of recreational boats, was the top detractor in the Small Cap strategy during the first quarter. Malibu reported disappointing fiscal second quarter earnings with revenues down 38% and sales volumes down 44%. Management lowered sales and adjusted EBITDA margin guidance for the remainder of the fiscal year while they focus on reducing channel inventories prior to the release of the new model year later this summer. During the quarter, Jack Springer, who has served as CEO for more than 15 years, announced his departure, scheduled for May of 2024. The Chairman of the Board, Michael Hooks, and Chief Operating Officer, Ritchie Anderson, will fill the interim Office of the CEO while the company searches for a replacement. As of December 31, 2023, the company had net cash on the balance sheet, providing flexibility for the business to withstand current industry challenges. After the end of the first quarter, on April 11, 2024, Malibu filed a Form 8-K with the SEC disclosing that one of its dealer partners had filed a complaint against the company alleging Malibu had breached its obligations under its dealership agreement. We have discussed the situation with management and other industry contacts, as we continue to evaluate the potential impact.

BSD Analysis:
SouthernSun faces significant headwinds with Malibu Boats as the recreational marine industry experiences a sharp downturn. The 38% revenue decline and 44% volume drop reflect broader industry challenges as consumers pull back on discretionary purchases amid economic uncertainty. Management's decision to lower guidance and focus on inventory reduction suggests the downturn may persist through the current fiscal year. The departure of long-tenured CEO Jack Springer adds leadership uncertainty during a critical period, though the interim management structure provides continuity. The company's net cash position offers financial flexibility to weather the current storm, but the recent dealer complaint introduces additional operational risk. SouthernSun appears to be taking a wait-and-see approach, actively monitoring the situation through management discussions and industry contacts. The firm's neutral stance reflects the balance between cyclical industry challenges and the company's strong financial position, suggesting they may be evaluating whether current difficulties represent temporary headwinds or more structural issues.

Pitch Summary:
Boot Barn Holdings, Inc. (BOOT) is the largest retailer of western and work-related footwear, apparel, and accessories in the United States with more than 380 stores in 44 states, and an e-commerce channel consisting of bootbarn.com, sheplers.com and countryoutfitter.com. BOOT was one of the top contributors in the Small Cap strategy in the first quarter. We believe management has a sensible and achievable plan to expand their store count to approximately 900 stores over the next several years and believe they can do this without adding leverage to the balance sheet. Gross margin was up 180 bps in the most recent quarter, as they increased the mix of higher-margin proprietary brands. We continue to like the long-term growth and profitability prospects for BOOT and believe that the management team is well qualified to execute their strategy.

BSD Analysis:
SouthernSun expresses strong confidence in Boot Barn's expansion strategy and margin improvement trajectory. The manager views the company's plan to more than double its store count from 380 to approximately 900 locations as both sensible and achievable without compromising the balance sheet. The 180 basis point gross margin expansion in the recent quarter demonstrates management's successful execution of their proprietary brand strategy, which commands higher margins than third-party merchandise. With a dominant position in the western and work-related retail market across 44 states, Boot Barn benefits from a differentiated niche with limited direct competition. The company's multi-channel approach, combining physical stores with three e-commerce platforms, provides comprehensive market coverage. SouthernSun's confidence in management's execution capabilities, combined with the company's debt-free expansion model, positions Boot Barn as a compelling long-term growth story in specialty retail.

Pitch Summary:
Dycom Industries, Inc. (DY), a leading provider of engineering and construction services to the telecommunications and utility industries, was the top contributor in the Small Cap strategy in the first quarter. Although results were slightly below management expectations due to severe winter weather, two large customers (AT&T and Frontier) returned to sequential growth, and management expects this trend to continue in 2024. More broadly, the demand for fiber construction over the next few years continues to look bright as both private and public capital enters the industry. Private equity continues to make investment in fiber assets via various channels, and the open access business model has emerged as a viable alternative to carrier owned networks. Some large carriers have even indicated they are willing to partner to build fiber networks, e.g., AT&T's joint venture with Blackrock in 2022, and recent rumors of a T-Mobile joint venture with Lumos Networks. Beyond private investment, there is significant public funding committed to fiber through the ARPA, RDOF, and BEAD programs. Although the $40 billion BEAD program has progressed slower than initially expected, management now expects deployments to begin in 2025. We expect this program to be a multi-year tailwind to the industry. Profitability at DY has increased over the last few quarters, and we believe there is further room for margin expansion by leveraging SG&A expenses as revenue grows. Management continues to operate the company well and allocate capital effectively while maintaining financial flexibility (Net Debt/Adj. EBITDA of 1.4x, the lowest level in over 10 years). As we have stated in past commentary, with only ~43% of the homes in the U.S. passed with fiber, we continue to believe there is a long runway for fiber penetration, and DY is well-positioned to engineer, construct and maintain these fiber networks.

BSD Analysis:
SouthernSun maintains a bullish stance on Dycom Industries, viewing the company as well-positioned to capitalize on the multi-year fiber infrastructure buildout across the United States. The manager highlights that only 43% of U.S. homes currently have fiber access, creating a substantial runway for growth. Key catalysts include the $40 billion BEAD program expected to begin deployments in 2025, along with private equity investment and carrier partnerships driving demand. The company's financial position has strengthened significantly, with Net Debt/Adj. EBITDA at 1.4x, the lowest level in over a decade. Management's effective capital allocation and operational improvements have driven margin expansion, with further upside expected as revenue scales. The return to sequential growth by major customers AT&T and Frontier provides near-term momentum. SouthernSun views the structural shift toward fiber infrastructure as a multi-year tailwind that positions DY as a primary beneficiary of this telecommunications transformation.

Pitch Summary:
Atkore Inc. (ATKR) specializes in products tailored for the electrical sector. ATKR caters to various segments including electrical, safety, and infrastructure. Under the Electrical division, ATKR manufactures essential components for constructing electrical power systems such as conduit, cable, and installation accessories. Meanwhile, the Safety and Infrastructure segment produces solutions for metal framing, mechanical pipe, perimeter security, and cable management, ensuring the protection and reliability of critical infrastructure. With operations spanning pivotal and emerging sectors of the economy, ATKR is well-positioned, particularly as we transition towards a future where electricity takes center stage. Operating in thematic markets experiencing secular growth, ATKR is well-positioned in key sectors such as the solar industry, data centers and EV batteries where ATKR plays a crucial role as a supplier of electrical components. Sustained demand for solar products should continue, driven partly by policy initiatives like bringing manufacturing back to the US from China. Additionally, the growing energy consumption of data centers due to advancements in Artificial Intelligence (AI) are bolstering ATKR's prospects. While recent EV sales may have slowed, the long-term outlook remains promising. It's worth noting that these end markets are still in their infancy, presenting significant growth potential. ATKR has demonstrated strong execution of their business plan, marked by product innovation, successful acquisitions, and prudent capital allocation. These efforts have paved the way for opportunities in revenue growth and margin expansion. Revenue has grown 13.9% on a 5-year compounded basis and gross margins have expanded nearly 10% during the same time period. To show confidence to shareholders, ATKR recently introduced a quarterly dividend of $0.32/share. Their strong free cash flow and modest debt levels should allow them to consistently grow their dividend on an annual basis. Though we see ATKR investing the majority of its capital back into the business. Moreover, ATKR remains committed to ESG metrics and sustainability. ATKR continues to improve upon and enhance their ESG targets. They are an important supplier to companies that have an overall impact on reducing emissions. We are bullish on the ATKR opportunity, but our analysis also considers potential risk or downside of the equity price. One concern Wall Street has with ATKR is that its demand surge during the COVID pandemic may have been temporary. We believe this short-sighted view overlooks ATKR's broader strategy, including its acquisition prowess, strong customer relationships, continued product demand, and prudent pricing strategy. Pre-COVID earnings were below $5.00, but post-COVID, earnings guidance for 2024 is forecasted to reach $17.00 at the midpoint. Interestingly, despite this substantial earnings growth, the stock is currently trading at a similar valuation to pre-COVID levels and at a discount compared to its peers and the broader market. We anticipate multiple expansion as ATKR continues to deliver on its growth trajectory. Recently, the stock has moved higher, but we are still optimistic ATKR will continue to perform favorably. We remain optimistic on the outlook for ATKR, given their strong end markets, their ability to return capital to shareholders and for the stock to re-rate to its peer group.

BSD Analysis:
Riverwater Partners presents a compelling bull case for Atkore Inc., positioning the company as a key beneficiary of the electrification megatrend. The manager highlights ATKR's strategic positioning across high-growth secular markets including solar, data centers, and EV infrastructure, where the company serves as a critical supplier of electrical components. The investment thesis centers on the company's impressive operational execution, with revenue growing 13.9% annually over five years and gross margins expanding nearly 10% during the same period. The manager emphasizes ATKR's strong capital allocation discipline, evidenced by successful acquisitions, product innovation, and the recent introduction of a quarterly dividend. A key valuation disconnect drives the opportunity, as earnings are expected to reach $17.00 per share in 2024 versus sub-$5.00 pre-COVID, yet the stock trades at similar valuations to pre-pandemic levels and at a discount to peers. The manager anticipates multiple expansion as the market recognizes ATKR's transformation and sustained growth trajectory. The firm dismisses Wall Street concerns about temporary COVID demand as short-sighted, emphasizing the company's diversified end markets and long-term structural growth drivers.

Pitch Summary:
CRA International, Inc. (CRAI) is a leading global consulting firm that offers economic, financial, and strategic expertise to major law firms, corporations, accounting firms, and governments around the world. Consulting headcount exceeds 1,000 with approximately 75% of senior staff holding advanced degrees and 41% of advanced degrees being PhDs. Furthermore, CRAI demonstrates exceptional employee loyalty, with half of its senior staff maintaining tenure of more than five years, and a quarter surpassing ten years. Such remarkable retention rates are pivotal within the consulting industry, a sector inherently reliant on the expertise, relationships, and quality of service provided by its people, directly influencing the firm's capacity for revenue growth. While CRAI operates across a vast spectrum of global business sectors, including life sciences, energy, forensic accounting/services, and financial economic analysis, its cornerstone remains the antitrust and competition domain. This segment makes up roughly 40% of sales and is becoming ever more important in the current business/political environment. Antitrust and competition are primarily fueled by merger and acquisition (M&A) activities, which, despite a slowdown following the post-pandemic surge, remain a vital area of focus for CRAI as large M&A transactions face increasing scrutiny from regulatory bodies such as the FTC and potentially the DOJ. CRAI played a significant role in the high-profile Microsoft/Activision Blizzard merger, a deal that, with CRAI's assistance, ultimately received approval. Highlighting the breadth of their capabilities and the trust placed in them, CRAI has the distinction of collaborating with 82 of the Fortune 100 companies and 97 of the top 100 law firms, an impressive feat for a company of its size, demonstrating their extensive reach and impact within the industry. Our decision to invest in CRAI is underpinned by our anticipation of a revitalization in M&A activity. Over recent years, M&A transactions have been relatively subdued, attributed to a combination of factors including a hangover from the post-pandemic surge and the impact of rising interest rates. However, the landscape appears poised for a shift, spurred by declining ten-year treasury rates, more accommodative financial conditions, and the onset of an easing cycle by the Federal Reserve. Additionally, diminishing recessionary fears and the historical rarity of M&A transactions declining for three consecutive years further support our thesis. With an upcoming election, one might speculate about potential shifts in these dynamics. However, our analysis suggests that the outcome of the election is unlikely to significantly alter the favorable conditions for CRAI. Under a Democratic administration, we have observed rigorous enforcement from the FTC against substantial deals, while the DOJ has actively pursued antitrust cases against major US tech companies. This regulatory environment has been beneficial for CRAI's business. Conversely, a Republican administration might introduce less regulatory oversight but could also stimulate an increase in overall M&A activity. Notably, scrutiny of large tech firms is a bipartisan issue. Conversations with CRAI's management have further reinforced our confidence; historical trends indicate that neither political outcome has significantly impacted their business operations or lead generation, suggesting CRAI's resilience and adaptability in varying regulatory climates. CRAI's business is driven by lead flow growth that has been growing double digits but has not been converted into sales yet. In the last quarter CRAI finally started to convert on the pipeline. This leads to higher utilization of consultants. Earnings for CRAI are driven by higher utilization. Basically, it is the number of CRAI's consultants that are working during a quarter. Historically management likes to target a mid 70s annual utilization, however this number has bounced around the 60s the past year. CRAI can do roughly 11% EBITDA margins and at times can get up to 12% in certain situations but do not maintain that margin. CRAI's business momentum is primarily fueled by a significant growth in lead flow, which has been expanding at double-digit rates without an immediate translation into sales. However, the last quarter marked a pivotal shift as CRAI began effectively converting its burgeoning pipeline, leading to an increased utilization of its consultants. The core driver of CRAI's earnings is this very utilization rate—the proportion of consultants actively engaged in billable work during a quarter. While management historically targets an annual utilization rate in the mid-70s percentage range, this figure has fluctuated in the 60s over the past year. Higher utilization should drive higher margins and with it higher earnings. Over the past six years, CRAI has achieved a revenue growth with a Compound Annual Growth Rate (CAGR) of 8% and set a sales record in 2023, even within a relatively subdued market environment. Furthermore, the company has exhibited a strong commitment to shareholder value, returning capital with an intention to distribute 50% of its cash flow from operations to investors. Notably, over the past decade, CRAI's management has effectively reduced the shares outstanding by more than 30%, underscoring a shareholder-friendly approach! In summary, our investment thesis for CRAI hinges on several key pillars: exemplary leadership with whom we maintain regular quarterly communications, a business and financial profile at an inflection point, and the potential for sustained growth over time as a compounder. Our hope is that the only impetus for selling shares would be if CRAI's stock valuation becomes overly significant within our portfolio.

BSD Analysis:
The manager presents a compelling bull case for CRA International based on its dominant position in antitrust consulting and anticipated M&A recovery. CRAI's competitive moat stems from exceptional talent retention (50% of senior staff with 5+ years tenure) and prestigious client relationships including 82 Fortune 100 companies and 97 top law firms. The company's antitrust practice, representing 40% of sales, positions it perfectly for increased regulatory scrutiny regardless of political outcomes. The key catalyst is CRAI's recent conversion of double-digit lead flow growth into actual sales, driving consultant utilization from the 60s toward management's mid-70s target. This operational leverage should expand EBITDA margins from 11% toward 12% as utilization improves. The company has demonstrated consistent execution with 8% revenue CAGR over six years and shareholder-friendly capital allocation, reducing share count by 30% over the past decade while targeting 50% cash flow distribution. The manager views CRAI as positioned at an inflection point where improving M&A activity and operational efficiency should drive sustained earnings growth.