Saba’s Industrials Intel

Research evidence excerpt

Saba’s Industrials Intel

isibility to

a continuation of infrastructure investment in the U.S. via the proposed BUILD America 250 Act (aka

Surface Transportation Reauthorization), and stabilization of trends in APAC. With that said, AI-related

concerns continue to weigh on share prices/valuation across our global engineering coverage, with

most investor questions centered on when the focus may shift from AI risks, and what the market

needs to see in order to believe that further development of AI tools/capabilities is not a meaningful

risk to the group. In our view, investors are looking for these firms to deliver organic growth and margin

progression for a period of time while leveraging these tools, and more immediately, improved organic

growth over the course of 2026 should also help (we received some pushback around calendar Q1

reporting on headline organic growth across the group). While capital allocation has historically been

focused on M&A for the engineering group, investors have increasingly brought up return of capital

during recent discussions (with valuations lower across the group, investors are looking for increased

share buyback activity).

• Dealers – The outlook for infrastructure was generally in line with what we heard from the E&C

space (visibility improving given the nation-building initiatives), while TIH is starting to see Product

Support demand from fleet deliveries completed 2-3 years ago, with demand expected to ramp over

the coming years. The company is continuing to invest in the rental fleet ahead of anticipated demand,

noting bigger projects typically start with increased demand for rental equipment. On AVL, demand

remains robust (industry lead times go out into late-2027/2028; notably, the majority of Toromont's