HLIO - Earnings call transcript Q4 2017 | Helios Technologies, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Sun Hydraulics Corporation Fourth Quarter and Full Year 2017 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Ms. for Relations Investor Howard, Sun Hydraulics. Karen proceed. Please

Karen Howard

you, your time and results call. morning, quarter good appreciate certainly conference We everyone. today financial Thank XXXX Rutanya, for fourth our

and me Chief distributed our Officer. after press that Wolfgang be close. Dangel, On were Tricia will Financial are Tricia yesterday's the line Officer, and market with our the release President reviewing Chief and published Executive Fulton, the Wolfgang results in

our don't have it website that at on you If is www.sunhydralics.com. release, available

slides find also You will today. that will our discussion there accompany

look to find you the If Slide slide X our deck, you'll statement. on Safe Harbor

may the documents make we useful future well some factors earnings are actual the evaluating be factors release, uncertainties in point that by this Q&A. during aware, where risks that you results As during and and other statements as other to These discuss be our at to we as documents events our some forward-looking These the Exchange found measures today's uncertainties, provided the www.sec.gov. we as at can cause which want during we also website call, from as other and Securities out will also today. could are statements materially to financial are are to risks differ apply These Commission. subject or presentation will and filed Company non-GAAP I believe well that performance. with in and

GAAP. additional the this results as presentation information consider in substitute You of prepared isolation not with in for should a accordance or

that, before results, get the to of with open back we'll earnings and GAAP we now go the as on and up outlook our release, quarter, to my Wolfgang details answers. introduce it line And highlights the Wolfgang. tables reconciliations for in accompany We slides. started it’s questions today's pleasure his the perspective through for financial for turn some the in then comparable will of the measures well non-GAAP with Tricia provided have Wolfgang will to as that

Wolfgang Dangel

Good Thank you, everyone. Slide Karen. to Please turn morning, X.

performance team’s XXXX. We are in of very our proud

to significant progress on moment. results, in reporting more into In I’ll importantly, that solid even a addition financial our XXXX. more get Vision we made

Let $XXX me one-third level. record-setting sales increased a Controls contributed financial Sales the million. Enovation results historic for forma Sun the also you. grew Controls Tricia over year. of with We The to million, well one-time start On EPS XX% that with review items basis, very excluding those by US$XXX XX% sales Enovation a realized pro $X.XX, or highlighting of will XXXX. growth reported after XX%. type business nearly

January, was early Group, adjusted here. in accessed XXXX. to that were In EBITDA EPS a margin. equity million. February of February, sign non-GAAP Faster $XXX of year, $X.XX, initiatives very over late capital the this and definitive significant process. represents up Our XX% Similarly, We EBITDA XXth. subsequently we a that out point on to the want able I announced to XX% million acquire markets we agreement M&A them the We a reported about are successfully the XX.X% couple one the raised to of we adjusted grew items after Since our end US$XX by

facility guidance will in we transaction. expected we close recognizing in acquisition a with for moments. of introducing update use that is Faster, quarter. and second which few I will the our together on proceeds on XXXX to We once include closed equity to we existing revolving it We our were offering where cash the drawing will acquisition credit the the that re-summarize fund the

accordance we $XXX XX% million have summarize I margins X and key in Please We $XXX Vision the and between with expect to XXXX will revenue between for and operating XX.X% strategic Slide XXXX plan. turn our our current be business XXXX. investments and for SNHY to made adjusted in million

Antonio. completed It in successfully it XX% ongoing by and was As from lines complex was we fourth numerous throughout This Controls growth. prior carve resulting very a demand of the out but between This quite movement feed year San involves year, was operations. undertook the and further business been inventory Enovation of reporting set have its production up Tulsa itself, customer at significant and quarter. revenue throughout we the a the by complicated phenomenal the in takedown and

quite So accomplishment. we pleased are with this

synergies the the This we Additionally, realizing. which already other acquisition, of already activities. cross-selling cross-segment on begun and time includes work team started have we identified to the drive realizing at interactions

newly further enhanced by channel in Hydraulics accelerated further and global we all expected. global Next, the are connections specialists faster application revenue our the than partners the between we contributions our field solving by creating problem added sales facilitating suppliers field for stakeholders. was opportunities to and This making

Announced product new first our acquisition in electronics from performance Regarding teams. development, electronics short joint priced, product that we benefits their in project competitive line new is this of very to that and October, leverage line developed a engineering Enovation between of the electro-hydraulics. was highly one Recall a strategic our hydraulics order, the was knowledge.

warehousing. facility many in complete, provide initiative will realized in for engineering, activities existing our last key South The more the pipeline. region in Hydraulics Asia-Pacific projects that such I expansion the Korea. the segment XX% the you of This will including in has sales region. XXXX, our Once construction and of region for for In XXXX the this accelerating. the in our of been We region, our supports our beginning manufacturing, in is growth as it initiative our highlight region growth have

global leading to is agriculture which service. Controls XX goals, particularly complementary is activities Taking is manufacturer that our be brand ahead in back quick-release the XXXX X transformational Faster is two and and estimated manifolds, existing and €XXX solutions. very These which we multiple turn Slide offering billion It maintaining of valves while these Europe, Sun, financial of Faster our further will Faster expanding which multiple share EBITDA. our the trends. strengths. us, high Please include million, high-quality, of some will $X cycle. I $X.X The to Faster customer along acquisition a to market our cartridge differentiating the growth are gain number brings macroeconomic week. for hydraulic SNHY into for to Group in revenue, XX of products at our one market, Milan, estimated driving recap very important mass estimated in superior announced hydraulic Group Vision establishing of a valued globally. strategic excellent The is critical a global growing acquisition in profitability to million, of Headquartered enterprise annual times, factors addressable on This market. Similar very and XXXX planned coupling or XXXX. which end-markets its Faster is known in and last $XXX we consideration Italy, value us number Enovation represents entering high-performance All moving Vision seven and Product XX.X XXXX. are multiples million. to EBITDA the a at This represents approximately valuation synergies comparable is pursuit

$X.XX will pro forma to EPS acquisition immediately estimate and GAAP of margins. We Importantly, accretion XXXX $X.XX. EPS to the EBITDA accretive be

Faster’s overview, to which accretion Excluding to to all EBITDA will Tricia on results a turn the than over is estimated call touch With to estimate funding $X.XX the will in slightly of and the XX%. review is XX% acquisition. we I now for the that year bit EPS more the Tricia detail. to financial transaction margin $X.XX, amortization last methodology we different expenses, approximately week. reported a

Tricia Fulton

and you, Thank Wolfgang good morning, everyone.

processed about you As recall, in we may our month equity a ago. preliminary XXXX numbers released conjunction offering with

through that million year’s controls This not price review quarter our are sales impact an results. As up organic of compared XXXX, am our to X fourth slides, actual of grew the consolidated progress for so comparability. Fourth I with increase Most see XXXX do quarter last XX%. a you’ll I these immaterial indicating $XX our that on includes them. in had quarter. products any with Slide on were business or the have starting million, results Enovation XX% pricing $XX in alignment business

Foreign sales slide million back chart. inserted the well as as touch release a this a I now the by of the are in information. region, table favorable quarter. which summarizing impact $X.X bar the supplemental currency on sales press We designated the in translation had for will here

weighted heavily Asia-Pacific EMEA and the our to to $XX.X we to market up region is to sales XX% Controls consolidated the well by driven In As growth. of quarter previously sales Americas, quarter growth. noted, Enovation fourth total. XX% million of the as all realized the XX% up $XX.X The million million. markets the considerable growth year-over-year driving Controls were fourth to to business U.S. as up realized was organic business Americas XX.X over geographic the XXXX Enovation

which We to in and application additional we generating believe have complement sales are expansion. sales including sales field investments made specialists the in marketing market the

EBITDA consolidated $XX.X adjusted last to profitability, Regarding over was to XX% in a quarter. the due increase year’s The our increase was fourth increase million, up sales. representing

margin, cost when we EBITDA did margins. costs the margin pressured gross address we operating some However, segment. will experience those each unanticipated and I which review

for of purposes mention and of reconciliations here. adjusted the bottom-line, to or I GAAP the adjusted to release up that results consolidated a the $X.XX, shown want XX% non-GAAP for few tables that numbers. the EBITDA over to back year’s fourth Please last and items Turning our refer per impacted back we added adjusted $X.XX. quarter earnings EPS of share slides to in of reporting press were

In indicated, As reported and approximately is million income into $X of we HCT incurred of of included combined statement. restructuring Controls. we cost conjunction sales operations charges, in our Enovation which $X.X that, on $XXX,XXX our is we previously with million separately

in I acquisition our each administrative shown And detail for the had statement, selling, and finally, $X.X increased acquisition to incurred for as from expenses, I acquisition contingent also million million of the segment. the financing-related Included debt expenses. more we Enovation acquisition in full separately We with quarter strong SEA to the performance. $X on item. Controls consideration and $X.X the agreement of expense of on increase million provide those by we under of interest when the will engineering or $XXX,XXX the operational associated discuss reflecting income one-time the fund continued with Net fourth Controls. increased $XXX,XXX business’s XXXX amount Enovation primarily

included Cuts of deemed transition a charge Tax we the Jobs This charge our repatriation result fourth tax one-time the for tax in quarter XXXX. a and as Act, $XXX,XXX of Finally, of tax at derived our the Please rate. non-U.S. federal a partially a benefit lower for X Slide review to tax tax from revaluation turn new million net of of segment $XX earnings offset XX% year. by liability APAC deferred with grew quarter fourth region $XX in We to region, on the in in Sales EMEA the earlier Gross XX% growth year-over-year APAC the XX% turns increased continuing the particular growth XX% million quarter the the our region. in realized in operating and XX% Americas results. for to sales. Hydraulics profit higher the by growth strength recorded saw

the to gross So margin summarized margin XXX categories. by points two XX.X%. declined pressured into cost that basis We’ve

first category quarter. one-time is first The to cost that included items an several from million Hydraulic to due standard adjustment or X.X% reduction segment follows: operational of productivity in These a sales value inventory cost improvements. includes for resulted as the $X.X inventory amounting

expedited Next and due in We downtime freight are and incremental temporary that schedule. costs hit September. Florida Irma us after to back were outsourcing incurred associated material help orders hurricane get recovery labor, from with on past

described freight maintaining follows: cost times. with and some products, as pressured margins items, of and of sales million expand into or our strong XXXX includes Hydraulic unanticipated for will incremental The the of continue This quarter. capacity $X.X that best-in-industry outsourcing given segment outbound a of to cost material our cost lead inbound which category for realized we of goal several X.X% second includes demand

also unfavorable mix quarter. We realized an this product

partially adjustments $XX Finally, review to Slide euro increased margin strong last our our fourth dollar pressured, quarter million XX.X% a margin, of income British operating Similar year. offset quarter SEA to drove derived X unfavorable U.S. foreign cost. to gross fourth expenses. currency leverage operating margins or turn from and XX.X% segment pound compared a with Operating the up relative XX% results. Electronic the by our operating to lower for Please but on

XXXX year, acquisition. XXXX the the our want include XXXX reminder, fourth seasonally X, segment Electronics also quarter shutdowns a Controls that Enovation December a recreational million we that gross as $XX about new segment, the to I segment sales. its forma customers. OEM demand the weakest one quarter. and month Controls segment’s for holidays well quarter the many the and over margin quarter. increasing forma operating we realized margins market As is growth of mention Electronics extended Similar Enovation Power of small HCT million overall Controls to at this initiatives, realized a to full proactive the business numbers XX.X% the attribute into negative XX% pressured pro XXXX our Similar to growth Controls segment The summarized basis, to categories. sales Enovation generated and $XX two the strong margin contributed fourth products Hydraulics since over impacted December On as fourth the all pro and the X.X% end-markets. in vehicle the in cost our

includes fourth one-time missing in category to or Electronic These inventory to out first our segment of and the The cost for costs was attributable completed the $X.X are X.X% process operational sales carve amounting million which including quarter. quarter. scrap

which the of of quarter. $X.X will cost scrap. million into category increase includes of normal X.X% first second XXXX is Electronics unanticipated items, as for segment described continue several of the that an The our margins some in runrate sales This follows; of or pressured cost includes

full warranty indicating we significant to for quarter. a unfavorable plan product is product using Controls we This that XX% turn new introductions, demand, some and business for review $XXX in business Enovation had with of organic some million year up customer we keep XX year-end associated a have consolidated the results. are Sales adjustments. mix million finally, of to were XX%. reserve the Next some Fourth, grew our includes Please cost with the sub-contract over approximately $XXX Slide the an XXXX. third, labor medical

with $XXX,XXX XXXX. had currency compared Foreign unfavorable in impact XXXX an translation

consolidated was was EBITDA margin Regarding over last up XX.X% profitability, the XX% year. $XX while adjusted up million, to to XXXX XX.X% EBITDA from adjusted our

Turning to from earnings the per $X.XX, share bottom-line, adjusted up were last $X.XX year.

quarter, press I for release our here. and to non-GAAP of items to the for shown As we the EBITDA for adjusted the of GAAP refer back XXXX purposes in back results please and or that want impacted some EPS slides I Once the the added to mention adjusted noted tables again, reporting that consolidated of numbers. reconciliations

full $X.X quarter, margin XX% previously which the gross expense Controls expanded the and with Enovation change operating quarter. XXXX items margin in million and In million for previously impacted earlier XX.X% a XX% the interest expanded items the to and fair full value in for Please fourth XX% we Gross $X.X XX The million. quarters. grew also contingent to I segment as the unfavorably to of noted turn $XX amortization the despite valuation of of described, EMEA addition APAC, profit as effect the XX.X% the to inventory fourth Enovation million of first items Operating the fund increased to to net the acquisition. the items regions the well were impacted quarter, described. the debt despite $X.X $XX had in profit prior million that to These I year or reported from Slide also change of Hydraulics to Net respectively. million to items of review these and Both of contrast pertained consideration. in grew acquisition. $XXX Americas $XXX,XXX year interest Sales the due income XX%, Controls segment. incremental to for XX% increased XX% with

want raised from XX Controls the year, including the segment complex from were realized XXXX. a sales about about out review flow we of previously again carve operations acquired Please XXXX. to completing which structure. XX.X% segment business. for offering year. For those Slide that in Electronics contributed which and basis, view of a capital to margin is these for Enovation for a of operating very Faster We combined. of we leverage recent of of the with segment. results out to and margin Slide forma believe year-end gross achieved our plans full our Controls XX% Enovation point of this million and Hydraulics generated the turn potential million incremental operating culture the pro equity cash over were The the XX% fund before million On strategic a that acquisition. I a to sales. the review they to this the Please $XXX the $XXX while as on XX This segment’s year is testament turn XX% realized $XXX

cash operating For $XX.X was increase XXXX, compared million by The an to generated $XX.X offset XXXX. we net in million higher from working activities of with in increase due income, capital. partially

utilization. and XXXX, in well lines ability to the especially have of sales during as area the then new demands, their an inventory facility our support didn’t million of to offering at Total an the Subsequent focus XXXX. As capacity XXXX, we million started as we million we we noted is $XXX debt as meet available XX, from capital interrupt shutdown extra of revolving production debt year short-term growth, $XX million This from in We during additional our at for believe prior needed million and in December credit with that working of XX, XX, were under debt To was Controls outstanding improve XXXX. full. capital had Enovation carve equity our December customer at opportunity repaid as to being our XXXX inventory quarters, to repay down used We working finished $XXX the our $XXX ensure proceeds year-end, out. no we location. to cash investments. December year carried up and $XX we

$XXX revolving our $XXX which the Faster expressed million accordion of adjusted partially quarter. multiple. expected equity close trailing credit and debt about times recent feature to representing our We a XX is fund X.X net acquisition our approximately million million debt offering EBITDA exercise of and Faster for is second forma upcoming pro in Group, the million Group, months end, was acquisition year our on $XXX also is at intent to to $XX our Net facility

very believe and back on strong open cash your we’ll perspective for you XXXX. Wolfgang, the Given for our this a we to organization, level we aggressively flow of manageable I’d before began to is the during like Q&A. it outlook it turn combined repaying line

Wolfgang Dangel

Thanks, Tricia. continue are SNHY to indicators growth. Please that signal important turn to Slide Leading XX. ongoing to

accelerating expected production in of XXXX at total remainder middle of slowing a the latter U.S. rate. year, accelerating Mexico. manufacturing supporting industrial continue growth the least are Managers is those slower U.S. XXXX. regions but currently then expected and XXXX, noted US economies economies and at growing the growing fell major January were continue This mining for a and is growth of Eastern XXXX. at growth The in growing the All in We at half also continue example, except rates. that to of global the Western Purchasing but to and an includes the accelerating production rate For accelerate U.S. China, India Index growth until are production XXXX. Europe, Canada, throughout in slower to expected in Mexico’s Brazil. phase theory than

are Currently, we market. the housing of cartridge to is expansion the U.S. valves XXXX construction our look machinery except most status multi-unit construction for As to important sector of the the sector, expected in through starts.

recover in. rates. housing the are recession duty trucks expected to across expected grow capital start at to multi-unit manufacturing is American heavy Year-over-year XXXX. anticipated sectors is has of defense, U.S. goods in it from most the However, growth and North been fastest the to

new machinery industrial U.S. XXXX. in are expected contract orders However, to

growth point XXXX business with volatility. in indicators to ongoing Electronics Finally, the U.S.

stated us concentrations we XXXX Important you OEMs, regions innovative expand is making for field industrial for accordingly have to and our where the space we benefiting additional increase generally solutions. turn or entire one seen, material and have products have handling relationships applications. with current for we coverage and the typical to by and us in investments As our with macroeconomic expect driven so about regarding to wide visibility Please this Slide is note, will broaden our it and outpace penetrate Vision This quarter general are in year. outlook. XX have predict continue we plan, thoughts We our growth. an new introduce economic to accordance given to to activity be in

based we our conservatively We indicators. of trends However, current guidance developed remind and few you on want economic do things. to

and other invest some additional Also, in organic as projects. margin to application field aggressive initiatives, our Electronics continuing the well development remind incremental usually business of are from that weakest we seasonal Therefore, our marketing you as will is generated with fourth sales the both for growth. in reinvested includes product new business. specialists sales our and Hydraulics quarter First, be segments. This the I and our

the of the announced year. of when that have closed our of for time we remainder expected Finally, include contribution guidance will update that Faster the on our business we acquisition at we that Group, to the

expect XXXX and between a EBITDA XX% proceed stands. revenue we Again, Please on communicated actual guidance forma basis, only expect our pro with margin currently it XXXX and our results. of growth over to in we As compared XX%. last base week, XXXX XXXX that XXXX summarized forma XX% SNHY pro to we as XXXX for we approximates business this adjusted the Slide XX where XX.X% is

Group it will We to acquisition. close include when on that we update Faster

by our are to growth of rate. We revenue of driven growth a segments at in both XX% expecting similar X%

current our estimated $XXX,XXX, Faster margin impact equity an of the incur following reporting the which to methodology. our of XX.X% are not expense effects We Group. is acquisition operating at interest expecting of reflect but with we the reflects XX% $XXX,XXX the offering, Net will to recent of does adjusted a debt

of and be benefits effective we Tax XX.X%. to tax estimate the Given XX.X% Act, Reform rate the our between

and up the improve Again to and Our Depreciation once that, will currently million and completion these $XX.X change answers. numbers in million be are open Faster million as complete be of questions and that between acquisition. we million million productivity. as will between $XX.X facility well Korea, Group be $X million. $X $XX reemphasize let’s between amortization lines and the I With for the by ongoing expenditures driven expected South capital our new will $XX to investments

Operator

Baird. with [Operator question. Dobre your question proceed Mig from W. with first Our Robert Instructions] Please comes

Mig Dobre

Good morning guys.

Tricia Fulton

morning Good

Wolfgang Dangel

Good morning, Mig.

Mig Dobre

question. Maybe, adjustment a sort earnings of first, just

freight of two the got the sure You’ve sets I about are at times with I other, $X.X I million for going so not and instance, capacity To on. broadly what’s you kind once presume am business with given and associated think maintaining that demand and on I speaking time that doing on Hydraulics, to lead and over so adjustments industrial looking for that’s looks understand cost of companies. that, the when related as me, so many of

have on You similar with Electronics the for sort of thing million. $X.X going a

So I guess, what well? is these cost you in of your view as to from occur why some these that costs particularly as earnings, XXXX some will need mentioning to to be since adjusted extent are

Tricia Fulton

as as Yes, that in some We demand the the them these keeping in expediting up costs with cost of are we we we believe freight are things, products temp expect specifically into to be and we will with that in were material believe additional out are range. and one-time likely like, and them the into annual factored out why them continue segment labor costs. – outsourcing make cost sure do some those lead We that but Hydraulics that’s guidance to don’t do and numbers, have Those ongoing. additional our some we XXXX and really resident are are indicated do pulled are QX such. QX in

were just really QX lead items best-in-class in unanticipated, times. don’t the to resident points XXXX those our and expect maintaining that worthy we some of were the continue to of But numbers. into All

A we we’ve we products QX. of are that a higher for cost were new those that rates. put points Electronics at in to scrap but of start QX. scrap our side, lot the seeing lower production QX lines as scrap, normal into process Those some additional new that SMT are the we And before. On which going in have did were That’s installation in, rates and are outsourcing introduced. again, continued,

that forward vain and to on up well as where get we So, process. we should those go speed as

Mig Dobre

are meaningful me, don’t Well, again, you picky, occurrence. if mean, that I in a million you mix on I I don’t but component seems mentioned new of But like Okay. those or to that and natural the also products. warranty just Electronics mean sound not. mix $X.X

Tricia Fulton

quarters, out did have higher side, it’s and negligible. more than especially quarter, fourth a point little do some it in very we Yes, Electronics on bit seems normal. quarters mix to some we in It the the

think used than normal cost as warranty we I the way well. higher phrase

So the in the were we just use trying to to differences haven’t fourth added those those back. quarter. We explain

Mig Dobre

Okay.

guidance So, inclusive I for may just the occur does on to whatever this guidance be excludes clear, am your at drags forward? looking when XXXX, else your any guidance or is going of nature

Tricia Fulton

and the segment. specifically material it the segment, Yes, and the that guidance vain temp include mentioned does over does just in cost freight, that from some the in the Electronics I But Hydraulics things of the drag of that should specifically outsourcing the we the QX, see also include the it year. labor, includes the into elevation normal scrap

Mig Dobre

with? other can that the quarter three but about gross because these the clearly, the back you to through questions. are are versus of margins start front drags, us little a half, half, year, segments us how more as anything help – for range of we ramp both first we the thinking can Two help you sort Then, slower for going Okay. bit or

Tricia Fulton

Yes, so, the in on related the gross margins some these will drag first quarter, see items. specifically we to

As we gross margins margin at we work see through in the the segments other quarters, level. should of both improving the

it’s additional some will of from from that’s away. cost these coming Some and of productivity go that coming

Mig Dobre

And about XXXX? in line or XXXX, full are year standpoint, segments and I item here. for lastly, SG&A. you There think help of you get mentioned a XXXX what investments is your price about the XXXX? that then lot if in wondering do price think assumptions from versus for And XXXX that, you much you a didn’t both How us Okay. can am

Tricia Fulton

additional Yes, I’ll the let just SE&A a and M&A on basis of With any because the address those financing issue. purely pulled cost separately. the regards have to cost cost of like we SE&A, Wolfgang out things without pricing

would We additional specialists leads will globally to field but it’s be addition allocated SEA things year-over-year see a slight that of relatively the and the increase costs. in marketing and more like application additional to small SE&A that incentives

Wolfgang Dangel

Mig, year, committed when strategic general the we first world and XXXX. the initiatives. half this – for On pretty customers at point of routing and pricing, with first all around met plan We increasing all, prices partners we last much of to the of have in time, not out

now, in trend, analyzing probably increase the pressure and could of the overall see side, we half on and think at obviously some I we commodity the during are XXXX. situation see the also looking a the we price second industry

Mig Dobre

Okay. Thank you guys.

Wolfgang Dangel

Mig. year-over-year, Thank

Tricia Fulton

you. Thank

Operator

from comes Jeffrey question question. next Our your with Hammond proceed with KeyBanc. Please

Jeffrey Hammond

morning. good Hey,

Tricia Fulton

morning Good

Wolfgang Dangel

Good morning, Jeff.

Jeffrey Hammond

the just back X.X And expedited how get et number looks of in to that give cetera? sense that normal So, takes go XQ? us you costs, freight, back like in of long it on terms the a what kind can on just to to of anticipated to

Tricia Fulton

Yes, right mean, now. are moving I those targets

So, a number of can’t hard give I QX. in that of to how expect much you

lot cost make the a related segment that have and those to of scrap all sure can additional them. in underway along why We where to the walks we we happening in scrap that daily to of mitigate do twice those and fully initiatives exiting up we saw QX understand mitigate and to they have Electronics are is what

ongoing in be what QX. drive an will to too what think initiatives exactly we what to relative estimate is those saw like difficult QX. things it’s that down effort, as those impact we saw I believe I from to costs QX So, in going the to But,

Jeffrey Hammond

– write the like like clear away higher medical warranties? some or go the this that away caution there that X.X Are or

Tricia Fulton

medical labor and that like really outsourcing are away. see annual are related and related going that Hydraulics segment, best-in-class Yes, are the excess that to be The and lead the to to in to mentioned material temp probably inventory ones times, mix, freight, we our ongoing inventory portions. reserve count, things maintaining sales go you only the things the

pointed we out, Mig As – have variance it December. plays each we that some quarter, of in do both always mix in just notably but in higher was segments apart

also So, things like away. go warranty would likely

Jeffrey Hammond

the expound some just of put? And volatility. Electronics on Okay. that you outlook, cite in Can you then, or I volatility, kind you comment ongoing think

Wolfgang Dangel

Yes, Jeff.

pretty much two there. looking are We indicators at

XX% over business know, is American based. you the As North of

on that I and printed we XXXX. both PCB looking growth the semicon So mean, suggest so at and indicators, to we book-to-bill And American ratio. are look the of we in at they going side, boards PCBs, see North sales are circuit the

where However, they here been has ratio from book-to-bill are month-to-month. comment about volatility in. That’s volatile changing because the the comes

services. steady We manufacturing is remains very also holding and up at for Electronics growth sales strong. look That

Jeffrey Hammond

think just the finding but, Okay. said you the Thanks. are Is you it can of the and what’s you for been better I working synergies? on then, synergies? And upside? Enovation, surprise about talk to some revenue running Are ahead synergies lastly, you things cost you described more just are

Wolfgang Dangel

more we and revenue-driven. the first back XXXX, much to we announced would set that in goal in First of we curve a $X acquisition we pretty EBITDA then in XXXX. by that XXXX When had it’s going get need means the ramp much so ourselves up We��ve million and all, to the XXXX, things XXXX, XXXX, align the year, get projects will respectively.

it better would anticipated. the than referring to, is to more I was probably a the get bit thought going little comment So have time taken the think between aligned. teams I collaboration

So XX% lots and XX% will But of of activities are or that we those they cost the are revenue-driven accelerate generation synergies. expense-driven. probably joint seeing

Jeffrey Hammond

Okay. Thanks a lot.

Wolfgang Dangel

You are welcome.

Operator

with next with proceed Drab from comes Our question question. Brian Blair. William your Please

Brian Drab

to, include all Then accretion talking you an not amortization? add-back And numbers. the think I and you if for from I of just whether deal-related make that I clear, Maybe then, you for that wanted Good the it those and that everyone add-back taking could but, why sure Or Thanks we it. amortization? a could is clear estimate are all, amortization repeat just an include are amortization? communicating specify or questions. about morning. for are accretion accretion your understand first on does Faster you does

Tricia Fulton

added adjusted we’ve amortization. the the numbers, of back all in So,

amortization So to before books range the that was includes the all which XX XX expected on their incremental increase. and

Brian Drab

operating So, income new adjusted I adjusted in but the calculation operating the it’s – relatively EPS. income. story, clear, your add in thing and add and understand your one you the think you amortization But I amortization do that calculation I that are do back deal-related that, to – of you is not I am of think back

So, the you that sense? be the does would your that accretion calculate makes I apples-to-apples number, adjusted the useful think way is with what EPS, most if is, that figure

Tricia Fulton

estimates. Again, these it Yes, does. are

they reporting, are was our felt it you the part we we but reported, when once of So way correct business. pull everything to are are easier out, in is it

Brian Drab

Okay.

back we mentioning the this that are than number now. that the $X.XX with – use should that add Is that to respect we EPS get, number that sorry, then would $X.XX, So, be you estimate right? figure the your would to or EPS accretion adjusted to less – something than

Tricia Fulton

adjusted the for saying are one. you So,

calculation. we So, they yes, each doing adjusted EPS when in manner same doing aren’t as we way are after this the quarter, it we report

Brian Drab

Okay.

estimate So, to $X.XX was –you but EPS add say the at wouldn’t what today adjusted for XXXX. know exactly it I consensus don’t is the $X.XX, add that you get to moment, if expectation back wouldn’t a was, let’s it

You’d my calculation to closer $X.XX. add back in to something $X.XX

Okay.

Tricia Fulton

are looking on to something $X.XX Yes, at to we $X.XX probably closer that.

Brian Drab

Okay.

in coming a those talk about helpful. new a of revenue a double-digit side since product introductions I I think, then, detail of to number introductions, potential bit Can maybe on quite more Okay, new the Electronics one product the you question needle? impact of And the on that’s move The just or potential a XXXX. took in any to some time it other from major there. is little

Wolfgang Dangel

I Yes, a we close time see to you it’s real introductions at we of close ten, until takes impact. product such. have bit how look about it’s a little ten as to always – it depending it, Normally, mean,

XX% as and growth last why in you had segment. However, that this we that’s year, know, very

I I introductions that between, we have about the seeing extremely introductions as and we were successful in would really the years. tell product say, them on nicely. normal product Electronics mean, implementations, it’s ongoing ten an round Some of in you basis, quite But

segment just stand think innovation doesn’t of business the continuation of, out. there. XXXX So I the It’s a

So, it’s it at – contributing we more think to the but growth looking that in conservatively I opinion. my think I showing we are are here,

Brian Drab

Thank very much. Okay. you

Wolfgang Dangel

You are Brian. welcome,

Operator

your SunTrust proceed from with comes Charley with Please question. question next Our Robinson Brady Humphrey.

Charley Brady

these production can want out that as it’s on to guess, thanks, here. to horse aren’t forward. a help repeat. costs going But sort known But understand that goes don’t Hey, dead back beat of moving I you the from morning. good unanticipated target, costs, I and a I

so repeat figure You can number likely and and mentioned, out at healthcare warranty we repeat net allocate can that are that we try a we the to least is do however how that, get to to stuff, going to going not that. to going

Tricia Fulton

both repeat, Hydraulics – things repeat. repeat product that for segment. the we we in Warranty pointed some is would warranty repeat. won’t don’t not Medical so FX to the likely reserves to out that material cost had additional segments. We expect Yes, mix not

Charley Brady

points causes not don’t Okay, percentage of could that Electronics how was sense much you unanticipated to and of big that continues have as basis pretty as I how those in because quantify a for I and of that of QX, continue. margins, XXX what any it number mean, much does

Tricia Fulton

try second, Yes, me get just let that a to number.

the that We haven’t before. in done calculation way

Charley Brady

to having are kind but Maybe you ask I’ll that hard question previously? do as adding I of not the you another that’s sales, very it’s something having quantify, more any to well. versus are in working And much by growth the to while you adding them they it’s sense business are – people then. How people doing sense, pretty know these that, organically to field generate these how

Wolfgang Dangel

normally, we of a approach. bit are little prudent with that type Yes, Charley, conservative and more

this people coming forward and to get who forth. probably Northern so of company, business engineers a up the The were application additions either Latin So with moving so the we with revenue, people to into speed They the coming last OEMs we expect over not specialists, year would very long very With Those two out are generate application territory Americas. the we came of years. put very the because it America quick. were immediately acquainted majority regional these of the takes that’s those the to industry for time Americas or time. outside from experienced making are and

training, them emerging people for portfolios here give the time, them need in we more in the a into to segments more send product the geography. with in back So little bring markets both intensive because the and and we U.S. them in then those bit designated acquaint

even. years, by normally, three we’d breaks thumb, So until somebody of it rule takes say, about

be it and them can general, takes there and in so for differences, full themselves. year them forth So, third they contribute to onboard, two onwards, train then years pay but and bring

Tricia Fulton

remaining level, stay and reduce answer we to are repeat. through to to they’ll question, how enter to with well working ability still regard cost earlier may of able may The reduced as at XX% that or they but same. we through the same cost XX% those be Charley, will first have not those your if be be expect could to much the an to we the quarter those

Charley Brady

of XXXX, hearing to the XX% so incurred XX% into QX in correctly? don’t Okay, slide cost am I unanticipated

Tricia Fulton

Correct, yes.

Charley Brady

thanks, Yes, helpful. that’s very thanks. Appreciate it,

Tricia Fulton

Okay.

Operator

Jon Braatz Kansas proceed City Please question Capital. next Our from comes with question. with the

Jonathan Braatz

a that look the into the to cost back rise previous just or will is repeat Tricia, the a everyone. costs morning first Good will first bit? quarter, little those question, there at when that worsen will in possibility quarter, you that

Tricia Fulton

they say, not would rise. would I

to I underway that rise. different. address something possibly initiatives of would and lot a have We say those could where do fully understand we wouldn’t

Jonathan Braatz

Okay. then… And

Tricia Fulton

mitigate them at January go closed they to would are. only yet for we some just will what down. looks have for I able that of a be and we’ll where Hopefully, don’t – like point. We’ve estimate this good

Jonathan Braatz

Right.

might these into Okay. Would the bleed into third anticipate you and the quarter quarter second that costs too?

Tricia Fulton

of could in into a both quarter. the quarter for pretty some the segments. Historically, second It’s seasonal bleed it’s uptick possible that of them high second

possibility So, maintaining especially that in there is segment the times cost, those Hydraulics lead related continue. of some to could

Jonathan Braatz

competitors this time? – lead your about Okay, bit. to lead are how relative times do are How your at your quite you a speaking times

Wolfgang Dangel

Significantly better, Jon. morning. Good

Jonathan Braatz

Good morning.

Wolfgang Dangel

about gap look are today, we running has compare I of fact, a the the board is, week. I matter by mean, that to the think at peer across widened. so there group we it as probably ago and times standard lead two If a late years amongst

right standard bring entire weeks times from products XX weeks now. you around probably and weeks is portfolio, eight side. order and pretty you there somewhere range wide within are between the our week lead the we about way maybe the commit on in So four it for Right late, now, irrespective we to to is a competition are four product the one-and-a-half which Hydraulics the the world out week

Jonathan Braatz

Is Okay. that…

Tricia Fulton

our previous Jon, to estimates for continue or costs these question, we quick think we are XXXX. into your real going any address increases to that built think are back to that

Jonathan Braatz

Right, okay, okay.

for cost. any year, That XX%. excludes I was XX% one-time Now, Tricia, think your next guidance adjusted the and margin, it

are As now, stands it now, quarter, stands as the you at when the costs in first you look any that quarter? one-time - it anticipating

Tricia Fulton

cost No, there. we pull not that may a out lot. acquisition-related some have of We

Jonathan Braatz

Okay.

Tricia Fulton

We have already accounted for that.

Jonathan Braatz

okay. Okay,

Tricia Fulton

amortization that to the adjusted. Mostly be have

Jonathan Braatz

in wonderful had don’t a that. a at last the the think think I sort continue for little when new Enovation down the Okay, of little or development, it market new a the account there year headwind be XX% of you a product contract the But, talked bit that a to going top-line revenue little some let’s say wins of I into – year, growth bit a you anybody any but XX% to bit look at about conditions, stepping area. growth expects like XXXX slowdown lastly, okay. Wolfgang, Enovation? and might was of that are And to in terms growth And

Wolfgang Dangel

pointing Jon. still of I to contract negotiation, – this can’t of think I first I point any any mean, mean, individual I is out all, mean. superior out to No, growth. is this I headwind

Jonathan Braatz

yes. Sure,

Wolfgang Dangel

it’s it’s preview Guiding at share, we seeing that XX% I have superior, we well definitely - and environment overall And are XX% still I last but year, to think it’s taking think. to I the growth reasonably is market economic XX% that still think not explained.

Jonathan Braatz

Thank right. Wolfgang. you, all Okay,

Wolfgang Dangel

Jon. Thank you.

Operator

next Markets. Our Capital Daniel Marcus question. from comes with LH proceed with your question Please

Blaine Marder

growth bit long-term the little them perhaps on Thank Could to XX% you. it’s And XXXX us of that? guys, positive, just XX%. expand a on you you the How you? beyond? expect business that Marder. at and you Blaine revenue above also drivers how is well is out gave Faster the Hey Accentuating the the CAGR through play are

Wolfgang Dangel

question. Sure, good Daniel. Very

and we are downturn main answer single been in seeing has the for there. the a reason growth Ag years the the first think time in a to accelerated XXXX that of I has recovered and and for market is number

of market XX.X% I in probably say growth would to are due so that’s end-market see as the we means growth growth Faster some lumpy coming I are reason been are over and three well they at and Ag has market would accelerated only share seeing take your there – double-digit the and That purely to that we Daniel? question, now that last an grow we probably for it’s XX%, Ag probably revenue probably why the and destined really guiding say, market seeing years to to to this market where that’s four expected Group. XX% phase. So where answer the main

Blaine Marder

thanks. Yes,

Operator

I like the would for At you. comments. closing back to this Thank time, Dangel turn Wolfgang call over to

Wolfgang Dangel

your this participation again you Thanks you. all Thank of Sun employees morning for are and here for the to hardworking these thanks who driving results.

quarter Thank So results Faster then you very close quarter May. in acquisition we the day. on a have first and second we in all on our to updating of forward you when great are the of looking much and

Operator

conclude today’s teleconference. does This

at for You you time. your And, may lines thank your disconnect participation. this

Helios (HLIO) 27 Feb 182017 Q4 Earnings call transcript