CIR - Earnings call transcript Q1 2018 | Circor International Inc

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Operator

Good day, ladies and gentlemen and welcome to CIRCOR International's First Quarter Fiscal Year 2018 Financial Results Conference Call. Today's call will be recorded. At this time, all participants have been placed in a listen-only mode. There'll be an opportunity for questions and comments after the prepared remarks. I'll now like to turn the conference over to Mr. Merrill remarks Sharon introductions. from Calusdian for and opening David Please go ahead.

David C. Calusdian

good and morning, you, everyone. Thank

unknown call Buckhout, Officer. On contains CEO; is other www.circor.com the are today are identify the that Scott website future CIRCOR's Bhalla, be to at company's available we'll These expectations on section and the CIRCOR's Webcasts Please to the Chief statements slides Financial The on referring today Rajeev and & of Presentation and slide forward-looking turn to risks, known and subject link. factors. Investors X. uncertainties, Today's discussion expectations. President

full these only filings could X, represent implied from of those other discussion SEC For statements at available company by a and today, as May CIRCOR's differ materially today's company's The website of results are advises review you Actual or to forward-looking filings. XX-Qs, the anticipated on the Any XX-K, XXXX. views remarks. Form company's its factors, circor.com.

call press non-GAAP earnings CIRCOR's release These The tables on available to are X. any website. date, at measures choose the may today's Buckhout. over and comparable to CIRCOR adjusted later organic adjusted so. will do measures Mr. duty call, forma to EPS, the reconciliation slide charges While specifically operating CIRCOR's forward-looking non-GAAP management now On amounts. operating adjusted cash recoveries. refer free exclude metrics special of update statements disclaims GAAP net to adjusted pro margins, Please to to financial flow, any a the and the income, turn these metrics income, in of company turn I'll the

Scott A. Buckhout

This the morning $XXX the across of adjusted got to us. XXXX reported approximately in as momentum first Good first a of our entered we quarter our at everyone over strong the continued end segment saw thank of acquisition and year. Thank expected orders of on quarter joining the which we Fluid team business revenue book-to-bill million than of million, in We a better in you off the the full as representing reporting of the markets $XXX X.X. December we of booked The completed under quarter. quarter quarter. slightly we last Handling EPS the first end including both start $X.XX is many almost first We CIRCOR you, for and of structure Colfax's new David. ratio

Energy reflecting performance due orders addition Defense touch let reporting & the Fluid strength basis strong largely will on to Rajeev orders of down pumps was engineered recorded on forma programs. X% Europe. first Overall Orders up But, our me a Handling. Aerospace when with orders new were with equipment growth three key a discuss Maritime the strategic we operating since on and orders Joint our a Industrial year-on-year & in were and our Industrial, XX% acquired driven pro that end last in of aftermarket part Handling Multi-Mission was basis Fluid X% the on acquisition. and increased financial parts. We Aircraft million part compare and of the Fighter forma of the to year business overall Services, a markets aligned Defense, organic segments the Aerospace as last Strike difficult to call. moment. XX% business are general the In in contribution primary a up highlights Industrial for defense markets, were were industry large segment marine saw by due XX% valves Energy, pro both from Reliability & year-over-year Aerospace $XXX Order valves. basis. in globally pro orders and Our organic Defense. forma refinery in orders up a and organic we commercial

With to than less us for world's business potential Handling Fluid one large by integration. as the to us products, to acquisition synergies, this diversified with controlled service solutions million balanced on a leading we're four. of ability overall we're base. synergies, year provides aftermarket pumps a end to and a in and service new our of flow five excited services, ability valves, months, our and The products of growing growth progress access realize committed of a flow robust severe severe control positions and suppliers products the in the opportunities about of significant deliver our across manufacturing $XX It mix owned and the significantly confident business complementary respect $X set and supported synergies and by installed market. technology control differentiated more markets. we've of Although equipment and other scale cost billion motion It enhances sourcing, highly engineering

growth processes integrated this operationally also the We're is of integration; consistent is order accretive Handling Handling actions. disruptions synergies businesses aligned portfolio. intake in of making largely any the meaningful as of strong. the Fluid exited with We've the clear We into progress has reflects organization on market expect Colfax. The transaction the been integration cash on philosophy surfacing place. structure synergy accountability the and be our largely a G&A CIRCOR; services organization structure EPS We've to across for transition year. end And the Fluid already metrics track, now had business in haven't sourcing good we result with agreement the

on in the business of having will be the programs Services CIRCOR engineered network restructuring Reliability and reduction industrial margin our largely make track, rationalization progress completed our the force valves quarter. this German our completed and For Italy in is we simplification continue last on three call. complete, of expansion restructuring The business announced overall is on program in we our to our

are $X rate cost may recall, approximately annual expected As of approximately in and $XX to you these generate aggregate run actions savings million. will million

Improvement manufacturing our as and ramping Corona, to globally. and business. continued year. our notch India. dedication Petroleum the their expands will that received API their of to breadth top in award the Institute has million Quality XXXX, Airbus TapcoEnpro of each performer recently for grants Aerospace and report primarily service. that these new We're announce pleased this part high prestigious a to the We We're We of valves support commitment we second significantly growth of in our four up in customers suppliers I'm $X to and of year. realize I'm and half American we for production Chain top expansion team Program. to expect of proud California granted manufacture DeltaValve Mexico can customer the for in only savings award This lines Airbus inaugurated also quality from our our the products certification of product to Mexico pleased Supply Monterrey, in facility. facility product distributed the

We cost significant to sourcing expect from and savings manufacturing realize products these India. in

first me market discuss it let Rajeev the more Before I detail. end to review over results turn our to quarter in outlook,

Rajeev Bhalla

Scott. Thanks,

segment our our reminder, forma both reflecting which occurred in a Fluid available as and This XXXX. attached given the As basis realignment, is filings it includes SEC information we've though pro income X, combined and acquisition organizational data the on quarterly to information on provided revised historical press release. in January statement the the tables Handling

cost the at expense. requires In income adopted pension between This addition, expense standard quarter. accounting of beginning or of other reclassification standard operating new the of the certain we the and pension components

share. segment significant result, for were a versus reflecting customers. service With while down on businesses the the adjusted This reflecting remaining a North the Industrial in basis, segment especially Grou; and review there with to from by segment a European American demand costs had addition fewer combined basis. year, Industrial deliveries operating From of X% market organic QX sales of per offset a margins is shipments in prior marine power in increase market in lower the generation part on last X. segment on pump that the million the other commercial forma pro On impact margin are $XXX business. perspective, North earnings slide lower components lower had benefiting consolidated of volume backdrop, the operating carry-over American strong last XX reflected business. North to impact and results, primarily starting pumps from year. to the impact valves European the America of was saw the As basis EMEA the in business Industrial This in pump of an change segment in no American European a from adverse North year. in savings is the pump U.S. valves the with income. remain Navy our restructuring out XX.X% of by results was Industrial operating demand The the sales acquired impact offset let's The partly points

to basis valves on up the slide reflecting in Energy growth were refinery expect For organic moderate X% valves the million, up margin synergy and from about benefit valves as restructuring Turn we Engineered as actions of short distributed as our increased sales well in are down XX%. second XX% sequentially forma realized. sampling instrumentation well and quarter, slightly. cycle as pro expansion as X, a $XXX

dilutive results services, operating the business of to The segment margin a Services quarter. Energy due the reliability segment up decrease was was Reliability in the of With Energy year-over-year. XX% performance its inclusion sales were breakeven to X.X%, XXX overall. points basis

In valve through production the up addition, ramped Monterrey. in we distributed Oklahoma and lower we drop as sales experienced a on City

in labor line head in were valves increasing market. with with stronger difficult a productivity delivered in margins loss year. Refinery sampling in struggled facility the and quarter City quarter. Instrumentation sequentially. Oklahoma the Our count delivered valves and prior margins smaller Engineered a

margin distributed lines. valves well restructuring the in quarter, volume expect For benefit a we as valves savings expansion higher and of from our second refinery sequentially as product

Defense Turning launcher on increases business X. for forma from $XX X% organic quarter, primarily U.S. of significantly pro programs. the & in our Including defense and up accretive Revenue government business million, basis. & sales to had the year-over-year. margins Aerospace expansion. Defense defense Missile business, increased UAV basis operating sales XX.X% pump year. slide a approximately Aerospace volumes, contributed & XX% to prior Aerospace Higher were improvement the operational points price margins. defense Defense XXX the margin up up The from were was and pump to of

the moderate selected second X to items. quarter based P&L on margins to sales expected mix. expect for slide in We Turn the

Regarding due the item relating income taxes, to discrete position. the forecast to than the uncertain XX%, previously for resolution quarter a rate tax a our lower was quarter of a adjusted in

effective year be the rate continue expect full XX%. We to to

Looking expense $XX charge component we items million this related and including amortization restructuring of relates share. The of charges, million, recorded a pre-tax step million. acquisition to total up per or $XX non-cash at $X $X.XX totaling special of largest charge inventory

will not further charges of any step have Going of forward, up we inventory. the

the per charges compared for other $X.XX costs result the relate or separation we The million, position share, up $XX.X Fluid remainder slide Fluid of debt actions. $X restructuring as transaction Interest expense to million balances simplification For primarily was for well charges for prior severance. higher year of the over Handling three the as programs, million our due recorded debt Turn the as Handling quarter acquisition. to X. $XX to a on to of the

This quarter reflect was rate the the the on businesses During spent high driven $X projects Handling we the of CapEx by quarter, them. million in in not upgrade Fluid when capital year. unusually in we process does on that the for approximately number run spend were acquired expenditures. It a

For expect CapEx $XX be year, approximately we the full million. to

In first quarter, of funding. costs severance number disbursements advisor level a the disbursements addition large high care to incurred for seasonally in health the and fees, of we

our better interest the cash April, of completed working for our of our through $XXX of year we interest including the call, rate portion We I that interest options rate debt agreement fixes rate last expect improve million four-year noted to we of a evaluating X.XX%. to On fix the at flow capital that a swap term In performance. remainder were debt. the

about result, we $XX expense range be to now prior million of the full guidance. As year up from $XX the our $X to a in million interest expect million

second million. to expect of interest the we million For in quarter, $XX the range $XX expense

$X.XX per Moving on $XXX in the adjusted of second million to range to quarter of EPS slide guidance range share. in and $X.XX $XXX XX, million XXXX the revenue expect overall, to we

see decreasing and sequentially in this back the revenue We half expect continue earnings to costs year. with of integration to increase

special related to totaling Regarding per of per second restructuring we of quarter and to and $X.XX expense $X.XX anticipate restructuring the Acquisition charges and XXXX, $X.XX special charges following share items. $X.XX share. for amortization charges for the

adjusted Regarding be XX%. our the approximately expect tax we second rate tax quarter to rate,

let Scott. turn Now back it to me over

Scott A. Buckhout

Thank you, Rajeev.

healthy in our across Industrial and In and Book-to-bill of give the slide overview the is Let me momentum and us will X.X you that of give turn XX%. the a oil as drivers an was The believe was industrial almost most the grew machinery lines orders end order segment North momentum orders the of OEMs move significant pumps increase we industrial organic commercial & saw XX. business. largely XXXX. through markets quarter into regions sector balance Please we in driven orders general to and quarter, selling QX first and and and in mining Europe we in industries. forma in heavy sectors. gas increase general for the the In marine pro from construction, America the by

ship result a As back building well. for we as last saw half higher of increase market the in in year, new activity an of the commercial marine orders

going are the For sector to growth goods the orders line in overall into in expect PMI the we quarter expected Pumps & industrial by sequentially quarter, up Durable orders with continued remain market. well. order be be gas second driven oil as first to the positive. the indices for general

the moderate sector However, expect orders we sequentially. from to commercial marine

raised of Industrial May prices pump I'm excited globally businesses half effective The announce launched the in one we to we also affecting addition, recently times two Xst. by and maintenance easier date all-weather that progressing products enables revenue. our about In was that to downtime, XX%. cavity in maintenance group. new OptiFix avoid pump to up for The costly designed reducing is faster customers our

biggest Our the wastewater is pumping applications. OptiFix for in market

where from compact for Our two is smaller pumps. In all-marine new the to have XX% vessels ideal are marine offshore we than pumps that a marine firefighting. products critical. in first footprint water space used is specialty all applications The centrifugal comparable size quarter, introduced cooling

is also of significant terms ease XX% savings is which product of installation. and in Our lighter fuel

now significantly This and Now were let in orders well. year-over-year brands up our the the services. firming our increase and refinery refineries, Capital MRO parts TapcoEnpro as by spending The product capital me aftermarket are up After valves sequentially. we doubled MRO have In segment. to shift seeing a we've deferrals QX strong orders placing DeltaValve the than both projects and and provided. year. period we're quarter, a quotes over maintenance projects sustained consisting first both and and previously of of Refineries investment. an orders Energy and prior line capital provides follows more

strong Over win last the quarters, we've two historically maintained rate. our

licensors pre-engineering the are of As business this work for as you to is be Having refiners, favorable EPCs can predict. with timing high, busy in market know crack activity be project project as are and can difficult lumpy that, and spreads well said level the and process management.

unfolds. as solid We expect order intake the remainder of year the

Looking Rig and at to strong. North American high. valves, remain the continues distributed completions well production be count, market

As QX price pull-in to part expected, of QX effect orders large January in the were Xst due than in increase. our lower

the valves operational after Monterey. in efficiency quarters the increasing line and QX City pull-in. expect be our bookings standpoint, we're adjusting with couple the in for We Oklahoma to of From an past output QX distributed and of facilities

QX. line orders larger prior a In in but the sequentially, number We a projects In QX versus quarter in QX in in production in last with year. with and expect addition comparison. than lower instrumentation QX were to double API first the year booked due to place, certification in Monterey difficult we of sampling,

year. for QX, look our valves the and slow, improvement Europe seeing Most expect the strengthened the QX activities in America, the especially we while Overall forward activities and sampling orders As of fittings downstream steady moderate for as we market upstream smaller quoting in has and in move we to we're North rest MRO. products improvements through concentrated globally. projects but of

we fittings. call, severe XP As of pressure line GYROLOK service capability product mentioned on the last our launched successfully increasing the the effectively

This high heels HOKE close significantly we improves product the the enhanced that monoflange offers instruments. coupled reliability valve. technology measuring recently introduced long-term the that pressure valve of launch, of On

for provides it addition, and most demanding In specifications. meets a that customers' our simpler safer installation

and pressure challenging sequentially up FPSO and North to see to remains especially a Turning in Johan to engineered market of projects. Castberg commitments pricing intense requests. East number is bookings related requests These largely Middle quote valves, follow in we to we increase offshore were in due XXXX, increase Sea. saw FPSOs year-over-year the but the continue for the orders Overall, project the in gradual and the project

order consistent sequentially second improve quarter, order half expect second expect the our levels we year. the in the intake For we further be and generally to to of

and Our Aerospace order the segment quarter expect to we & in Defense first as continue QX. into we executed well strength move

lumpy by in XX% nature forma the order combined expected along large QX. international QX segment Strike of for in Given in jet on programs the programs Fighter orders for this order higher of pro driven an and program. in drive orders on and XXXX part is business, fighter we That the a missile saw basis, a Joint production In domestic increased bookings. our number to defense continue now XXXX with submarine decrease

growth front, order platform is build MRO and being rates commercial single-aisle growth increasing for the driven of On by AXXX pipeline. the aircraft, an active the

raising business our across margins. solid and half year. we of addition, as across look expanding and In we're generating Overall, businesses the strong see by order as driving to we we company we're continue cash of prices to flow second debt and appropriate. and reducing long-term To most momentum committed summarize, the remain the the growth, QX optimistic de-levering free to ahead

be to Now your will take questions. Rajeev I happy and

Operator

a now you. Thank We'll question-and-answer session. be conducting

Hammond Our first from question today Jeff is KeyBanc. coming from

Your now line is live.

Patricia Gorman

bit see Hey. when understand improvement key guys as through for help you the Jeff gating the in Trish talk issues about Gorman This factors and on impacting expect is results? to little a around come us for we can well that margins as Can more Hammond. Energy the timing

Scott A. Buckhout

start QX, about then the we'll how – playing the you? margins in were talk in a quarter. How QX. There and with Scott. in This really this situations is see outlook I'll Energy three out start margins primary bit Sure. we pushed that and Good the down Trish. morning, little are Let's Energy

business been higher us was in side. and margin the run into The valve's ramping that we've on as meet higher our distributed to some levels that up first We've situations demand. cost have business, of

we shutdown is course in and in due first three of QX of margins. weather where had first our The volume affects which the days in we had quarter Oklahoma production no to

been business. been you up in ramping this labor now, City in with market qualified in getting labor, tight ramping right the having imagine bringing and have up a the – in trained getting and as we guess also getting the type up We efficiently seeing struggling a changed forward shift in hire changed and and and industry of the in stability whole we've running. way trouble QX. Oklahoma productive a and booming labor We've them into can business, It's Oklahoma them labor what the more second, saw in the we this April I we're bringing people way in City we're looking with business versus structure, we've we've lot

second Mexico. The this part is of

that's Mexico ramping very We are up and well. working

should output You expect between Mexico's QX double and to see QX.

level margin we that of in basis quantify – that at point in the the about well distributed in and just will about we I be majority talked Energy quarter valves. valves first largely will inefficiencies took the it, expect go To second into that XXX a the quarter. took hit the distributed So, hit as we Energy for the we resolved

valves. the in had had the We in valve Energy issue was engineered in second engineered loss quarter. The a business in we

quarter. in in might calls, That We first for completed in us restructuring QX. XXX the about first we the know quarter. that points you the business As basis restructured hit from previous

breakeven. of that Services, profitable going the acquired a the loss acquisition. a business. Fluid in smaller anticipate into a first then that be would to third part but is – piece we new it higher We're much to that revenue. business QX. second Handling This was in business be a still much improve the but QX. a quarter to And tends smaller forecasting loss, expect Reliability We anticipate lumpy service loss, as the on expect we still We – It we quarter

We QX, So think points issues it. but basis for that not in necessarily QX. goes hit of the these about majority of away all in the three total was XXX

Patricia Gorman

follow-up a Just there...

Scott A. Buckhout

Anything Rajeev? to add,

Patricia Gorman

run about Sorry. going we What's margin in second be reasonable a XXXX? thinking that rate should half into

Rajeev Bhalla

high-single should we Trish, be is Rajeev. digits, this getting the Yeah, into

into well look look back the digits year we As we and beyond above double this that. as then of

Patricia Gorman

Okay, downsides how integration great. any that Fluid question, upside is one thoughts And or going? and final then early just Any surprises? on Handling

Scott A. Buckhout

We're see and we is in. take opportunities say – delighted Rajeev, that we we here. not I'll number would jump of a seeing I'd necessarily first expected. start cost I unnecessary can we've things the months found. in The that I'll we that or CIRCOR, more was Sure, the upside that, coming so, synergies categorize can the positives. are at then, cost opportunities they're with you costs yeah, of them with than that that there we but get as because over think the

is pricing. The second opportunity that finding we're

We raised we've done just nothing that since learned – Xst, May – almost been globally. prices prices globally. much we across not has We've are this Effective really business. with XXXX raised in this business price

of And we looking And that the how are commercial out see stronger saw expected, the side. seeing orders the then so the third deal coming expect did forward to some not closed we that marine particularly strength bit we a to when in out. in than We is plays we're QX.

the we're on. On issues opposite did of some we spectrum, the operational that inherit working end

burning a than have process then And of I'd initially integration, expected and in Handling more I than facilities higher we've we have forced working said in expected last then past-due in I the a down. Fluid of number the on would expect in the guess would backlog we We probably turnover we're it. faster say that

we positions we're open that employees, CIRCOR a working on. in We've but roles that the critical positions have process open working some of that some got we're lot still some positions filled we've of are, So through. open working the critical with

Patricia Gorman

Thanks, guys.

Scott A. Buckhout

you. Thank

Rajeev Bhalla

Trish. Thanks,

Operator

Thank you.

proceed with today Humphrey. is question your next Our Robinson question. from Charlie Please coming SunTrust Brady from

Patrick Wu

question. for taking my Good Wu actually morning, Patrick in guys. standing Thanks is for Charlie. This

Rajeev Bhalla

morning good Patrick. Hey

Scott A. Buckhout

Hi, Patrick.

Patrick Wu

in being the as bps energy it quarter, earlier bps with XXX on in in about question inefficiencies, margins recall, and down look the pricing were down a talk XXX that last then end pair the pushing came are valves there you into put energy seeing you when sounds break in of I from those bit you traction think little the I – there? like engineered the year. the was quarter inefficiencies quarter, for for in when and Scott, about you particularly good Energy about place all pricing at some that the Can and guys

Scott A. Buckhout

Yes. talk can I about pricing.

So let me talk about pricing, and something Rajeev, if in. you jump want to add

So product of you including within Energy, recently if we've think in the prices Services, lines Reliability about five raised them. two

haven't valves, struggling and competing So you we're engineered can we project January in In we get. distributed for we that's effective raised X% as prices raised every X. a prices valves, know still market

that to stick. is We going that expect

shipping not the we're that backlog. of yet seeing shipping through you're QX, still Now impact we're because

shipping So that that that's and we of of we're acceleration at an had old orders you backlog. the in remember QX pricing all might

board distributed that see but don't of X% the in that impact the was yet, you valves. So X% across

Reliability And refinery well. through every raised and targeted year year. that In prices as XX we other line then effect instrumentation and we October an is valves last the getting last product the a that good increase increase We raising traction had into went prices on annual in of increase, The that's that and price surgical we sampling. haven't year. where in We're in we've more do do been instrumentation increases Services, months. sampling

Rajeev Bhalla

valves, to a of like blanket just based difficult so A jobs those little and do engineered it's lot price Patrick, project increase. are a

Patrick Wu

just you to I switch on chance maybe color sort a a chance be any a additional to order is And want talk I side commercial order give helpful. you side you about pretty were sounds of the you helpful? the the a it to understand that's guys want to the guys know pretty wanted gears Okay, more A&D. there I like from facing strong. the commercial tough know little specifically would defense to give and growth comp intake side. orders

Rajeev Bhalla

Yes, Patrick.

color some you give me Let there.

mentioned side a as you it's So, on defense tough compare. the

Maritime the recall If and first the of the got Joint lots two you Strike last in Multi-Mission XXXX. we year, of quarter Fighter Aircraft

any Fighter programs, compare, QX. with of this launches So a for a Joint that are that get lot side good lot the been Those of orders the and but large of out are don't orders bit creating pushed of as said, we Strike UAV missile year has difficult well. a MMA the order order a intake two

the the Commercial aircraft the AXXX side, going with from recall up month. XXX's there's a the month up up the about aircraft rates little XX Boeing rates build a Airbus. where as by are were build On to over you single-aisle Boeing The program, XX the are XXX, a AXXXs

year of programs on that, as So we're there. a with about the that lot about out the we coming is that seeing one XX well. content respect don't and you've to mention, is keep talk that a in defense are good aircraft piece got to that mind the good growth tanker program XXX, of And where other the generally have the to we program just

Scott A. Buckhout

now submarines in here we have And leading been particularly order XXXX increased add growth have good of on increased just business rates the then Handling business budgets addition build are and expected carriers the Fluid a would that I last and sized and Navy approved, XXXX defense on to intake. with

So as we feel pretty good business that piece well. about the of

Rajeev Bhalla

orders the to And those fluid just actuation actually came out add up just respect close to business, to our and that ship were mind commercial quarter. in here the Corona one a business last thing in of XX% of we lot California let with controls me that that

So, compare, by it's being bit little nicely. a up but tough the overwhelmed the is commercial piece

Patrick Wu

just defense the year, positive you pushed clear year-over-year seeing, those first for fairly of – come then, sort it I looks to in And being want that should I orders be quarter projects then? helpful. be are the to like fourth. entire are That's But netting that Okay. guess not the the guys out through

Rajeev Bhalla

Agreed.

Scott A. Buckhout

Correct.

Patrick Wu

That's Okay. you. Thank I all have.

Rajeev Bhalla

Great. Thanks.

Operator

next you is question Thank John Franzreb .Our coming & from Company. from Sidoti

Your live. now line is

John E. Franzreb

Good morning, guys.

Rajeev Bhalla

morning, John. Good

Scott A. Buckhout

John. morning, Good

John E. Franzreb

You the the in bit bit market, something mentioned versus little pump On in side marine sales provide the talk more color the would Europe? disconnect a can business, you helpful? that just you case, can North a Industrial that about little is the just be of about America

Rajeev Bhalla

orders you on are sales? John, asking or

John E. Franzreb

On shipments.

Rajeev Bhalla

in Shipments. some good see Yeah, growth as so did Asia Europe pumps and in we well.

North With Some of of to that in and a we to pumps notch, with past-due it's market the marine the But XXXX our that from our there helping of us activity the shipbuilding place prepared little good a to related that's still with remarks of shipments door, in delta America, that's backlog the just took actually the the part up is some market. respect well. what's as respect of about talked standpoint that driving North of American the here. bit out back healthy market some is that the a getting half commercial to respect

John E. Franzreb

there market the any America particular going shipments aren't you in out Is the – door that that North Rajeev? Okay.

Rajeev Bhalla

The power market is a little softer.

John E. Franzreb

that going in get second quarter? Okay. you're to the back And

Scott A. Buckhout

you'll grow see You'll will meaningfully. sequentially, the the pumps in Americas for see shipments

Rajeev Bhalla

Correct.

John E. Franzreb

Perfect.

side, equilibrium the you're you secondly that some given And you're on a Scott, or on the year? of think Okay. slight the to that are for the pretty I like inventory how quarter. things. you're though it trends to get the positive your to be levels, what activity? strong thoughts just to Are loss business, guess on think willing about you've are side, said your going up sounds want customers' even you valve your engineered say And bottom in balance more here and you are audit we've Energy reached the the the seeing of the you I distributed valve quotation close audit trends sense about the the production side you of ramping two taken

Scott A. Buckhout

start I'll okay. EV. with So,

in the of with actually few Middle customers. our a East was ago I meeting weeks So a lot

a got I them amount on of feeling they're from color so as decent well. And how

I say it bottom, when my think reached you the we opinion I that we personal have. is put in

seeing now before a seeing more we or activity even ago are that. were We quarter the than quarter

Middle in things projects, – we've telling starting finalizing – Our in they're turn customers in intend are meaningful that the what past. seen the sending to are to RFQ's, way us than they're they again are a more East the wheels us

QX we low QX half. are it intake lot but and similar in last in QX and the expect than meaningfully saw in a back We're of here off year. saw then in get we that to orders the order base of we're So a expecting QX what better we better very

not for revenue does see what in probably significant XXXX. in We're year mean this Now in until going business the revenue? late to that and

to believe – we respect better XXXX QX The be. this But no think think and will it to the where think a at we're meaningful in QX much are valves, distributed building a with year bottomed tier. I not customers We that we're is – starts XXXX getting a your in directly I up are valves year do engineered question last point in way. answer than from here. I bottom longer inventory year, better

growth modest with But intake in market. Poland, that we in we in for that and the the half. QX some run the kind about up inflection expect that QX see maybe order So, you saw believe this don't we the in point QX correct of that's any the or in down we increase and if rate back price

that they flow focused cash profitable managing disciplined are telling are us on that. customers growth positive Our and

that going we some we're as modestly being are in that see So today a it, that there's North America the know to big expect seeing the year. lid the are we run rate somewhat But industry of keep it through order on so grow inflection. a you to managed won't probably bottlenecks in

John E. Franzreb

Perfect.

Rajeev Bhalla

With engineered to investment of are that the the tracks completed at the little In look one there of significant And number offshore those project, a some to final business just really that the add FPSO projects milestone key John forward. of respect that's positive. projects let of that for me shape XXXX, bit go comments. milestone complete of valves, metrics we color a that in was that are Scott's including decision, kind then to so FID in type

Scott A. Buckhout

And XXXX actually. was of XXXX I double think

Rajeev Bhalla

balance. Right. customer distributed And inventory, then the on a – we good with second valves it's piece to respect are the

stocking as sold, kind as filled get orders cycle that seeing so of well. we that and And the are continue

John E. Franzreb

other regards what's anything just to wondering the integration call Thank also, for can Two quarter, didn't have a quick both of any the could the consulting part, out what's that I us? income related you margins. on might in color are questions. to cost FX, the that And the Excellent elaborate P&L, little other that you. if you. more In item, bit out you break absorbed costs was anything pension impact you there

Rajeev Bhalla

example are With adjusted John. are absolutely, related, Sure clarify, agreement the operating the segregated Those we two with look of for separation And Sure. out to respect Fluid income. in to acquisition paying categories. to costs, costs services integration where I'm transition those just Colfax. costs at the Handling that and associated

to of you in help an to million numbers in a and QX the would expense with was particular operating We suggest, rate related in $X project. in expect we then costs, The are QX. integration similar run diminish other might of hire consultant remain And our to and a close it as that here. those tune bucket QX. QX That as a us will

John E. Franzreb

Great.

Rajeev Bhalla

is you you other the the of question With our income on respect income, our statement had, see to what the pension bulk related. base of

the we the chunk reason might down income And other year As move versus what have the costs income. that accounting seen Fluid a fresh pension numbers service Handling mentioned twofold. start. in acquired. is a we pension the line, components, of than all sheet relate of is clean you the acquisition is One it when of we pension this remarks, kind now in prepared below so is the do you businesses And most the do years the to you prior

losses for look us, out actuarial get being ends old ahead. up and the we of wiped as the income planned all return So on assets

John E. Franzreb

very Thank much, Rajeev. Perfect. you

Rajeev Bhalla

John. welcome, You're

Operator

Thank you.

Nathan coming Jones today next Stifel. Our is from question from

Your now line is live.

Nathan Hardie Jones

everyone. morning, Good

Rajeev Bhalla

morning, Good Nathan.

Scott A. Buckhout

Nathan. Good morning,

Nathan Hardie Jones

much not going Not much very to on. about talk There's today.

Rajeev Bhalla

pieces. A lot of moving

Nathan Hardie Jones

little have of performed here. the business first the would here towards by that start the demand picture we bit level, or it about expected I at Refineries the Does in in start this bounce any purchased better place, talked back just talk this bit to that Certainly you around to Flow your be quarter. with. like under orders that you to operating looks XXXX a a business are XXXX business? in you still start wide orders. doubling It thoughts Critical business When the expectations. below placing in margin you to where first get about a quite

Scott A. Buckhout

I'll yeah. in, that, jump you Rajeev. and – So can take

look happening you order QX together we're going right to the orders in underperformed hope where strong going in what so it it's the The when But sense it company. you're than order something I expected bought the XXXX slightly hold? we the is I'd intake So than investment that when be we now, are thesis, last to it seeing we're now expected year. better We – where seeing of we in we right that that The put is will. We remainder wasn't be it if there better intake holds year. say through if know at what's the is. to that's the originally are

Rajeev Bhalla

So...

Nathan Hardie Jones

Okay.

Rajeev Bhalla

big orders to out are respect Marathon, we refinery just we And amount capital bit orders you on think the seeing Turkey add of if of and had with kind have I we're place fees, in in the project being Nathan, of out that, a where little largest color Tüpraş. Garyville stress which U.S. is recall to well. the a pushed the bookings as these to good DeltaValve the

some TapcoEnpro. as So aftermarket the there are good the projects well on as there

XXXX maybe top on be do back But think the Our we XXXX get mid-teens. be versus point, respect estimate today so with levels? will could at this much stronger, upside. XXXX even don't to but high surprised We digits double-digit we to

Nathan Hardie Jones

you of business that And one large in there. where that that some prices. raise you've also are putting you're pretty yet noted the Those steel pieces of was to guys

to prices these sure cost you that protecting cost you the plans reduced Have with steel I'm margins there of products? some in dealing here? raise are and raise here? So, you're How material business? Are raw inflation businesses to

Scott A. Buckhout

Okay.

there's components couple here. to So ways answer of – the couple a a

– is and an And price that the project we the business, in and piece if you get aftermarket maximum get. the have some So are unique our we of every – a there's fiercely break to we project, can competition. have this competitive, of price this into the project what a of project pieces, cases. the products lot business we piece not of unique, a is some don't business say, very DeltaValve should couple I in It's

So and in pricing look feel margins similarly. we amount that the When the that have with aftermarket, happy we decent of business. power, very at we're you the a get piece we of

and good the business. that's the do to and work to qualified get uniquely for the aftermarket are we're both and of piece We able the very on DeltaValve aftermarket, pricing TapcoEnpro

and the there's in projects, now. moved of to being business spirit that's more more will – competition. capital if there's more market, pricing that TapcoEnpro It's the right that's For pressure India you

on addressing in to we of piece much the responding So very focused the that are market in business the overall. competition cost

that's So yeah, we of competitive push we business. but more price when can, piece a the

Nathan Hardie Jones

to and raising in TapcoEnpro despite – protect that say business on you've capital So, able that material – is having costs it overall to increased fair to that of you're out prices business project costs the side that take your been not raw margins? there that

Scott A. Buckhout

Correct. That's exactly right.

Nathan Hardie Jones

Okay.

So color of you little cost can in that you that, Can and maybe give than the out. talked us thought more timing? opportunities that get more Fluid cost on the unnecessary Handling business, scale a you about seeing you the

Rajeev Bhalla

as the it We've G&A really that's selling structure of G&A it's opportunities around the it being growth it's parts and some we're of there's other kind piece keep that's that specific looking the to looked and good Sure. up that Think And with the hard. and hard. of new But part We're divisional of respect we the at important of the there. think group very with the in. SG&A we really engineering, structure at product set Sure, – that. – invested development obviously quite careful to Nathan. kind think

what can example into we of where adding And deal some bit in up related of cost walking synergy a anticipated to actually there is a than of incremental good we combine areas get some the we're sense are that then the team. kind it is functions where can beef synergies IT the we little some and

Scott A. Buckhout

me let to a bit. So little that add

higher OpEx the European our And you America what in quite in of you sales in the business So than that, then see we're Rajeev group CIRCOR. percentage other that or seem of in can referred SG&A, it's headquarters pieces of trying large. there's specifically significantly to a the that understand other piece as of the there's Europe the piece you cost call see too, parts is what that maybe

understand for digging try So and what's a that to reason driving to Europe, that to reduce there in opportunities that. there into good is we're are

Nathan Hardie Jones

that over Handling past-due in business a backlog I'm Seeing a business the to fair years, going in one bit possible? people tends how take is you of think are lot years as more system. higher expected of about over than clear Fluid the sneak ensure and is, a how that the it guys Fluid quickly of out taking guys talk the big as what Then past-due much the seeing you it to what problem Handling getting backlog to Okay. Can on than to it longer and and actions you out there. lot a

Rajeev Bhalla

Yeah.

why and clearing to Archer dealing – now. there's percent past-due that's I operational – Head we Archer let's it that. Mike backlog. what's was what business this. to more backlog. And pieces being it's its is and what the integration that from and of terms and and probably on Industrial we have There's in an In I think it it have of Operations specifically understand put it say items to sizing, the standpoint that charge in Revenues in quarter part it of of probably to that's a not able stays like piece the a Lapointe with would do Mike involved we the piece that's involved & actually XX-ish is Nathan, of up And takes that's been – and With should respect the Aerospace execute two if of were way. part J. this it – of there Defense absolutely

Scott A. Buckhout

– the extra at comments of we couple team we've with these dealt here a the and is think of kinds issues past specific CIRCOR in I has.

This remainder here concerned the side moved The the So we the is of do. past-due is We're the this is Americas They backlog understand understand They age the customer is what backlog smaller that this in Navy. business more of you majority, piece something know backlog with do defense something to the of than & Industrial lower with half of defense with closely Defense. that the and managing the not past-due we're that than with spread might The what managing is it about. side. to past-due to doing. Navy. on be There's down. Aerospace risk and we're between the burn that and plan the a well Europe how it's it the the on dealing we're

So better we feel that about too.

with it's So going yes it working okay. the particularly us, we're working is so to but the going to backlogs, take I Navy and with think Navy time they're be

Nathan Hardie Jones

Okay, thanks very much. I'll pass it on.

Rajeev Bhalla

Nathan. Thanks,

Operator

Thank you.

Carney Our Company. Gabelli & is coming from Brett next from question

is line now live. Your

Brett Kearney

morning. good guys, Hey

Rajeev Bhalla

Good morning, Brett.

Scott A. Buckhout

Good morning, Brett.

Brett Kearney

you for activity of this bit back to going your to in on maybe of a related QX, you're that the or primarily ask to half I a piece seeing whether of and commercial piece pickup activity aftermarket moderate the that said into the expect year guys that's and whether bit the want outlook the that the know OE XXXX marine just business? to for I heading you

Scott A. Buckhout

of Merchant activity actually commercial the increasing last it's back building majority year, Marine it's the opposed increased is OEM the the So – business ship activity to we're seeing OSV. the it's the of offshore side in and the our of aftermarket, improved based on not vessel, as marine on on more side half

side side Marine seeing OEM Merchant good on OSV we're the yet. the seeing not that and aftermarket growth we're So not

Rajeev Bhalla

the rates some do activity some well that's at and take is up as indices the metrics is a there of that that us that our front of on you look freight one nicely, shipbuilding Brett, pumps. that's sell allows to helping can

shipbuilding lag is get So four-month to is a probably the about an there when three- between when order. we versus occurring

So that's key another at. look metric to

Brett Kearney

guys. you Thank Great.

Scott A. Buckhout

welcome. You're

Operator

you. Thank

follow-up John next & from Company. Our Sidoti a is Franzreb question from

Your line live. now is

John E. Franzreb

fourth that quarter, ship you in on ship will the the that that referenced Joint XXXX, XXXX? Fighter just will that orders or Yeah, earlier, in in quickly expected you Strike

Rajeev Bhalla

in ship XXXX, would That John.

there there XXXX. cetera that So the primarily is up, material but et is deliveries would so pipeline pipeline is we and long but get the orders time, every shipment year fills in XXXX lead full ship so the

John E. Franzreb

fall none of XXXX, that And into Okay. got would it.

Rajeev Bhalla

occasion the earlier But likely on today that that some at could I what thinking this in point. reason don't happen. we're Only that's for think it came than

John E. Franzreb

Great. Thank you, Rajeev.

Rajeev Bhalla

welcome. You're

Operator

Thank you.

is from question. Your a Robinson Charlie from next Humphrey. Please Brady question your SunTrust follow-up proceed with

Patrick Wu

actually guys. Patrick follow-up. again, Hi, thanks This for the Wu is taking

implemented segment. you prices Industrial guys the I across I Xst. half raised board the heard side, May that make just effect the on of sure think for and of to in a And want I was the Just pumps correctly

just little quarter for year. the cadence wanted margins more you and in bit the of So half understand also to talk sort Can I the the second a of second that? about of

Scott A. Buckhout

let Rajeev me the let talk of So, then the about margins. cadence I'll clarify pricing and

customers. pricing is the but is we our businesses, as we have across the other some have of long-term with many board, So it in agreements

that, half of X% little So, kind so usually effect. to have let the And there's Rajeev to net prices getting take with to the we're I'll raising you X% X% the breakage. you as the to half business, in the way of going about to X% think that's so on I a of comment range applicable that's be would on. think roughly business breakage some well that

Rajeev Bhalla

an Yeah, but start bit from in more will little a improved a cadence a margin lot QX, see in standpoint to QX. Patrick we here

we and really out the new getting close in would see those shipped, orders, QX. year expect margins nice the backlog, based So have we orders shipping just on priced new to some as

Patrick Wu

Okay. Thanks color. the all for

Operator

conclude and does you. gentlemen, Thank Ladies today's teleconference. that

have day. today. you may line and participation this for your wonderful your a at We disconnect thank time You do

Circor International (CIR) 2 May 182018 Q1 Earnings call transcript