AIMC - Earnings call transcript Q3 2018 | Altra Industrial Motion Corp

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Operator

Greetings and welcome to the Altra Industrial Motion Corporation’s Third Quarter 2018 Financial Results. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Ryan Flaim from Sharon Merrill Associates. you. Thank

begin. may You

Ryan Flaim

altramotion.com morning Slide follow welcome call, management’s slides section. to be Good in and To Investor the they the help referencing Relations the posted are you discussion turn that under everyone you. Events to Presentations to and Please call. will website X. Thank on this

the management will XXXX. defined Securities Private the Act call, be of as During Litigation in making forward-looking Reform statements

excluded to I today Financial Christenson Executive cash by flow. on Altra’s from Motion any turn Chief company’s QX diluted that other to Forward-looking a as discussed to Officer, expectations. statements items Carl otherwise. operating available events other from working capital Slide and in to Carl. as reviewing Non-GAAP call turn operations, Altra uncertain Measures update On non-GAAP law, non-GAAP to over and the metrics release now XX-K could management under the operations. other of to financial financial risks, Please XXXX when and Financial and management’s intend net are measures Christian today’s on GAAP results income, and significantly the Except future investors in must tables be Corp and the refer Please me Officer, press continuing Storch. of refer and company’s non-GAAP share, Altra’s the our Form are XX-Q filings With the X. events not factors exclude that of certain alter release Commission. non-GAAP differ its believes recognize the Report non-GAAP will statements, Industrial are items measures Chief comparable described slide website. or press call, Quarterly inherently uncertainties or earnings the income new Form of These with per information, on Exchange free The in required Securities our in and non-GAAP forward-looking does result whether Annual presentation heading and in Reports applicable reconciliations will should the Discussion U.S. management

Carl Christenson

Ryan, you, good turn X. to Slide and morning, Please Thank everyone.

here with our combination time the to will with to markets, an a a exposure automation & more first new Altra the Automation today and transformative Altra premier global expanded medical, the the integration, for early which business A&S which I technologies Specialty progress has end we is completed of including portfolio $X.X of and robotics. factory truly be detail industrial. Fortive since increased exciting with excited now We’re stages made as moment. in a very excellent and different in billion We’ve positioned business, cover

quarter Business delivered System, $X.XX, from Altra third strong seasonally due and on U.S., First, and EPS reform the the results. as QX last was the income business. the grew for million performance to year’s tax capitalizing $X.XX, non-GAAP non-GAAP XX.X% executing in a up of in expenses same a to delivered this market quarter. in By improving increase third acquisition-related year. period XX.X% net on conditions we the from markets I’ll we review a We demand despite down legacy primarily robust strong $XXX GAAP EPS most end Altra Our of exchange negative quarter, in across our leveraged impact year-over-year Revenue at X.X% highlights foreign

supply pricing management cost chain We input to to tariffs. inflation, logistics freight have offset to primarily related success actions in and and and improvements continue leveraging increases, commodity

expect further the merger, A&S completed improvement chain that through we we have to supply management. Now drive

Now please Slide end turn our markets. of to review a X for

markets to but of end will distribution, align high- organization. are market mobile transportation, and present evolve focus we revised merger, The set medical, forward, and metals moving being robotics, with automation energy, our on mining, will which a distribution. finalized, still and new off-highway A&S include Given the factory as completion of that such tech segmentations expect new markets to the we

Given end-market drivers the business. have the QX this we with end reviews imminent shift, in this key for on market the are done historically consistent focusing quarter, legacy we our Altra review

the During market very sales oil growth experienced we quarter, demand and as in strong gas in that double-digit continues.

continues strength. to to sales were wind market Obviously, double offset strong are metal in to Material shipments strength. down the addition, to due sequentially sales. to prices rebound, spending were single growth in market double- QX. Conventional future. digits, with chain finally, across And the most significantly strong expect sales & high markets softer-than-expected customers forklifts, handling market in These of commodity In market we dramatically tariffs be higher year- The expect anticipation gen sales was our a cranes been digits up robust of as market momentum continued date, market demand have improved foreseeable performances continue power Overall, than end that of over-year. wind and some of continued sales addressed. demand elevator another strength of also supply environment. a pick to more soft wind steel investment overall from lower-than- primarily were offset as support could for but year-to- constraints are hoists digit quarter our up and result sales up tariffs. as Mining were the better-than-expected sales. The making reflecting change expected up partially Turf by Garden and we market continue significant resulting

global include integrate factor we normal economy. other the year. increased secondary that in expect businesses end we a impact negative impact end the continue the is to the holidays for quarter exogenous The as the the at year and of on tariffs has Europe holidays from extended of and benefit exchange, some to in North will addition, the the A&S In headwinds fourth the there a foreign to risk America. throughout Obviously, exposure with businesses result a high-growth from the markets as combination

distributors quarter year. fourth addition, In the at by the customers and balance sheets their of end our the can impacted managing be

As the in fourth on reflected we meaningful businesses guidance, the a in A&S accretive very the to quarter. do results expect our have impact

X, Slide turn Now please. to

of Before I turn a like transformation ahead update with like I’d our for day on provide value growth as merger engineered would creation on leader Automation I motion for the to positioned both A&S portfolio, – a in guidance, the personally of Specialty A&S financials with hard organizations plan. platform – Altra Altra and solutions to on timeline. Christian complicated to impressive and global our of is you & power call the We transmission. completing the an transformative the Fortive’s to review make you our in transaction to with this With the a work first for I’d combination Fortive and over like acknowledge completed and precision, drive enhanced very QX businesses. of control

and to flow able We for have accelerate better combined free engineered combination premier end- solutions substantial accelerate and growth innovation delever. profile enable an a the a company cash to to evolves to provider customers. market our enhanced The Altra problems from quickly financial solve with component provider challenging

linear portfolio our to a products our precision can technologies drives software. broader sophisticated now and provide technology, breaking of suite customers and addition motors, a controls, businesses, leading with motors, motion and transmission including new engineered we and of foundational In miniature capabilities systems, power

aerospace attractive at spectrum medical, higher defense, transaction for a made one, end with the of automation higher-margin the As we higher-growth, result, technology since we very stronger a to very close, were with already of the ground the day markets, financing the and From Notably, position robotics. we factory running the including and the concluded end prepared hit have have terms. excellent integration favorable progress and businesses.

We several procurement items, the expect chain our integration payroll debt progress key the to integration activities We action supply interest be including related weighted and based balance X% IT completed to current market and to the and approximately successfully conditions. average costs. activities and expense excellent X.X% on on

I, this the These the great combination value cultural and a We members also with our Through management have facility for table. executive skill Christian X/X far. joint complementary and combined A&S establish Altra the drivers teams our our fit. are reinforce to a the bring a and team, sets businesses. five approximately visited have other that values of to core so along belief validated values core of process team, good we key collaborated organization, is that that

We improvements. to resolving organic Altra drive excellent the have A&S and visiting management cost and the will and to operational system we brings these growth facilities strengths extremely of such meetings, businesses up globe, performance as the the talent, many across with the timely is table, The to delivery the operational Business complementary system System business and problems. capabilities China impressed be operations tools been and we leverage firmed teams our in week. the that the Through A&S conviction have next India

business We implement system systems have in integrate and planning to order world-class to top two drive line bottom to begun the growth. a

is show industry, start to be the Upon premier which now to IPC Drives to Nuremberg, for joint collaborate. regulations this were to one combined for The will teams November work the sales no collaborate gating opportunity shows are Finally, of factor. a in sales the great we on our trade are trade in just able opportunities. closing, beginning SPS that’s a the longer Antitrust businesses

leverage major technology to drive companies strategic turn top several on kaizen for half believe a our looking world-class to financial sharing system priorities will results, at We organizations I’d which sessions we you is sales as the With reaffirmed our drive sale to of activity. first have strategic confidence will to have Christian in we’ll back bottom scheduled, progress provide the important an of to XXXX, made far to our improvement update to innovation, integration We and that, business continuous Christian? together so on then planning to both by over realize and capture have significant opportunity million our synergies line call I four. come from new implement event a the synergies like year and ability growth. a and there integrate review forward The Altra. and our with global a the leadership with $XX the of has work

Christian Storch

the and were strong good to as X.X%, Price We due net contributor accelerated XXXX. FX to quarter of income increases to effects up and same down to up adjusted the up XXX excluding had a X.X% contributing points very of Carl, in European Asia growth foreign points expansion negative of operating North Geographically, exchange, and excluding the growth to moved XXX effect from were strong a tariffs. top foreign X.X%. quarters margin. we X.X% sales as delivering was revenues you, cost XXX offset sales line to rate points, our impact rate, were morning, Thank our basis the were revenues everyone. basis negative Pacific exchange, American sales basis XX.X%, was

we to what to similar last reported to tariffs, cost continue that have increases recover related quarter, taking actions are to we tariffs the Regarding necessary been the we believe date. to enacted

the and are margin mix monitor Despite we evaluate tariffs. with basis should and the XX.X%. to Non-GAAP were non-GAAP to margin, take by to year-over-year XX expenses. freight increased points down actions continue margin basis to prepared right decline any logistics situation and in operating We due gross be year-over-year points additional the gross faced our to and increase we XXX able was

Our was largely acquisition XX.X% are impacted non-tax cost, and was tax GAAP by rate which negatively deductible.

EPS non-GAAP a of rate XX%. reflects tax Our normalized

quarter and Slide X. excludes expenses. turn EPS restructuring third cost of to and the of Please $X.XX For XXXX, acquisition-related non-GAAP consolidation

XX% year-to-date the was was the cash last – with year’s free the compared quarter same flow Our up up for $XX.X period million, for year. full

was Our million. equity book $XXX.X

In will turn was million be XXXX. amortization for our the following $X.X Capital priority paying cash, a down combination. debt, updated depreciation our for quarter Please outlook review sheet to totaled investments the delevering and and top A&S Slide for XX balance $X.X million. of terms the of

We year the XXXX the guidance following updating A&S our for are combination. full

in year holiday $X,XXX,XXX,XXX XXXX, full range due I sales season. point of have the expect to fewer X% a sequentially $X,XXX,XXX,XXX. to to For would the the QX we like will out that days now shipping

exclude acquisition-related income amortization depreciation tax Following net to from of the non-GAAP and we non-GAAP combination, net intend EPS. and A&S

reconciliation non-GAAP a million. changes, these for and call we in range three this XXXX. to Including this range of million the $XX.X income in new the of slides method million million expect quarters of the $X.X.X and the net to in included income net have now $XXX.X to We first $XX.X

range range to to diluted the in EPS in $X.XX non-GAAP of We the diluted $X.XX. and $X.XX EPS of $X.XX expect GAAP

$XX the million. Carl. range capital to discussion over We for range the expect million, to to and the million items, tax be XX% expenditures XX% turn before year amortization our in in With of will to $XX of to full in range rate $XX the the normalized to million that, and be discrete of back depreciation $XX I

Carl Christenson

the and and going Slide please forward to priorities turn three our Altra. strategic XX, Christian, as you, I’ll summarize Thank new

two priority million order integration making first the the This on team cultural that cost in is advance laser-focused deliver world-class on order sales synergy of businesses integrated, business implementing execute The to merger operations sales collaboration targets. in remains savings and includes our organization. by we business the capture the to day-to-day to of targeted remain synergies, growth the flawlessly A&S across improved sure are and delivering our continues a priority, to our $XX business the seamlessly the system on

flow. we And proven This with a to deliver – growth businesses growth. our pursue into top strategic on We customers. our new A&S priority infusing is new Second to excellent strategically across financial the system is and sheet. capitalizing capital accelerating of well growth delever line expediently business leveraging and driving introduction strengthen the organic technology enhanced the innovative tools, scale to balance by businesses accelerate includes focus for believe on third so the to solutions do cash and are free positioned sharing by core

progress opportunities the of are integration. begin the Additionally, expanded base the targeted with debt two pleased once will times. of is pipeline to range our prepared three support the so and A&S growth with build EBITDA that to business we are made ratio of long-term have performance we within In M&A to we the the conclusion, Altra early leverage we to net

several oil about like growth new We’re mining, by we’re the we Altra markets we’ve keeping the your global team, recovery to our open that premier to served, I’d industrial remain as to including back the entering it the and to to With employees We steel. agriculture in encouraged A&S forward that, the call and leader. we turn ongoing gas, as markets shareholders the historically updated excited a and and questions. ahead operator look to welcome forge

Operator

Instructions]. [Operator

is proceed. first Scott Capital Please Our from question with Graham Markets. BMO

Scott Graham

respect Good the with to cash. change morning. A question on to guidance the

Within the there? intangibles number for the What $X.XX increment EPS is to $X.XX, the of acquisitions? what embedded amortization is within for

Christian Storch

So table. Altra as side, that reconciliation $X.XX we in is quarter a or the $X.XX indicated for the

be used So instance, guidance. of the old if that for calculate get way the our range $X.XX the end which $X.XX it, you take we is that low $X.XX, to would to

Scott Graham

the that in A&S I’m Right, in about here. piece amortization the but fourth there is an A&S the also back add asking fourth is What quarter quarter?

Christian Storch

$XX about is It million.

Scott Graham

rate you And will simply use a XX%, that? tax on XX%

Christian Storch

XX outstanding we fourth would about And XX.X – Yes. use the million shares. quarter for million

Scott Graham

it. Got

maybe will what you On the quarter? in bit also and let’s just think that fourth your the little also interesting just – interest say, got guidance a could my fourth us calculation positive quarter like expense seems, in I’ve interest because you out Could tell you just help roundabout expense wrong. us maybe look

Christian Storch

the cost. amortization So all-in, including and expense million million an deferred somewhere on of $XX basis, annual between will interest $XX be financing

to divide in quarter. by what four, fourth you number expect the if we would that’s incur that So

Scott Graham

direct Obviously, Last all impact? if to at it. able – on you combined an direct point, tariff sort two basis the of is way lists added lists of to a tariffs impact the the just tariffs. this Got on on we’ve I guys annualized size have the the section. there that question wondering, primary been businesses was more

Carl Christenson

and Yes. order for the it's the of It’s million businesses. in Altra range for for the in $X additional the magnitude million same businesses to legacy $XX A&S businesses, the

Scott Graham

inflation from Carl, direct In call I include tariffs. does you're words, So side to with that, yes? of impact that natural want indirect, not saying – what the that that, let's other clear is just the and there, just be these

Carl Christenson

is calculated secondary or went not a buying there commodity is from into then correct. HTS included tariffs. that's it's from we China, – the how impact materials we're are, item increases bill by those just That’s in That numbers. flows whatever goes up every the – still code, that a And direct just are, through that the whatever impacts and parts,

Scott Graham

Would basis an an stand annualized would today? as have be what we number you idea that on

Carl Christenson

that direct probably that – and changes calling we're tariffs cost the we that it's the don't don't rest looking out And materials separate. there's say we're that to related to separate inflation try materials other is. are purchasing but just lots try of expense to know don’t We input that and we at that from inflation. China, we tariffs Because in what just we have No. try increases, and then the seeing we're just exactly net of

Scott Graham

Got it, the and But could on the integration promise, obviously, on longer. here synergies just begin delivering like deleveraging first, deleveraging have the take priorities is, could will you XX, begin Carl. I question, And the the away, synergies know Slide your Mike, integration last second. I right

every So reduce I'm of company's it cash and wondering, its flow the free take essentially just intention to is dollar leverage?

Carl Christenson

Yes.

look I think debt. the pay debt, the it's going we're down debt, pay the what down to we at down pay when do financial the cash, and with priorities

Scott Graham

Got Thank you. you.

Operator

is Please question Robert Our from Company. Mike with Baird Halloran & next W. proceed.

Mike Halloran

Hey, the on good guys. morning transaction again done. Congrats

Carl Christenson

you. Hey, Mike. Thank

Mike Halloran

of pro on combined have So, look XXXX number anchoring general, slide start guys entity. an the the let’s the kind put you've forma decks of been on for in if you all-in certainly kind out, EBITDA at you

EBITDA based you of EBITDA in last $XXXs deck, like about the think guidance? trailing for synergies full excluding XXXX year I was was it on on months like the think $XX June. number XX forma that slide what I that and looks low the million update the the Could of pro

Christian Storch

Yes.

of EBITDA for Investor excluding Presentation, exhibit Presentation, the that of we synergies. used the essentially equity, that $XXX financing shows million reconciliation well as So, placing as for activities in our Investor slide a September

year of up the going the with probably for It's number. feel and very our look reflects the we where comfortable end to the year, balance by think outlook of we low end guidance we're that we of range, the we the the like, upside at number Now that end use is close want year. what out so little there's as But number for our to calculate of looks a maybe bit a general, if good profile number that instance. leverage you to current in to

Mike Halloran

Okay.

And above looks guidance low what least assumed the like little that earnings at in a is million? range bit so number end, the that $XXX so at basically,

Christian Storch

Yes.

Carl Christenson

high little bit that. on A

Mike Halloran

makes That Okay. sense.

related the contribution a what quarter on more two, So can out do then, perspective, any did fourth way any look then A&S And quarter? versus third basis or give contribution think the can in how either from when from is things you A&S-related split Altra A&S, you the that perform way a A&S, color of annual on couple you one, impact some to the guidance, you legacy you would work? an in at can

Christian Storch

Yes.

after that I the I that be Fortive believe, might refer think earnings there you to So, performance. comments we to is call some call related today, has, there

them, to So that to surprises, be people don't I you don't expect it way. there any in there's But me can is tell to let ask want general, and we speak that for negative questions. put I for opportunity certainly, what

Mike Halloran

Altra versus A&S And you then legacy here? when composition of guidance the think range about revised

Christian Storch

Yes.

top is of EPS will in gate on one, neighborhood year-over-year of somewhere the also business XX% the a Number It bottom basis cash what be that accretive So, implies guidance the out things. revised line the of two that range growth, A&S the terms XX%. in will quarter – A&S to line have and some the business performance. fourth Altra's implies in both for

biggest reasons, – it relates two significantly is, reason days fewer in down EPS main not which quarter. quarter, unusual for sequentially, quarter fourth third Altra, in to to fourth is be compared have the is going the when is we shipping one the As the to

days. have about shipping X% We fewer

the the the have shipping of European time-off Some in holiday and December, will only XX entities they days way holidays our people during the give fall way season.

to sequentially, you you if to add raised So quarter to the – you through piece the fourth would look if – And at line. will of be QX. both so will lower things compared the – old out, have combination look than will top this guidance, be when together, line fourth guidance it will guidance, but all That bottom of that's them speak. we shake flow

Mike Halloran

Right.

the follow-up a the quarter based based was guidance something assuming, sequential that’s that the guidance, you about earnings it A&S, the you on like So, embedded because have – today old for strip my out sounds there, three than I’m cumulative already this fourth it months sounds you if but better year just your model would ago? on like in but old decline feel

Christian Storch

Yes. That’s fair.

Mike Halloran

And then…

Christian Storch

is know how difficult sheet what and And And don't as comments, how art. we is driver go one last or always go investors. And of customers want our one that's month. Mike, in that, to fourth how reason much December wild that predict. is customers way quarter to – main December there's be card It's quarter. the distribution on comment why management the a behave, we how we We will balance work but can a the the Last hope our guide just cautious our other to the OEM will very in upside and other. you

Mike Halloran

completely. backed-out of which million bit for from previous then acquisition? a the looking sounds saying so ongoing you're – around quarter, Understand somewhere think, is, amortization-related rate's $XX at it question. And the what an you're like is little I a that It follow-up last

Christian Storch

had is side, the initially rate at, a amortization the than higher be are initially – here estimated. look what's around will than and on of attrition if The stickier good Altra estimated. we churn for the The is news customer we lower we called because much A&S it's full-year significantly higher than basis, depreciation base customers million, the yes, on So, is had which instance. $XXX

the that's good news. Now

the amortization that the and combined On depreciation the around million. of, flip is acquisition-related and, of is historical out went That's call the your of business million, piece. has for it, depreciation. acquisition-related side customer combination that The of $XXX a therefore, up $XXX value just depreciation

Mike Halloran

or $XXX the EPS? then the is $XXX it should to an so, adjusted out million get And that cumulatively million we backing to be

Christian Storch

acquisition related, normal. only out backing $XXX because The million, we’re

Mike Halloran

exactly for, that’s appreciate And you. was Thank time. I looking the I what

Christian Storch

Mike. Thanks,

Operator

from Jeffrey proceed. is KeyBanc Please question Hammond with Capital next Markets. Our

Jeffrey Hammond

Hey, guys. good morning,

Carl Christenson

morning. Good

Christian Storch

Jeff. morning, Good

Jeffrey Hammond

getting deal the running. on Congrats you're done ground early the hitting sounds and and certainly it it like

to that's good hear. So

just is like, back the as business straight Just a on organic Fortive, June like through of give It a kind of put run for growth the of kind out, for rate us walk the Fortive you get can XQ can Altra? seasonality typically, of model seems number mine XX? versus little you then you've business, And Thanks. the quarter the and lighter. think range – you fourth Altra legacy bit for you

Christian Storch

the first So, Turf the first to has When part in the is or December and of of like that & like our the at the XX XX% the question, downs the with falls Altra, is is historically, August and or seasonality probably and seasonality season then the somewhere year Garden in look with first stronger points, XX.X% A&S slightly then basis half. second and around first revenue half half half, the something plus in in of the business, in the the all than year that half minus the the business. of It's holiday we similar. more second

the second the in in in December still they and seasonality Europe with For similar August have holidays. half,

less So the second the side. repeat you question, part a can And of – would your say, I little tiny that? I then Altra than bit seasonal,

Jeffrey Hammond

No.

organic about – growth? how the I should legacy just think think XQ you we Altra,

Carl Christenson

Yes.

back growth. some that sequentially, think you growth days our for then organic add should quarter, shipping to third the revenues X% you adjust compared and should fewer So,

which flat at flat because and when to down days. I Look never the last of happened were probably quarter. range, midpoint you has to year the fourth because at year the the last slightly sequentially before. last it's it quarters. at fourth of – looking the year think Revenues was And to in at last year, the exceptionally So equal four to strong – look quarter, quarter second quarter, we're was shipping an

extremely high pump. it's So

look we be And when I by the we at bookings, growth. impacted mentioned… backlog, shortfall. shipping look see negatively just going as So we still We're at when to

Jeffrey Hammond

Year-on-year...

Carl Christenson

round delta. So, year worse in That It's jurisdictions. XX of you the gives days a this XX last some versus X.X% European year. of shipping

in said, of I XX As European December. days entities only some our have shipping

Jeffrey Hammond

kind then a Okay, think of in just the interest rate entity? ongoing And tax expense, that that’s Thanks. $XX can that cash around, you housekeeping that – million the $XX i.e., for what XXXX, swaps, basis us move are you're And the contemplating How versus combined the or anything we – about cetera? an items. interest expense? to of the should on else is give with et what helpful. there on would couple And million,

Christian Storch

Yes.

the expense on be $XX lower expense, quoted. $XX interest that So, million will around interest $XX million cash to million that I than

are those will into The cost swaps. foreign currency intending basis enter points. weighted around and interest rate swaps our We to by of swaps XX borrowing combination lower average of

that to So X.X%, financing X% interest amortization be X.X% weighted about will and to thing X%. average borrowing around including and cost at cash all-in the is looking of deferred cost you're

Carl Christenson

to swaps. included do them gave we assumption this going we're the that number The

Christian Storch

that then the $XX the of And million effects million the swaps. includes is last point $XX to Yes.

Jeffrey Hammond

kind kind the that Okay, you'd XXXX that’s any of for use of debt excluding paydown make? number to

Christian Storch

cash lower million for $XX then interest And Correct. number.

Jeffrey Hammond

are got lean. like tight in you’ve pretty the and still it is the chains Okay. And then I day know supply fourth seems But inventory quarter. shipping issue

there balance to tightening sheets any you they leaning As or customers, that to reason talk your is would channel? everything's think just be down in that pretty the seems lean inventories like

Christian Storch

cost with are high quarter, North get to think side true time, true had customers on channel. the lot instance. on is expedite in we the is can the We very to struggle significant That for incremental of we in That products America. Europe. that chain, freight to inbound demand some from Supply we our lean them I the of third a our so suppliers. with freight, in suppliers incurred still continue in inventories the our more

that manage sheets which indications So are now. year-to-year And that, unknown. balance as their Carl? space the very to all around the that's varies that's going of from and things extent in but – do year-end, do well companies industrial the that still they and

Carl Christenson

Yes.

a in the that the is in year, what's mind, to in codes, HTS but tariff we are my of buy look components I bringing you only would not beat – going we at sell increase Xst XX% mark that lot think group, if the there's of put will would a the the my after to people to in that XX% in bringing those things in tariff. the material from Jeff, in go are are question thing that codes, or opinion, the

if "I'm – people the impact I make an got that don't is say, how somewhere to going they card one have to is up into if that bringing on in how else." I've So they on build cut stuff I but my you, much in tightly how factor Then know this inventory sense think to it codes. wild that manage area, they that products. inventories our a that's could

Okay.

Jeffrey Hammond

– I $XX you mean, synergies. just the confident million expressed then And in

thoughts confidence just facilities people hitting the early in on for you. Just talk the at a and you as feel go year-one around synergies your and Thanks. to

Carl Christenson

Yes.

expressed I some exactly cost come that said good past, think know aren't the very, we’re out and but – to there before, side going the we've synergies, in very in is and there. they break confident the very as the we've we opportunities

can on to I'm there. one reconfirmed we're particularly we I And synergies – line. as top what so sales excited the think is that the we piece side have business a are our about and think we those that the convictions And combined drive do

can not I do really exciting one, does as a that year that's we take in combined think so longer, a business. but little that's what Now

Jeffrey Hammond

Okay. Thanks, guys.

Carl Christenson

Thanks, Jeff.

Operator

with with is question. Please proceed John & Company. your Sidoti question Franzreb next Our from

John Franzreb

guys. morning, Good

Carl Christenson

Good morning.

John Franzreb

Of your prepared back, metals fourth which facing and oil that three a markets, the quarter in quarter it best sounded comp. and I the anyone I of is expectations, – mining, significant you faced those On fourth the remarks Are to and far. guess like gas expected winds the know the come comp so you or in down? the tough tough a

Christian Storch

quarter was weak So, very last I strong look every was very – you I think, and think, markets, last gas But and market, the year. actually we mining other well. very oil if was I in year, wind doing had it think fourth at of but a quarter

Carl Christenson

Yes.

in quarter in and and oil big projects year the I think had toughest comps, we gas fourth last some two mining. the

those likely quarter. the would be strong to repeat so will have And – least two probably that the that

John Franzreb

And are of a comp? does onetime suggested quotation kind businesses activity tough your slowing it's or just temporary those

Carl Christenson

just It’s comp. temporary Yes. tough one-time

and some But don't out mining some whether comes there's from regarding know. projects, I of that Asia to have so fruition – commodities some to announced what's there going think do. cards CapEx our not, have a we what's – it's or demand customers and wild so big that the some

the I'd the that probably biggest that's one risk. has say So

John Franzreb

implement effort And it, your In would pricing a into in years, background you base? is Chris that kind bit customer talk increases there Got their got past be own stickier. improving their lot of put you've a to A&S, model. little lot their about couple price the ability of alluded it. Any helpful. on of a Could base customer

Carl Christenson

offset and able I businesses, price our think what increases with the Well, is it’s very sticky to been are so the ability. – cost to than increase. to These they far, they've more you're are and been similar once commodity in, determine tariffs we've able

So it's been very what to to I we've do. able similar think

Christian Storch

where a – that that's we products where our customers the expect that we that lot consumer be customers of most but what is more think make We – exactly have of might doing Carl are are that don’t right most and challenging, customers doing. – I

John Franzreb

you, got. guys. Thank Okay. I That’s all

Carl Christenson

you. Thank

Christian Storch

Thanks, John. Okay.

Operator

closing reached turn CEO, would I session. have of the call the to we our gentlemen, and question-and-answer like end remarks. to Carl Christenson, over back Ladies for

Carl Christenson

November forward you you. Conference Yes. great joining seeing a to Global for at look to many you us like we when the day. I’d thank present of Baird on X. have Thank all Industrial And and today, we

Operator

you. concludes today's Thank conference. This

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

Altra Industrial Motion (AIMC) 25 Oct 182018 Q3 Earnings call transcript