CFX - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Colfax Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Late, we will conduct a question-and-answer session, and instructions will be given at that time. I would now like to introduce your host for today's conference, Mr. Terry Ross, Vice President of Investor Relations. sir. ahead, go Please

Terry Ross

today Good CFO. name and Colfax's is Relations. Senior the of Christy. CEO; President joining Chris and Vice you us. Investor Hix, call on me My Terry President With Matt morning, you, Trerotola, thank and and everyone, Vice for President are Thank Ross, I'm

call, also slide archived using Investors the and and our website website, be the website. today's colfaxcorp.com. of audio Our earnings morning can Both this today you of issued until found which presentation and is walk also section be on a presentation release was our next this call quarterly will later available on the slide to be available be in the call. We'll will through the

some of measures those we'll subject statements today our today, forth estimates accompanying as might law. and them, can measures reconciliation our statements These press respect slide assume call, relating in by earnings beliefs and and making do that non-GAAP forward-looking statements including future as we are SEC make forward-looking intend from call Actual statements might this we release to today's only today. speak uncertainties, update any obligation our except set be any regarding The and to differ those about to events With during required not the materially financial or results. and information the results be any found in forward-looking filings. risks forward-looking to During presentation.

X. over on to like Matt, I'd who slide it Now, start turn to will

Matthew L. Trerotola

joining us you Good Terry. today. for Thanks, and thank morning

in forward quarter. step the third growth are We Revenue to pleased another in improved. operating report results

Colfax margins. Fluid segment the we future. announced shaping remain sale reduction in cost operating an the also We September. Handling quarter important profit was on efforts Our in business of again This the for and increased track, adjusted

this history. move platform provides sheet growth to platforms. opportunity and provides in shareholders. important attractive create Colfax, more our has Colfax's a new value balance But our an it to role As our the include played for unique will flexibility of original company's strengthens acquiring business It which strategy, execute

our We of slide our in & to acquisitions the I'll also data-driven growth quarter, October, Handling The acquisition Fabrication agreements filler platforms. to alloyed technology in Air and build bolt-on share the I bit Handling Gas X, more a Siemens about Gas on had strong and On closed and we a to picture We metals. our change Turbomachinery acquisitions discuss new in FabTech that which acquire quarter Equipment another advance & Technology. in orders initiatives want in minutes. Air early few three in did announced momentum

East I'm markets only regions, Middle nicely. equipment by saw up improvement recovery. and is metal in America we growing several to filler encouraged Our across most the now yet continue to seasonally led volumes with the performance particularly standard in returning where by Industrial our picked solidly North improve. volume not sequential regions, adjusted

a one previous innovation and margins moved customers, of future we of four at our line trade realization This innovation day Innovation still September channel in our We much steel very quarter at balance being and Investor commented defines show to in from but the Germany, and exited through show the you with every it's change fourth was and this the number Colfax rising ESAB. month, show. Day, of since Essen in Show will the the quarter, progress demonstrated FABTECH and successful A protect ESAB. to QX, and partners, in as dramatic Chicago saw observers week on core forward well-positioned product look so costs. years largest as this at increasingly process material our our had in many highlight price the of in values, industry the headwind industry's into We inflation, our a third also we come quarter. I ago. the later seeing where at ESAB we pace less

the and filler advances expand to introduce continue Rebel We technology automation. and family cutting important metal, in

capture enabling Our extend from solution rapidly performance Leveraging recent machines to a and new were acquisitions develop are data our HKS solution. also technology, new legacy we products. able competitive to communicate to WeldCloud and

We Air previous awards the recognizing was dynamics year. pause Turning is pushed oil underlying projects and comment large quarter out shift markets. Gas X, the communicating want clear and China gas quarter. project comp orders. faster-than-expected petrochemical, largest be us gas. some I and in about came we I The to This the as and of view calls from very for We of the summer, implementation oil impact to between timing segment, slide the in the refining Through on in to timing in project the the still which most lower-than-expected heavily-weighted our We resulted and delays view of saw the Handling. to & we're want discuss of investment third projects and in to improving. seeing a so oil difference into tough gas, power the that fundamentally

to again. XXXX, is and prices order on new quarters. orders orders in QX levels system. several reductions of stabilize and with in In the In and likely increasing, or be ensure to Power XXXX, given sales build first revenue at in and by and be the power this the not impact backlog half of expansion order offset XXXX growth as proactively through to and be mining the resulted growth next growth. are took our change been sentiment business. a Our second dealing will invest years in we quarter, future the China for will power, situation. should with a This temporary XXXX, Power what back pressure announced generally oil and in power overcapacity the increases until achieve order the are consistent timing even swiftly global lap step-back activity path of China we This XXXX or this favorable. industrial The second By and actions we restructuring begins outlook to whether their profit to in goals determining large half more a of stable lower growth customer lower put quarter. to projects is see in in Howden some about slowdown picture organic have if general reality we the that a half quickly. drop other and margin the positive, activity, that for early we continue will of in strengthen in a balanced and our to we different China to likely expected third few remains grow any funnels actions a

focused a industrial year have been largely broad-based we industrial the to efforts improvement in this in progress initiatives and growth market. Howden continue general Our strong on see these applications and on

Over industrial Gas orders grown five from the years, Handling & of last XX% have general XX% to our mix. over Air

the power STE customers. product It adds offering China, and strong. category and cultivating Turbo. been The been teams wastewater Turbo the and recognized channels that in acquisition, Howden Asia small and successes now reach is and local turbine waste annualized quarters I'm seven closed X new market. adding acquisitions biomass small between We've already recovery remains great expands global and and growth broader and Our accelerate Howden Each in industrial offering, seen September, the the ventilation we've our last mine our CBS to a in growth serves our industrial where leader world industrial software, about In success investing complements in by Southeast double-digit fueled and Since five of our October, of called build outlook leverage especially organic acquisition metals and recent organization. that control announced the industrial tremendous a supports heat Simsmart seeing Howden benefits technology. acquisition the core collaboration scale. Slide Since processing. growth announced identifying we've Colfax's our optimization to three acquisitions it we revenue. growth applications system and also million compression call, highlights strategies, compressor team has from bolt-on $XXX India the initiatives. and with our strengthens business, simulation our fit operating Ventsim is Howden and we distributed design acquisitions. new of

hardfacing now capability combined metals Ventsim, build more We through are and internal twice continue our like alloyed In a at almost external investments world specialty service attractive in welding, and industrial diversified as and provider acquisitions filler to segments, partnerships. EWAC deliver and HKS growing is the Simsmart, to and with customer reach leading value connected mining, metals. aftermarket and is product often ESAB's range steel, called sugar. pace This standard industries maintenance rail, India. product and in welding of power, expands such cement, in repair the

As welding acquisition, filler of filler an well very we has country innovator can steel India metals growth nickel to applications. scale the business with and metals. industrialize continues complete leadership us ESAB the the will have build as business up and infrastructure. EWAC position for ahead strong the sets that in exciting out a Sandvik's critical we and improve The This has acquisition in significantly. the ESAB's enhances profitability our business high-alloy technologies in great and stainless range used welding model, in been

strong for metals are After supply raw an materials, future area higher-performance of acquisition, We're us. Sandvik development of Technology high-quality ESAB require materials. designs investment the R&D Materials making a and customer will filler important As alloys and and new alloyed for relationship continue the progress. of

strengthened to So discuss our balance Chris and initiatives. far results. future structure $XXX gaining We're have that traction and million businesses, portfolio. support market on we our growth exposure. the our committed we've reducing with to I'll it acquisitions over to stronger growth a creating flexibility shape to turn And this cost thoughtful bolt-on financial the sheet year, over our our diversify

Christopher M. Hix

overview quarter continuing Slide of Matt. for results X operations. an starts third Thanks, with

Fluid U.S. figures in total divestiture. only our not in discussion As GAAP, this discontinued a EPS business operation of as of In the results with means results of results. accordance typical completion reminder, a the and our Fluid be will Handling through the reported show the business Handling

schedule our Handling of that quarter and orders consists segment expected recast publish week, Howden operations year-over-year Air and few and the for brands. very historic a a prior-year divestiture, assist Gas Air because, continuing QX, this into the Gas of announced and investors, orders. Handling our the the of discussed, will as As Heading result segment we and now Colfax a shows is Handling Gas and previously quarterly Fluid To segment. included results later lower we related new our large

in and spending We came expected the the into with secure and order oil bit the by in downstream changing ahead strong margins quarter. a discussed Handling, of mix and increased basis our adjusted quarters Handling by orders because benefit Matt customer and in be reported lower moved than exchange of X% new ahead, margins a markets. segment Handling. offset year price offset X% on acquisitions our inflation from to longer bolt-on XX profit I growth, and the from conversion and M&A, the translation. points operating than Fluid Total offset more both platform. by corporate Below came Air company growth volume where through was of in we industrial reduced earnings of four the Total Gas to earlier, larger sales decline continued picked of organic ESAB, looking progress the balance margins pace projects. pressures due and was as the of higher driven being from expand higher and lower we line rate results. better another in steel FabTech up as new-build and In in realization At by Gross X% tax we quarter prior the price improvement to slightly a as mix expanded benefit efforts margins, part cost acquisitions just on expect no orders to quarter. started from foreign As gas the Air delays a of with expectations up were power the in Gas reflecting

and saw organically to So, We for $XXX Fabrication slide $X.XX in with of every than were our the encouraging adding quarter, discussion Segment adjusted a progress Sequential the the higher solid EPS, we sales Please the particularly fourth X% for business turn with in X results. America, results. up the of to almost prior region. were North quarter X%. in quarter, results million Technology another had with of expectations acquisitions healthy and achieved in line we October start year.

On moved represents we maintain metals we XX-basis-point as price price will moving our the of XX.X% steel realization expected, still Air restructuring on operating focus and we Sales converted sales, Handling X, As up With and margin as counter is slide to through improvement four and inflation. turn third improved attributed higher improvements. segment. management. of Gas growth Adjusted XX% quarter up, to we an prices to quarters spending savings the other were organically, to our previous revenue.

than Although grow of business. adjusted challenging. earlier make XXX we restructuring The to our additional expect segment, into It's the that take ongoing results the to showed margins the effort orders to cost Howden revenue margin be important quarterly despite recognize in headwind. improve to including tends projects include actions of the year. comparisons Matt commented increase structure our project on to investments transitioning smoother volume also next basis the business, benefit of and still operating being a points large

growing that last million emerging and year's part backlog comparison. our global and market Slide markets, You we of to are the quarter that This mega $XXX teams can our general in We've infrastructure revenues puts our regions. major Howden's continue standard orders see takes those in into projects. a of industrial prior our success investment and included already to XX product leverage technology the over driver has discussed of is and been almost from three Howden. build half

slide let's So XX. to turn

full We $X.XX of net are to share. per income of $X.XX reaffirming adjusted our XXXX guidance year

Fluid our operation. a For the outlook benefit as discontinued the business of includes consistency, Handling

business to of $X.XX $X.XX Handling will year. the for For generate estimate Fluid full EPS adjusted the reference, we

incurred $X.XX accounting to and adjusted expected Our outlook gain excludes material the accretion slide first purchase half I'll to in outlook close is were acquisition does include to in of to transaction. and XX. This costs EPS it related year's remarks the not the of divestiture, STE the on the on of about The the integration wrap of up recently should expected costs, transaction some year. closed this due not prepared XXXX. contribute add our which

our Technology fourth continue have Fabrication Handling, Air We business. steadily and this continue in and move through environment our year, to is ahead expect the this Markets orders quarter. Gas less to we In trend improved clear.

the coming business. we to necessary Overall, deliver of now less cost company most is flexibility choppy still moving profit improve the New-build direction. drive of market X% the and expectations but this power, total is and is which continue executing than in into is we strengthen our shared of year. growing, environment, the The Colfax, the our company down, cost to will to a positive actions In we are we and structure business. on opportunities protect

like that, call balance a year acquisitions. been acquisitions and segment made to to flexible actively accelerate pipeline And strategies meaningful potential capital open mid-teen our Colfax platform our have shaping of stronger, more I'd to questions. progress growth tomorrow have developing margins. With path bolt-on We this thoughtful finally, by building we sheet, our for on deploying on that the

Operator

you. Thank

Ronnie of Suisse. is Credit the Our of first question line Weiss from

Suisse open. Credit Your good morning, Weiss Hey, is Ronnie (USA) Securities line LLC guys. -

Matthew L. Trerotola

Weiss Hi, Credit (USA) LLC Ronnie. - Good morning. Suisse Securities Ronnie

You areas. in talked about restructuring certain expanding the

could Just be could wondering if benefits are incremental and the just size size from what big of taken be, how you actions action? possibly what the being could potential this this

Christopher M. Hix

for enough business, Air I Handling. market make And suggest be path and develop a mean those we continuing and to the for We're that What would we meaningful see us of to that business profitability year. it'll say I is that weakness growing any counter specifically the maintain actions. I next when Gas the Yeah. to sure

can growth Colfax that restructuring other get it. actions Got overall effect next the Suisse commitment next course, long-term something have - being in that of Okay. Howden, Credit wanted Weiss divested expect, weak here power Ronnie momentum And and within that the company could is and what's of meaningful involved years? with LLC the coming with be would all to business? (USA) to in we within With the then outlook And have to we for that so we earnings ESAB that the year. Securities for the platforms,

Matthew L. Trerotola

Yeah. The the Chris much a But part business. of it an of and the is said, small power of becoming back a Howden the of smaller of probably Chris piece half the business mentioned, of it's our as order Actually, in will XX% pie. be year, overall integral and business. the smaller projects, our new-build becomes on part it as quite

going business gas of the having So, to focus business, the some and is LLC the even the Suisse in growth initiatives been we as but And are and power the in of Howden oil for in don't STE areas number attractive power of we areas anticipate growth the best Weiss going a Got business, the that area, that future. Credit not in forward. divesting less brought of the Ronnie from (USA) STE focusing the Thank areas industrial have it. are that some business - years has you. Securities are the

Operator

Thank you.

Ritchie Goldman Our next from question of is Joe Sachs.

Your line open. is

Joseph Ritchie

Thanks. And good guys. morning,

Matthew L. Trerotola

morning, Good Yeah. Joe.

Christopher M. Hix

morning. Good

Joseph Ritchie

is Maybe just underlying the like much really midstream focusing and I pushed trends kind for wondering, out several gas like both this pretty weak-ish projects report We've is versus months? and you demand. weak and gas and next companies in XX this of of a just guess just had oil quarter pipeline confidence I'm in – getting the second. how downstream, on order And what over oil gives the

Matthew L. Trerotola

we a back that say environment better than Yeah. What see I'd is in XXXX.

the be to moving some But and to came projects we being things cleared then larger those. comments. the larger and in projects to But the price of be what's not but been over these going of area from a versus choppiness some And we've stable as Our projects, level little is think and our where a quarter-to-quarter still rebound, broad them, created an to sentiment the industry an over increase ours happened back is certainly in talked uncertainty that get companies forward a continue is price some slower and to where projects some are the are business it's and recreate that on time seeing level last versus that choppiness. I is, – an through, up There've the decrease. been that XX see X funnels certainly like increase side created investment in months we are that there's a enough time have and that a from mid about projects. downstream

Joseph Ritchie

Okay. potentially And is at there an regions any uptick could pipeline you specific now look driving take you the orders are right when next where that that year? that, a see in

Matthew L. Trerotola

and oil gas? In

Joseph Ritchie

Yeah.

Matthew L. Trerotola

where the regions in mean, I the there Those emerging the we'll activity China. are as – formation, parts projects, most is Middle project Asia, be the pipeline coming a Yeah. there's in the see advancement, project the of flow just the for the most areas it's to regions, are the to potential tend much question how quarters. where project East, order of and really clearing there

Joseph Ritchie

Are any And then $X.XX Okay. maybe accretive STE well. being but acquisitions you've other know other year, just about acquisitions I the you as one from already? about you that last guys M&A. done have closed expecting talked accretion question on next guys

Christopher M. Hix

the that acquisitions been closed, small. have pretty For have those

while, STE might here why accretion two is a there's get. we out done a you first that the and one that. there or magnitude or that so, on that's call little penny specifically we've of the And

Joseph Ritchie

it. Got

Okay. Thanks, guys.

Operator

you. Thank

is question Nathan next Jones Our Stifel. of from

open. line is Your

Nathan Hardie Jones

everyone. Morning,

Matthew L. Trerotola

Good morning.

Christopher M. Hix

morning. good Nathan,

Nathan Hardie Jones

gas these let We've XXXX. be they the companies on your projects of those on the projects. there Joe's other to half expecting Just first following in from on that well? up are Is as heard that opinion oil and question projects

Matthew L. Trerotola

the win projects be that think in my quarters, whether rate projects, the said I was are towards coming of projects careful in position way finishing that and they're larger handful certainly some quarters their is any likely not. comments – conservative yeah, There particular ourselves not at which we close. making what grow projects quarter don't whether be Well, those going We But, trying are let are finish that on in to we count the coming to to or going we're the those about we quickly. line. to we're or

that but some the think will I say So, close. them close next ready not in will many I'm quarters, of to

Nathan Hardie Jones

Okay.

in same? funnel of they the the Have about these through funnel velocity slow, talked the projects seen You growing. or going you moving faster, any are change

Matthew L. Trerotola

some to about I We sentiment trying into would Yeah. saw going little we this that that now to what a handful of time. some sentiment the cases we year, trying I to back it, year, bit, of firming but firming seeing happening. at of part early that quarters velocity trying we're voiced saw has of think down – And both velocity velocity. last the this that in the say see we're be and slowed voice overstate we a transparent not late

Nathan Hardie Jones

on one I Ventsim. a like it how to got that? what very just that Simsmart recall I've you customer? the Day Ventsim – to compelling that and about Can mining adds value talk to Okay. from How looking offering Analyst companies. project brings the that Simsmart last value expands your proposition

Matthew L. Trerotola

Yeah. Sure.

around with of if recall mine. engage the model discussion when Simsmart Simsmart solution, the solution, seeing customer a a really a our So, XD productivity starts mine you we

already all has the that of mines The already would vast software far customer customer has, our the something XD that Ventsim majority something is create. that's use by of area Simsmart something that leader modeling – in it's often sometimes sometimes mines. the their And team software. it's and for

as over as And them as opportunities expansions. mines direct to in those the do in Howden so they mine well the all fans world, that folks access two ability to and around efficiently engage now hand-and-glove look and fit got to Simsmart productivity are really the that a there's between retrofits around solution, businesses more we've designing

excited. really we're so And

business, that for to a technology solution a would our very small it's overall say, powerful but So I mining around relates world. the

Nathan Hardie Jones

much. Thanks Okay. very

Operator

you. Thank

Andrew from Kaplowitz Our next Citi. of is question

line Your is open.

Andrew Kaplowitz

guys. morning, Good

Matthew L. Trerotola

Andrew. Hey,

Christopher M. Hix

Good morning, Andrew.

Andrew Kaplowitz

the Air orders good mining early, could half some industrial it's offset of strength power be should and in in Matt but color first I how in know on by weakness new XXXX think the Chris, how Is about we you XXXX. XXXX, organic and gave for growth the is Handling? oil gas or we quarters, few Gas think on? going large for over growth really else and you can next whether something for how book swing projects about and factor

Matthew L. Trerotola

we Chris a a in little certainly add comment We're I'll give Yeah. cost downdraft clearing grow not action I is might to we significant. make that quarter bit. certainly some that some for but this comments an sure taking in earnings do see my to little, even that can with that said outlook prepared if backlog proactive XXXX, segment We're drop in we're XXXX. year-over-year a

a We faster can with and cycle that that that be that of year a we'll might and drop in million things million through to done. backlog few that in drop years expect can with the the the in traction in fourth progress following that our we to in of past decent And and $XX some year-over-year range. shown the improve backlog quarter, $XX that we've the aftermarket industrial we progress we offset amount can have get

we of order getting our stay be revenue can more order large as projects. range, the be the a share magnitude on on fair much what traction positive our come so and in then we growth win share, focused our then as we're picture. certainly of but improves how that to of you kind – than if can of gives we through, win which going to if projects And fair much the And growth revenue down, trying more clearly than is initiatives might possible the

Christopher M. Hix

these transformed and as strictly power gas into want to accentuate and Yeah. backlog on mentioned, Matt a applications is point cycle, the a of longer has aftermarket, time for and as I the bit. that period just heavy from there decoupling of oil more reliance been long business the industrial

becomes in, projects have with and opportunity swing recover so, oil And bit earlier the on year faster the depending shortfalls the and point, in mid your part of to of in year. industrial mining. timing some faster a of an when versus And next in of growth growth to power perhaps, a those gas then still factor the we come that

Andrew Kaplowitz

up then let of guys. that That's Gas follow- then Air in and helpful, Okay. a And to you sort on Handling. ask margin me

So, about so was you year-over-year And lower in looks think talked know Handling incremental margin around incremental margin forward does do for on how slide we company the about of I about presentation, like Obviously, projects, have business? margin target the talked the XX%. business in had not in it new-build now about it going a Fluid it. you XX%. the

how the moving Air Gas here? about forward business we So, do think and

Christopher M. Hix

XX% some the still the margin So, as is support here would in in with idea disruption But of margin I business. generally, a the bit we're through backlog of incremental a of little the the change there projects. a processing lower large

and hotly earlier As to that came in we've that. late our And margins. growth talked XXXX did despite year ensure were about contested we in with objective from time drive to into margin time lower this the backlog that throughout large in projects XXXX, was some come of and could the

– benefits to this help And that volume to that. quarter so, we've we've taken advantage of restructuring to help we've growth had the drive had. the Certainly,

restructuring fourth see into volume we pressure that but activity, As transition do with this more quarter the we've to we some where expect benefits bit a new-build from less year we of of of margin been the that offset emerge, little that little generating. expect still have to bit

Andrew Kaplowitz

know don't tax have one Great. a you've current I House's you, proposal. for bill sales. And – you ton at just looked one U.S. I'm sure Chris. looked the Like, then, of you reform have quick

high. You're more focused rate tax your is but internationally, company relatively overall for the

be the benefit view? this company a should rate So, from your bill preliminary on for tax much how of the

Christopher M. Hix

rate the Handling we that highlight the me bit the let a first, Well, little with expect given new of divestiture do the company complexion to of tax come our down business. Fluid

bit see of a there. we improvement expect So, to do

for would Second likely serpentine off, a that, the given to us And suggest has path this I U.S. through welcome will just difficult than other the that that would political the to lower would in as we any survive lower process, tax go overall provisions that company. exactly what rate would say it's rate. I assess multinational third,

We'll we're ultimately of how see think in all I So it reform. tax and develops. favor stay tuned

Andrew Kaplowitz

Thanks, Chris.

Operator

Thank you.

from next of Capital Our KeyBanc Markets. Jeff question Hammond is

line is Your open.

Jeffrey Hammond

guys. morning, good Hey,

Matthew L. Trerotola

Good morning.

Jeffrey Hammond

Morning.

just So way is kind that of to there hole in creates? to change China, how power of going weakness a this back and big quantify a

Matthew L. Trerotola

changes get – seeing piece million other and they impact China, our now. in as We impact million it of we've has The pressure million, year sharp we'd in it's we're come in of of that $XX of revenue came range. impact as end expect the that. talked year of China as the the had revenue comes net with little that a being to we'll sure. impact $XX it we part of through. upper this would And been sort fact range of in two. year another regions in Yeah, through through, growth $XX see a last more I like now potentially of world of an about next revenue the say that some we that early $XX order million in out seen some expected first China. the higher the But this business that In in than And quarter or kind other the

to And makers going be and so in is net effect the -with that in amount. so boiler the about China same

Jeffrey Hammond

looked I then if you of the businesses mostly in of the auctions, And the you looks multiple what Can deals? three there's rev, like on kind for at three these pay just about deals, it negotiations? $XX that's great. I they private talk kind news range, were the million Okay, think items. welding What purchase price

Christopher M. Hix

Yeah.

negotiated we've say would transactions is I that are So, that privately done largely the transactions.

targets process in that to collectively, want if these then our we there this we're think bit synergistic that years, tend able would three And strategic pretty to have I over achieve in and get parameters. transactions to The of pursue over five robust highly case, some transactions a of generally look we to should identifies we total years. consideration for more to we given the be know, is million. a our thinking you be kind portfolio return you three that we have, this a this the attractive of to and that – two $XXX like nature is that to suspect within at As We combination time. point paid

Matthew L. Trerotola

little technology and coming bit great be have Yeah. I improve in quite profitability significantly. transaction able could you comment the I to mentioned there, that a more. the some – that's just we'll Sandvik

of the we well. and acquisition, certainly, we a EBITDA small multiple sorry, software So, in there for fair as business paid and quite more And revenue very we there. we And paid was it growth EWAC was technology bring one. there attractive heavier India tremendous a – multiple position profitable technology The us think and is paid Ventsim business, certainly, that multiple a will that of future is a a HKS little there.

of So the on whereas we end at one more based the more what lower the be the one typically that pay would be we're would end EWAC buying fact the Ventsim higher at technology.

Jeffrey Hammond

trends I a mentioned us Can more said in. North and if And little think regional could America just up, little specifically. color, just regions I you then in a you fit I you Okay. FabTech? give think most but one granularity more more on last, Thanks.

Matthew L. Trerotola

From positive seen we've a standpoint, range. stayed in regional has Europe improve. trend Yeah. a to America continuing yeah, North

has moving more America a South range. been favorable into

to that's has very Asia more continue a futures. turned be exciting both growth larger are also can range. a region okay the look places that with regions in in lot flow markets But a those we or lot for create where a in can India is given business to quarter solid, less. projects but us. And there if Russia at be good underneath Asia growth, positive that, and any The

engines in growth extremely us as healthy and markets do teams for well. are well those Our

Jeffrey Hammond

guys you, Thank

Operator

you. Thank

next of from is Wolfe Josh question Research. Our Pokrzywinski

open. is line Your

Josh Pokrzywinski

morning, Good Hi. guys.

Matthew L. Trerotola

morning. Good

Josh Pokrzywinski

Just initially Is just that's a announcement. there you'd How question given basically on has any a ago on in much a the sense announced order there how we've when it's LTM STE gotten been been since since the the you that trending, initial an up terms deal that from anything was year of backlog number or patterns? to update now? like while the share

Matthew L. Trerotola

our here few a exciting it technologies, collective side to I are Trade we've do what about based positions Yeah. see our to that gotten that I've already improvements And count deliver around by have that we business folks first together the and opportunities industrial talking really taking picture some the in to and of plan innovation Howden other industrial in line we're excited team was that, our trend the to to I team there. the the really But day weeks of to Roots have beyond Within broader Wastewater healthier members. channel I that great year there. is number that in the of on the the the would our with we and and closed at with And was had on with be on our kind The see plan the as say going them exactly from ready we I in American joint that backlog got for trend same Show and wastewater I expected. overall a teams opportunity business really formed to North together chance a the the able that, say, world. clearly right got the Chicago in back. that the together. meet with see gotten we'd the for to that with collaboration side over how been about transaction, from teams business. folks would we'll business close. meet from much is a we've getting got the

Josh Pokrzywinski

that grow expectation I guess guess, or so longer-cycle gone. to business Just given Was specifically, in expectation. with have ring-fence to months for – trying year the interim you're in the here three it's how down? I last, that it's to to was flat six the line saying a

Matthew L. Trerotola

healthy in of a a is profile, the in (XX:XX). portion a growth but a that's smaller is wastewater wastewater having end business that meaningful healthy ultimately while a lower in It's We which Yeah. – see as business, of are the growth gradually right a profile growing business, the very now. change projects in wastewater

as projects year. the this bit of and larger a we in STE's work of them little both been them through from view of sticky from have Some view our wastewater

And a expect over growth and of gradual of growth kind more from that so initially, we of that out that then what an comes at time business. acceleration is

Josh Pokrzywinski

And Any market relative then are there? of pushes just going? one those last of the trends or clearly kind That's side of share Got sense FabTech, you. equipment there. made on to on some comment one, the helpful. gain you Any big guys have how

Matthew L. Trerotola

Yeah.

America, Rebel we product took talked to able North share meaningful position. As as we product. quickly the we that – into that some brought We've been with hold

and the stronger to into that'll we some we've will market, increase if variations talked product, we how other market. control it's well going you'll And our us around now hoped, time. starting with taken the help stronger that of into Rebel some way Now, show, that through we've offering us coming a other as filler the reception about been encouraged and share you the world, of to vitality us then, think as and to our We Rebel in think over as keep to gain. position to gas Also metals. well. continuing go the got to and there's our of channel small have industry a our strengthening make better we've around as might the cutting And been this we broad get piece believe it products is trade equipment world. than year penetration that, that this see have additional resulted that's enable a But nice products get and more as in to we really number we versions

Josh Pokrzywinski

Okay. Thanks the color. for

Operator

Thank you.

Trusz Our & next question is Company. from Matt Gabelli of

open. Your line is

Matthew Trusz

morning. Good

Matthew L. Trerotola

Good morning.

Christopher M. Hix

morning. Good

Matthew Trusz

Handling elaborate going to seeing you and respect strength from could specifically to your underlying if outgrowth on initiatives of the the Air wondering for there? was market Gas have Could you you the that industrial. you're China, I in discuss the with trend compared on

Matthew L. Trerotola

significant the our China initiatives also industrial in zone, market and over – in see positive We a had growth been we've a there. on it's focus

And confident outgrowing industrial so market. meaningfully we're we're that that quite

Matthew Trusz

specific meaningful And region or growth in a in to then follow on or the difference was quarter, versus Okay. equipment vertical? aggregate there the either in in up any consumables in fabrication,

Matthew L. Trerotola

equipment American basis, good global is the trajectory fourth in basis. feeling healthy growth The as little in Yeah. a North the Yeah, that significant the on were than equipment a bit I And commented the area global progress the Americas business into us our in quarter, and equipment has healthier growth healthier there some a the most is but that zone. see that on was positive both consumables a I in was acceleration range And quarter. consumables. think growth in about good we pretty than earlier, our consumables

Matthew Trusz

you. Thank Great.

Operator

you. Thank

of Our question from is Joe next Giordano Cowen.

open. is line Your

Joseph Giordano

Hey, guys.

Just a question strategically.

mix equipment that acquisition, you overall the impression On consumables. reconcile metal kind versus filler a towards strategy kind My bit to can was more of that? of that the move

So, can light you in there overall? of kind of just acquisition your frame the strategy

Matthew L. Trerotola

more I've than at been here. overall equipment can since end it's our a in position been has and users our strengthen least bring so Yeah. full equipment, solution mix the to we been our I'd say to shift time to channel that to the strategy to

going the business strengthens a set time, is to Sandvik, across that time. end India, some of industry equipment, filler that to a position, and the in within that very segments be with diversified really in world we and it's leading over historically, strong an really the yes, torches strength of but ESAB so, differentiate are parts the filler player accessory be are in the about be filler there's bit in the very equipment we opportunities it's been there into application to today the innovation healthy has core are going in we're EWAC, market of the two most energy use after a same to around business and where metal and higher plan towards technology and to going the are the eye – continue create in that to an where core position. And a equipment are metal capture of going areas attractive. that And of strengthen attractive And to with our metal and technology And time. But areas at TBi opportunity growth have attractive terms that is quite the growth position healthy talking places And acquisition putting margins, in is of equipment. automation there in the attractive business. over areas

Joseph Giordano

And seeing in last some can some you're inflated, that has the inflation you out of just break in bit? price there, I of of so couple Okay. just little know price. then general fabrication, of a growth curious, kind quarters of kind markets in that the the been

Matthew L. Trerotola

we been, to we've And as through we Technology, Fabrication as the In inflation got covering more. a place that's our cover up in bit the hard through third are go come quarter, through a the work worked where we quarter, we're expected Yeah. inflation. little metals. to to Metals the the price working get in year, metals to

Joseph Giordano

I mean currency the more on side.

– So, is like some currency that just price emerging inflation? like of lot a market

Matthew L. Trerotola

was there vast less metals No. that emerging that had the had year market No, times there – is significant the much we've majority of inflation. in certainly this of the past, inflation. and There price is year where currency than covering is last

Joseph Giordano

if do was in Gas quarter, looked this and on can how math Fluid the included great. in Fluid from have then side, there? probably margins and the the me, would last but I Okay, And

Christopher M. Hix

continued have segment to higher constituted. Yeah. I and the grow would it came Gas quarter as that, Handling together. the is all how What business third calculation it in now don't continued the is margins than Handling Air to have and I the Fluid say

Joseph Giordano

Great. guys. Thanks,

Operator

Thank you.

Our of next RBC Capital question is from Seth Weber Markets.

open. Your is line

Seth Weber

Good morning. Hey.

Matthew L. Trerotola

Good morning.

Christopher M. Hix

Seth. morning, Good

Seth Weber

– business Thank you. there the FabTech any you're you and FabTech? color Can seeing you trends on any side Could that and for share the oil on oil gas? gas is for

Matthew L. Trerotola

Yeah.

I'd and American part North those of East the are parts oil step-up and and certainly in oil the of that industry. oil Middle probably activity some down of in are activity. the think to improvements two in gas the some and industry, and gas say related mentioning. less still North the a I are the on America worth are place gas And areas of based Asia there

Seth Weber

is assume just what booking of to really then, square given just on that comment new-build current projects fair the that business. lower Kind the to it margin order And Air just I'm projects the to you're trying backlog? Thanks. the pressure in Gas that today that up. are – that trying still margin on Okay. or in I'm new about prior and levels, was under is

Matthew L. Trerotola

EPCs more we've working Well, little doing that us trying to margins creating as and at as deals, the lower then bit work that to won, with with user the end selling, much been sure the better as is, for room can at deals work the been to of on as doing passes, in been sure, and as we've to win second things those where certainly, each And since of win some as but deals. there's the give at before. we One projects. than on margins we've ones that specifications two significant are look much project possible projects. make a about those that productivity our trying we've talked new we And the since also possible large winning is them chains we than deals do margins, supply better value amount

Seth Weber

Okay.

even gotten not is the has that environment is all, taken the industry worse pricing come but have So though fair volumes – competitive a in not characterization?

Matthew L. Trerotola

like it But in year. of it Yeah. the that where pricing half competitive I it's last acute got a was versus would any and late project. diminished environment bit the last year say back competitive for down large pretty little certainly still it's seems

Seth Weber

much. you Perfect. very Thank

Operator

you. Thank

is of America. Our Bank next Andrew from question Obin of

line Your open. is

Andrew Burris Obin

Hey, guys. Good morning.

Matthew L. Trerotola

Hey, Andrew.

Christopher M. Hix

Andrew. Good morning,

Andrew Burris Obin

Hey, China. from calling

question in relation a I'm power. going China-related to coal you ask So to

that's just Southeast Chinese the Or with deceleration it a active sort near-term is of all and some are in coal administration your maybe retirement. slows that activity a of down EPC coming Asia any in U.S., in in Trump actually also seeing coal Is out chatter projects is? forecast? that quite the is and there So, you what's of

Matthew L. Trerotola

of a sure have China the our China more number China because net that won from business talked customers consistently parts about tried China When the we've of those activity – our there get say impact benefits to China orders. as And that business in might the instead talking in China. Yeah. decreases we've plants, other the we're changes, about active we're outside of that of

about so, of that time. And what we that that talk talking the impact impacts, about and terrific activity include uptick, some on expected. that we're They this it normal at is, counting include point say U.S.-based is not comes. Asian would if not when But I would a in we're the do the be

Andrew Burris Obin

deals, all for of company give just broader And FabTech, know together? a view And maybe question. markets you to as I in get it your of seeing emerging Thank what maybe you're exposure. lot trends a questions a it markets Colfax We exposure? Got bring a just is markets, the what you. all you lot follow-up key could market Post but emerging just about top-down you. us emerging by of did with a

Matthew L. Trerotola

have great businesses, to globalize we with emerging a markets. the quite emerging markets a new projects into Yeah, sure. over our faster, have as at and can are presence these can strength that that us. data you we'll of those to is of industrial the other certain Yeah, platform Any parts to the emerging new way opportunities platform might we'll Not accelerate just that bit opportunities industrial faster a markets, so, a set future into this look our post a markets to new also so in this of and times benefit into a Fluid that markets. real divesture and some going Handling, XX% we that might that a of of acquire that found synergy and as direct of those have do see that work, can the infrastructure bring parts the our business our started company. of but be find markets often opportunity I businesses. for I've of we is growth path we've developed that continue we about believe two get platform

there. that We all be – think situation markets improving rather towards much power of nice growth, far there now, going than consumption get lot really the mean zone And getting need is there. each power obviously, that's growth in power moving to is positive need a that's in growth path, I place. power a investment think China going long over attractive Industrially, an healthy As we as kind place China sooner spooling that up, there they haul. a that, and that pretty of South of But gradually ramp of not in the stuff is there. move China to but when back us terms industrial going to better to are markets, on a consumption specifics of infrastructure and the see for been has for and place service to haul. a It's of significant up they to. invest power the – at very will a level, in. the as then the amount stays we're see if up India an China coal-fired attractive going long later But been a key to China have their back we a the the market industrial as for long a attractive glad through lot haul, position American The China's

others but better finally, Southeast sales the leader have gotten Southeast the they Asia and expecting get that's talking through day the our election across lot a growth Asia, about Brazil get of – and then time. of Some of recovery over quick then And minute again, there. out as to was was board market other really better a wind have for cycle into has and gas he place that's taken to and to Brazil of a a I mode the with here, them oil and the going getting

think We and all And to markets good of time. for our things that those got going we've to be the be in to shareholders platforms. healthy they're things we're do new So, complement positions we good things they're excited them. have think in going to we over

Andrew Burris Obin

Thank you.

Operator

you. Thank

question Our Seaport Global. Liptak Walter of is next from

Your open. line is

Walter Scott Liptak

on the that a it morning. just FabTech. a are Thanks. of do to your margin follow-up sounds price, couple in is impacting things cost. Hi. there like And Good I wanted

a purchase bit of leverage getting said you accounting. your bit You but more little as able the the in pricing improves? neutral, quarter maybe of of suggesting some to a overhang little fourth be get kind in Are a you'll that operating still

Christopher M. Hix

Yeah, that's right.

as little in to bit against just performance were from leverage, generally then or we expect up well. As terms And to improves, a as see we're then, business get cost. better benefit of the price grow pricing some operating that sequentially, matching economic if we'd

Walter Scott Liptak

you in purchase can Were Okay. integration operating I income there adjusted left that if the some one-time accounting those. were number? quantify wonder

Christopher M. Hix

could you that question Sorry, again? ask

Walter Scott Liptak

Oh, pulled – out you much integration those number of called number the purchase in those left Were were were just adjusted and or accounting costs. the left... out how adjusted

Christopher M. Hix

basis in. left margin left were Those maybe Those basis in, were XX impact. of XX to points points it and was

Matthew L. Trerotola

earlier – They go Yeah. – sorry, ahead. were the question

Walter Scott Liptak

Okay.

are those quarter? cost integration so after fourth And so have purchase just the this you through won't that question quarter that accounting cleared

Christopher M. Hix

any quarter, we a No, the through. come bit deal then – in costs little there'll of and accretion of of we'll That's the commented related Siemens the into that sorry, that wouldn't that much we its expect have fourth to accretion why out more will technology STE get end quarter. be course, flow will fourth

Walter Scott Liptak

Okay.

Matthew L. Trerotola

on was to just there want a I about that top And the we've that completed. the accretion earlier that, question deals from of comment

the here the there's And do of as side some we some initially business on like work Sandvik way through commented, to do you work through some them. talking work next on accounting in improvement that year. of as deals we today, back our purchase as about far As the the we're

little But pass meaningful in contribution when XXXX. these we but They're significant next benefits year. real we've inflection driven later a year as bit about smaller the will once get to for businesses, So, the XXXX purchase out in acquisitions we'll in some businesses, the STE, talking into year the of besides the – get following some improvements growth. accounting, have now picture of they'll the get we're talk the we we come the about a we some

Walter Scott Liptak

Thank Great. Okay. you.

Operator

And you. any turn for like further remarks. does today. that Mr. over session to Thank call conclude for to I'd the our Terry Q&A Ross back

Terry Ross

for seeing Day and the Thank us at end again Investor our we today, November. forward look at you to you of joining

look we If that, next on any updating on our call. Thank you you me, forward questions contact have and you. please to

Operator

does and have you Ladies for may conference. all and participating This today's disconnect. in conclude program great gentlemen, thank you Everyone, today's day. a

Terry Ross	Colfax Corp.
Matthew L. Trerotola	Colfax Corp.
Christopher M. Hix	Colfax Corp.
Ronnie Weiss	Credit Suisse Securities (NYSE:USA) LLC
Joseph Ritchie	Goldman Sachs & Co. LLC
Nathan Hardie Jones	Stifel, Nicolaus & Co., Inc.
Andrew Kaplowitz	Citi Research
Jeffrey Hammond	KeyBanc Capital Markets
Josh Pokrzywinski	Wolfe Research LLC
Matthew Trusz	Gabelli & Company
Joseph Giordano	Cowen & Co. LLC
Seth Weber	RBC Capital Markets LLC
Andrew Burris Obin	Bank of America Merrill Lynch
Walter Scott Liptak	Seaport Global Securities LLC

Enovis (ENOV) 6 Nov 172017 Q3 Earnings call transcript