Industrials - Key Takeaways from the 2026 Truist Securities Industrials and Services Conference

Research evidence excerpt

Industrials - Key Takeaways from the 2026 Truist Securities Industrials and Services Conference

optimism for market improvement above the trough

heading into 2027. We expect order trends in the second quarter to remain strong, and

that orders and organic growth should increasingly converge. SPXC’s radiodetection

business has historically served as an early warning signal for demand, providing

a leading read as conditions inflect either positively or negatively. SPXC noted this

business continued to see positive growth across all geographies, with the strongest

growth in North America, followed by more muted growth in Asia Pacific and then

Europe. We believe the group broadly continues to price to offset inflationary pressures.

We believe the setup is positive for improving organic growth and incremental margins

in the second half of 2026.

Portfolio Optimization/ Capital Allocation Provides Upside: With strong balance

sheets and cash flow generation, M&A activity is accelerating, shifting portfolios to

markets with above-average secular growth, stronger margins, and higher returns. We

believe TEX is on track to sell the Aerials segment, which we believe is a catalyst

to re-rate the stock, and interest levels are strong given its market leading position,

with demand improving off a cyclical trough. Post the sale of the Aerials segment,

TEX embarks on a self-help journey to structurally improve margins and cash flow

conversion. PH remains on track to close the Filtration Group (private) and CIRCOR

(owned by KKR [KKR, NR]) acquisitions, which will further strengthen PH’s portfolio,

lifting total company organic growth and margins, and both of which can provide upside

to 2027 earnings once the deals are closed. AME is also loading up on acquisitions,