CFX - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Colfax First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time.

As a reminder, this call is being recorded. I would now like to turn the call over to Kevin Johnson.

begin. may You

Kevin Johnson

the Good President us. Michelle. am and you Chris me thank President President Matt Thank CEO; CFO. and name morning, is joining and on With Colfax. My Finance Senior I today Kevin for are of Trerotola, Vice you, Hix, at everyone, call and Johnson Vice and

colfaxcorp.com. is Investors section the earnings was Our in release issued available this our morning website, and of

which can will this be call you a through website. presentation our slide the call slide presentation of walk be also will on to also Both and today be next available We using will later the audio until on call. found quarterly archived today's the website be the and

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

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

Matthew L. Trerotola

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

deliver the to XXXX. see broad-based am significant organic had our results. report earnings growth QX to business with to growth. healthy to momentum operating pleased deliver We are ended a pleased ESAB continuing to good start and quarter is year our in I We first

that Howden business to finish product signs healthy is a continue the efforts a to results with the we outlook. expectations recent challenging After shared commercial new processes the in of pipeline in stabilizing, customer and business XXXX, improve service, February. with Our and has showing line

step efforts are a Sandvik second pleased We QX half that a we businesses. business acquisitions have in and and over leading I can ESAB of points are America few well the minutes few past path acquisition track, the team quarters, these improvement on performing most restructuring regions XXX these the you back XXXX. X, Additional acquisitions. and XXXX. slide results completed in planned, in to that our report as to well growth XXXX. five in XXXX of QX from delivered bounced strong delivered we see margin QX Welding In QX, took underway North On up will I our growth and margins in at with delivering healthy has acquisitions the of detail basis another strengthen share clear that organic on way. across We more the forward. am

of our of business with thought across price Lean improvement from is an and tariffs. products cost synonymous the X, We escalation holistic how has and improve us expect but the continuously both is been through I to drive The process as these addressing I recently in segment are face proactively monitoring growth team the path CBS productivity by technologies. and year share forward growth with impact manufacturing, system excited that ESAB a processes. you Colfax On us XXXX want with slide business steel the another potential We're continue to and business often announced margins. lineup our pressures example. to equipment our Business closely this helps consumables progress helps of initiatives a System and all are to step customers the on take strong range across new to making mid-teen of and

Our FabTech to is teams. to communicate productivity. for spent and efficiency of sales team tools selling A our our sales the increase These a capture terrific force time sales value with value customers are who and some and the innovation and of to North I drive value quantify to cadence use tools expanding team American help recently. teams example

expected. used One tools of XX% sustainably the The by in sales weekly sales business The work all expected. Slide and business. another was our by business. the STE our and X% regions by our & from tools. were the standard started teams able XX% over first regional sales frames as In there quarter, orders to teams as X increasingly plus same these the core in grow funnel are acquisition, XX% year using calls had increase progress being Gas down to Handling grow but our sales the Air growth

improving. our We continue The growth remain stabilized. gas the The clear has business margins growth have in markets opportunity and improve path to and achieve power deliver industrial and and mining strong in XXXX. strategic Howden through year to earnings and applications, a oil in constructive funnels

and are focused margins QX actions. on restructuring Our improved, on the and a are booked productivity range team track, projects of pricing

key to projects cost drive more end market. to We the a identify is structure in-depth review Howden core X of Slide orders continue down also further. by

grew strong We in in of XXXX. Our growth X% positively. had continue industrial industrial markets and XXXX to move very QX

development, moving like cycle wins longer deeper order through applications change resource and business included and quarter comparisons. dynamic quarter is into attractive Oil less STE. Our application a significantly can cyclical major and industrial allocation, gas versus has acquisitions strategy

can the range per an uptick million a a you included base with million project of growth future steady larger is three base, here As could also that the from orders of $XX to awards. future to consistent the and Underpinning path The $XX is of last quarters quarter. nine more benefit large in business see, impacts from business orders.

orders the growth opportunity XX% later or of a consistent Howden recent to year. generation to newbuild this proposals. continue power The is early as down trends, paused when part about of portion are stepped newbuild Chinese the that about we only it The suggest investments, uplift of steady healthier XXXX market at about X% aftermarket in a talked RFQs positive in and third the happened. and a and Colfax year operates next quarter We return see government funnels, power business Currently, power trends of rate. These Colfax. customer and relatively

Our our that funnel this with the at our confirm level, order plan. guidance markets trends and consistent have stabilized power and lower

aftermarket While coming The acquisitions in to years. we to our are X on the and smooth oil strategic markets, I into have have These they in focus made service to of our projected the these driving transition and markets, Australia. our to well shown improvements that future gas serve growth going of process of recently reference formerly momentum supply mining collaboration industrial very STE. well. check the diversify parts future recent win to opportunity Colfax power management on Colfax a all and grow integration leverage is kaizen also market growth large drivers funnel order businesses and developing retain opportunities. and business investment were larger and recent slide Howden pleased we're aggressively positioned visited on teams that and we with to new while the Turbo, a from are They starting doing They've and Simsmart got the our chain in CBS Howden I a the week, make creating capture new technologies Ventsim job that In their I celebrating synergies. range mining, in technology to to our business products serve ready done and they're the sure on improve we remain situations, with payment in value and marketplace customers. our track simplify to set terrific I'm this building focused other access of visits delivering acquired have solutions a to project and Earlier visited plans. Howden. to each full on unique a teams. with are a a ventilation regular I promote of and while in for to of scale to is

our Advantage of through Driven Data Ventsim HKS our new strategy businesses acquisitions. technologies. Some business are like each In these the advance case, by platforms strengthened and

work now financial new to to potential the continue results. an pipeline active and bolt-on And discuss opportunities we turn to Chris over acquisition ahead, it platforms. I'll Looking of

Christopher M. Hix

Total and markets a ESAB increased Gross Air X% matching benefit projects start I'll on million organic grew sales couple and of our a businesses $XX comments revenue Both growth contributions gain from profitability with were grew the the Handling profit also Air reflecting quarter delivering being FX from business. continuing Matt. and $X Thanks, healthy profit the backlog. & due X. XX% revenue delivered with businesses slide raw the and company from of Gas growth million a from operate and organic Handling to inflation. facility older, million, my Gross margins effect to in the acquisitions Howden and down of backlog & operating with $X the acquisitions. $XXX X% in million lower posted sale material Gas points of to in within

facility as tax the seeing of mentioned grew as into XX% of but charges profit, progress higher the expected new restructuring the adjusted this, and is result improved Adjusted to million year. translate included rate benefits, million $XX down EPS XX% also reduced on we amortization operating the margins Matt margins other to As operating through acquisition-related are earlier, profit tax in one-time gain. not from sale included benefits Results improved in and expect we non-cash which in versus quarter. $X.XX prior-year EPS to a that we with XX%. orders Embedded adjusted $XX combination

operating of America, business. For the Fabrication results be in quarter, expect the we growth inflation. quarter. the million the up and XX%. another X% fourth XX% includes first quarter's with organically. top Adjusted profit and the prior rest million achieved and sales points $XXX in Technology accretive We year growth adjusted were caught quarter. Slide with of from rate X.X% were the our improved pricing were $XX to Segment year-over-year to to for XX% the in results. in regions, raw sequentially quarter North the especially XX% tax year, line line most Acquisitions to to up material the XX basis Margins grew XXX added

impact growth X% and slide the the of China. respond balance. material continue Gas inflation. Adjusted than Air higher over The in have XXXX Our manage trade little sales facility from and had FX improvement was first slightly Handling we up a the had see a anticipated. business & dynamically to profit included X%, shown the operating on raw segment to The contributed gain tariffs on quarter-over-quarter. XX XX% new effect and Organic a we're prepared acquisitions was if as teams sale in quarter

support and of one best benefits our important the older facilities future consolidating facilities in of into this are growth which one We our provide will market. of expansion productivity

As half margins are the clearing backlog reflect lower-margin the expected, in projects year. that segment this first of

by benefits includes We margin $XX beyond healthier improvement orders. an enable the result continue acquisition Slide in more organic offset STE Broad-based than million improvement by and is orders expect within to orders the and gas the our lower backlog orders and from industrial comparison. expected which and up was range. in of a and FX improvement orders oil restructuring offset Backlog as in tailwinds, recent QX. will power, historical XX somewhat general project base came decline

to We line improve sequentially QX. sight have in a of clear orders

conditions improve improved constructive as orders. restructuring performance XX, year. remain in the slide better we we quarter of supported FabTech we the the market up year's year of to Gas expect in the see Wrapping power. by half comparisons trajectory through for third will actions an XXXX, as progress margin year-over-year in Handling expect also step-down & Air last and on lap We second rest

have strengthen a M&A which we enable We growth a platform. high-quality us their focused will remain new on and to businesses accelerate pipeline and our adding

to raising $X.XX Michelle, prepared are questions. open more. first growth which represents remarks. to $X.XX, That $X.XX our XX% we performance, concludes the our please of Following quarter or our for guidance call

Operator

Halloran W. of first Robert Baird. comes Our from question Mike

is line open. Your

Mike P. Halloran

Hey, everyone. morning,

Matthew L. Trerotola

Mike. Hello,

Mike P. Halloran

cost caught in side, quarter. price like sounds the on first the guys you it So, up

side the looking pushing environment price how general from on on is how maybe curve pressures a your cost a perspective, on hitting to just So, inflationary are the thought basis. as needed, how conducive is FabTech price little the and increases through

Matthew L. Trerotola

get work business, caught Mike, some global hard of cost here it's quarters did and This over hard we to different is to just number it team price Yeah. has continued the escalate. steel make channels, get been because on quarter the of so one a through. in It's work decision. can't you and by kind up a

kind You of through it. have to work

directly other the so a potentially. seeing we're hoping it side challenging steel place unfortunate in start some was China, that indirect that tariffs quarters many of and of that opportunities impact happened I in the threatened is escalate. that not And places of result impacts Chris we'll bit we like around creates will went North an appeared in up. a Europe, be of that continuing few a pretty and coming upside, to tariffs. this is the the down that limited some turn going treadmill. it's clear indirect it move get America places And from number as mentioned in will tariffs. kind and then probably down far and the to makes think but while that's off the start steel the had of in steel it On What actual on those of like the world, But moving has we and that are to places

Mike P. Halloran

oil on give a mining? Makes Just end you how Gas then the general on anything trajectory like sequential Air maybe laying some the the the second some thinking & on here. maybe gas there. some granularity continual is as on industrial, (XX:XX) or segment, the by out stable. trend the power this sense. better side, and on you're that Is in It still in color see confidence color really sounds orders get quarter Handling market you And health in to

Matthew L. Trerotola

Yeah.

improvement. that we to confidence think going do I see good have we're sequential

we that's to front, in very third the in on we'll lap We're stay power quarter, Chris that in And anticipating there more large As the power the a there, took will to drag. eliminate grow chart. the quarter which no but drag. mentioned, one we step-down expect clear the third as longer the stabilized on have it not range we from

in quarters oil the pressure range. we're mix some the on year nine and business underlying more of last but there that one in we flat in some projects a of the Second was three did and all, have so QX where of last gas, the larger of part feeling is

And so, healthy in also year and zone we and the we're there, expect as opportunities. funnels through be better we seeing to work very a

we of growth expect so, said, some some sure the quarters. and side see what's certainly And as in that's until on see other would won't to oil growth we coming of I gas coming be the But if in sustainable that.

the behind remains there. in the driving coming industrial them. zone both healthy And So, for monitoring we're we've then orders but performing and a also flow been well

will And so, sustainable get this if as and year, through possible in we driving put those to to really together, as we're as certainly we comfortable back we're fast business. that improve things the work growth

Mike P. Halloran

Appreciate Thanks Great. time. for the it.

Operator

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

line open. Your is

Jeffrey D. Hammond

guys. morning, good Hey,

Matthew L. Trerotola

Good morning, Jeff.

Christopher M. Hix

Hi.

Jeffrey D. Hammond

to of neutral the on Just a to can color is we growth just a on and terms cost, momentum. this geographic Thanks. on us welding, FabTech net continue then give to get more price one, it positive? can price/cost little we in you price of stay back if inflation, fair that say or where And we breakdown up kind with then flow just through keeps

Matthew L. Trerotola

Yes.

neutral, stay fair I drive this work be point ways short say will price/cost to and neutral and of a inflation value the to there at price/cost number hard But get given to price/cost been think hard beyond working looking to certainly been I the that. stay neutral lot always stay quarters, we it's of the – for amount pricing be or to it's of steel to term. going there's again, over past to we're in that

seeing most expect healthy rates growth been based world in the we're the growth There's terms of as world. the America. in continue. FabTech, in But other pretty acceleration to significant around broad also North and parts that most obviously we far in growth As of

the of month first is The with second line performance. that quarter continuing in

kind I the markets, strong are of into think high-growth So a them some growth back mode. of

I think but America zone a still than stronger in a positive Europe. zone Europe's in North is

Jeffrey D. Hammond

to done Thanks. the side? the platform have we go seeing on something terms if are pipeline been active the can deal and in then what what's of hold what ups dynamics, the just there, And back Okay. you platform getting

Matthew L. Trerotola

Yeah.

at to and we the the deal on are the and we active today, the of and we're do the to and we and completely done we that's working be price one how lot opportunities ones do one platform a that We've right time, committed because sure On frankly quite hand, that make platform a deal growth for are in shareholders. right completely been in after identify not our as of are same thing us pursuing. it, value in our when to creation we while work, pursuits. the land have committed we've next to right we've of Ultimately, at active, have the discipline the piece the on the with have that also to right next over company, opportunity been of as but identified for time. number that it'll in situations strategy strategy together, And come the involved fundamental were end areas just strategy front, those been well, some a for do

Jeffrey D. Hammond

Great. Thanks, guys.

Operator

Our question Stifel. Nathan from Jones next comes of

open. line is Your

Nathan Hardie Jones

morning, Good everyone.

Matthew L. Trerotola

Nathan. morning, Good

Christopher M. Hix

morning, Good Nathan.

Nathan Hardie Jones

the look backlog from gain If some or Handling a issues the besides Any dragged that's that still other the little Was margins Were issues price inflation? bit of coming a from further? down pricing execution sequentially there? there a else drag out fourth steel I low-price anything Air the I half under quarter. down a set there running of any bit cost ex through X%. the XXXX on but Gas backlog sale, were actually know have here, booked you're in & slightly down margins margins that second that at you from

Christopher M. Hix

expected projects, the competitively on and that backlog, XXXX that expected we throughout that signal half to identified to in drag clear throughout the we the and some as – we back more the know we'd we first see pressuring bid then of XXXX continued backlog this XXXX I be had Nathan, those that improvement. of

issue So, I'd that's we're really that dealing the with say here.

clearing as of sight QX We us the springboard great in those largely we gives year, from the half that in us I think, you'll that have additional in issue them that and line the pressure, get effect as back less see backlog QX, a more and QX, And projects, clear QX. on we those of that's behind in we than the margins. but in see of

really principally issue. it's that So,

Nathan Hardie Jones

Okay.

you you first to clear the little in aggressively be there. lower have from more would there to end development, think that were into I margins the on more Any hearing initiatives, making bit I there can about guys give backlog. pretty you to I markets. support just sure in lower-price going product us cetera else to check make were in the was nothing the half strategy wanting to color interested diversify a the there? progress in Howden's et you're industrial was

Matthew L. Trerotola

opportunities our businesses. these the Turbo been results. think were organic area. in Siemens organic years; number having areas steel some a had area that's the have of then like core industrial And drive traction Yeah, some marine and in predominantly on the industrial that Yeah. marine last in couple area wastewater applications, areas of environmental opportunities Sure, Nathan. are and attractive Roots visible of aggressively to the we've a now good into we number both years right areas, in for But initiatives in a also, range now, have we I of growth

significant that shifting lot we've in high-growth these of brought increasing industrial as growth investment as where there have amount are back and areas in a serving of technical markets opportunities that peeling segments times. been growth we are world we've so, been really industrial resource finally, in this not areas been industrial the well. the – the And we've and best a the attractive then our businesses before And other commercial our in of and

Nathan Hardie Jones

Okay. Thanks for the help.

Operator

Joe Ritchie Our Sachs. comes next from question Goldman of

open. line is Your

Matthew L. Trerotola

are us? Joe, with you

Joe Ritchie

hear here. Yeah. Can Yeah. I'm you me?

Matthew L. Trerotola

Yeah.

Joe Ritchie

Great. Yeah.

types on bidding as second. from some on where instill helping of prices projects the are oil as I'm remaining seeing curious be seeing well within to question hear that first curious for a oil about for year. focused in just part and orders of gas projects on up complex, the as just think that's any to the Obviously you So and you're pipeline. confidence a the types my what color the specifically of regional it you're you're perspective probably

Matthew L. Trerotola

of couple things. Yeah. A

of of some been downstream. back Refineries first and healthy aftermarket refinery in have opportunities all, sector have in come way. harder running the So a the

is – there's downstream addition, of there's the more then those become are cut In them in around of customers also of some a like fair the the to the Middle one but have of lot concentrations them amount refinery have active. East a areas loose, new area, the world, some And lot ready in the desulfurization in to environmental of investments order about. and thinking investment petrochemical marine and more some a Asia. but are There's be things that obviously of meet that standards

as in that also, hydrogen energy well. there to of businesses, we're the projects one lot seeing compressor efforts of of We are some a our alternative related

So bit the oil that flavor you gas of a and of of things. gives maybe and context different little some

this that larger have of and better us piling moving some in in Some that been gas. the quotes where here confidence and a up we're oil then to stacks there's happening period funnels in also some the place but which through give

Joe Ritchie

positive projects and Got there, do you're XXXX then organic you're average are the two sequentially see One, rest segment secondly, think based historically seeing of capacity of margins. what whether curious orders in space the that just that curious And guys following been in the comment booking, things. the you on on margin just excess today there's you're it. the your margins on on type That's the above orders because I'm bidding you maybe helpful, just to actually how I'm improving on you be Matt. what through year. expect And today? do about

Matthew L. Trerotola

Yeah.

we growth, order the year get had the a growth. improvement So, obviously to order to expected, back in have a half lot about QX in see of we're to your to significant question first of with that to shrink going here

individual and year, growth whether to this expect quarters is the the to side continue have the in not have the also order to or can half growth back of call are and which us still sustainable for to growth growth like in so order function order as or single can growth have or chunks of to probably we funnels is the order But of of way the we're year to fast on that. positive winning will leverage focused that terms order we we're to the the the this possible. opportunities We that growth a trend oil back that share point get on as new gas clearing signal we're clarity see that gets biggest whether more the coming clear that areas making of at that provide as more business year we order the tried that the and be a not. through little get whether growth we we whether in industrial have rate but certainly, growth, this as our can really projects in order so and very of growth than We've fair as different driving might a all provide going we're whether monitoring sure a

on projects we of that the to given earlier get, that lot were backlog some no the competitive front, consciously have projects we on margin So, larger and focus had a pressure the on value in pricing of coming of the talked how terms we those about we've clear pricing into through. that question there's monitoring on and go felt what

them about that's in that's flow year, of in quarter Howden. something backlog the have to And margin away consistent profitable in compete as we're have make first to needed frankly, can see year how margin the here that that in of calls strong the so for a we through focus which got as we we'll ones larger have the we ones to to order inbound going to on. our order way. about we've continue And thoughtful comments some make play through significant come talked growth we in seen, And going and the in healthy, we that's the as orders which win performance sure walk we some and into range show we from possibilities, forward

Joe Ritchie

Thanks, That makes Matt. sense.

Operator

Our comes Oppenheimer. Giannakouros Jim from question next of

Your line is open.

Jim Giannakouros

Hi. everyone. Good morning,

Matthew L. Trerotola

Jim. Hi,

Christopher M. Hix

Jim. Morning,

Kevin Johnson

Morning.

Jim Giannakouros

what's U.S. there. penetration, product or key if year-over-year related incremental given development, remains marketing, us the FabTech, you're a new et spend again, on focus Remind cetera, currently...

Operator

if telephone your please Jim, muted, is unmute.

Jim Giannakouros

Hi. Can me now? hear you sorry. I'm

Operator

Yes, can hear you. we

Jim Giannakouros

So, that. sorry about

could currently how also thinking we this of is good margin of year forward? that level costs frame a is U.S. a focus or Given key wondering a marketing, guys for investments, have step-up this if I run and you spend cetera. do in is penetration much et was I implications development, new stepped-up FabTech, there, if rate should right, be related product in you just that us. about mean, going

Matthew L. Trerotola

Yeah.

perspective details don't specific there, into I'll the on you get Jim. We give but Okay. that, a

fruits of R&D the past Between new flow the in that from and really brand and over year we've marketplace terms in, we America our – able of take we Victor made and acquisition we've new through America, North in there from that North the accelerate even advantage FabTech, in years, the the pipeline on the the you're and to we've that's continues started growth in the to feedback North shows step led a to R&D we've of a done in terms brought perception our being surveys have, this that front, First, significant had America, significant investing products of times change. stayed We've a and committed tougher of it. to in that couple in these is seeing products and change as well.

we to business in investment in investing time been we're the in we've and R&D. in. the bit continue a for that R&D the healthier about parts thoughtful think if business that'll which so, of in we We're make as invest invest to more I future. over technology for times calls And continue And opportunity little going seeing, give

of part into areas marketing broader investments tougher some think, the And the ESAB the certainly up a to open efforts. sales and our times, specific start to the invest regulator in we've back in I and business. starting efforts bit been force through as were compressed cautiously cost-cutting marketing

over well. are of in certainly drag productivity on fall-through so, we continuing time that maximum And that the might the we a But investments will also the be as business versus work to small on growth get business. the

So, that's about very key global about but area is America a growth, we're thinking how it. a little business. for focus North bit it's a

investments the that for for our see opportunities really think momentum. with I We pleased so, have time. business placing the job best and we're nice continue, us And a there. over that opportunity the we're to team's with global the to a areas profitably momentum that that lens in grow doing And

Jim Giannakouros

that's you. cetera. Understood. you're source by seems FabTech. I capital, trends a FabTech, takes backlog cash And stabilizing it environment helpful for working what you're just the course, Cash be we or segment. of very flow, firm, in and like this the there booking, use stable a seeing, puts it And et mean, And Thanks. would Thank that thinking working of components given capital, obviously, should be feels of year?

Christopher M. Hix

Sure.

we the of At a on working that the area opportunities look collection the growing team a more standard As of in absorb to continuing is function a good capital. in activities time, will of FabTech think business and amount – going work strides to capital, making healthy, some is the have. growth business, bit specific of focusing for the in It's as of to some better we be consistent the that well. capital same about working working some improving little inventory the and of components the drive

is those key Air Gas with there a we the level driver Handling of payments the that get orders. & customers from business, orders, the On

trajectory that we potential company, And changes, order collection right the the the world so positive the of around projects be then the to managing as a drive for level global just expect for activity. to it's and

the could in it of on year. rates you of together, a growth now, depending cash, sort like up if use it the capital back look slight at think sum that we it neutral looks the of all to right and have I be net half working

Jim Giannakouros

Thank you.

Matthew L. Trerotola

to that our was plan different as they Chris's time of piece in week cleared hours and improvements of going have how just one to capital the showed teams had how from to a there processes thing through the realign out in add the talked and do working that. XX shortens there's nice they're where a the drop way I'd pieces me took been that, of eight. they've they spot one a cycle their The I And one last do driving. showed me facilities comments. He the to and about they to they some got FabTech of of

identify And so, these team is capital working improvements working to that to that in opportunities business. hard drive over time turns

Jim Giannakouros

Thank you, Matt.

Operator

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

open. line Your is

Matthew Trusz

for Good morning. you Thank taking questions. my

Matthew L. Trerotola

Matt. Morning,

Matthew Trusz

change a mix So this is first say increase shown continues Would industrial has demand North of on over mix four you – specifically simply I in equipment as so Fabrication this was a to hoping reflective sustained last the recover? America of the Technology, to or is channel touch in versus consumables profile in quarters. or wins

Matthew L. Trerotola

Yeah.

noted have We lot done And improvements do in equipment some there back – have and those some are business equipment specific brought we've the of think a related. that share that our equipment we've are on we've that good market within in marketplace. areas we we into the think I also the where gained equipment innovation think of are the business and two there seen I certainly new

Matthew Trusz

you about extent are following hedge is against more about it, facing? what quickly then then Just it little first challenges Okay. and your can up lines, there? you the renewable give coal what real how a can growing and product energy, detail the to it is the discussion you're size And bit primary a on alternative us or exposure

Matthew L. Trerotola

technology of participation some Howden going but power I the Yeah. good, we've energies We've strong got on areas the wind opportunities. hydrogen, like to we we've areas the renewable in growth mentioned – an got is and some area a there area position. Howden like have specific got side, side, and certainly one on an welding that it's a don't some create

some but side, I of our So, renewables business. big as there the there on opportunity wouldn't a it is part yes, position

Matthew Trusz

you. Thank Great.

Operator

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

open. Your line is

Seth Weber

good Hey, morning.

Matthew L. Trerotola

Seth. morning, Good

Seth Weber

year-over-year XXXX Air half, that year question. double for the pretty Handling because crack I up take to do mean, the & another versus really wanted it'll imply Just margin you a in what Gas thinking really about, here absolute be strong that should think XXXX, at for XXXX? of low kind the Is be full margin second second – margin digits half. we up versus would

Matthew L. Trerotola

Yeah.

Howden going and for and grow say continue all, So we earnings, earnings that Howden we're consistent saying we're to we're to that. that we've to in track on been first of grow going

us we'll the through seeing the we have that of from we're for we commitment that improvement margins full we're our Second, year kind year. very But work in path update year our Where meaningful Howden I clear you margins way the healthy half lands there in the and in the made. margin year. to think year-over-year improvements something the on up through XX% this focused year path as a basis, work a then and should as back of getting on that is we've still

Seth Weber

just then And I some that to What going that the forward? about quarter start to Okay. to last on mean, well. you see think market as there business, happen talked in growth you business aftermarket do developed needs

Matthew L. Trerotola

of in aftermarket, has growth industrial the in growth in – some come think Well, when commented, There's gas, gas, after I and a there areas back bit was less markets just like growth the oil power it. been little as time I and of opportunities. and and there's oil been has some – and developed

power we our of On front, part the the long-term business. don't I power expect growth think in really developed

part that aftermarket. a the to of the with offset back being more year, we've of We specific emerging where talked to be that power but year. stabilize half seen some things here the were there us we for flat that going last flat power this the more the year. expect that's down headwinds And see of down gives We that business about

still portfolio. part our of of flattish power see a aftermarket sort overall being as so And we

Seth Weber

Okay.

So, that's the in right way the to think about it, is kind of flattish well going out-years? forward as

Matthew L. Trerotola

Yes.

Seth Weber

Okay. That's helpful.

Matthew L. Trerotola

in got growth also there, we've we've aftermarket based both of not we've significant initiatives that's and power got driving. opportunities healthy But market been that amount and

Seth Weber

understood. Right. No,

helpful, Thank very you. guys. Okay. That's

Operator

of Joe comes question next Our Cowen. from Giordano

line Your is open.

Matthew L. Trerotola

be Joe. mute. Hey, on Might

Christopher M. Hix

with you us? are Joe,

Operator

comes of Citi. Kaplowitz Andrew question next from Our

line open. Your is

Unknown Speaker

on Good are morning, How guys. It's Andy. for (XX:XX) Vlad you?

Matthew L. Trerotola

Good.

Christopher M. Hix

Good Good. morning.

Unknown Speaker

us Gas growth in stronger see some color more So, X% and by maybe your plus I & whether maybe previously flat around Gas potentially Air can give on changed trending think expectations organic X% segment you a all? you in to you Air have X% at just were the guiding do towards and to generally end? FabTech. or lower Is that plus little & FabTech your expectation still to

Christopher M. Hix

upside original for as that business. out. similar I'd Yeah. for put FabTech business we Handling business, say Air we're I projections have remain on roughly expectations the still some our think with the a the And There's in I the & Gas sticking line. for potential well. that expectation that think But we

Unknown Speaker

potential into Okay, And back deeper model? you've do stepping a just now dig had and some where your and business? is how business about your then you maybe business, to performing expectations can great. integrating now Siemens chance incremental the deal that that see the that you've had machinery maybe time versus just And you opportunities talk Turbo

Matthew L. Trerotola

Yeah.

in right expectations that quarter, model. first and our business The line with our performed

that with And so, in the business. really start there we're pleased

the of in we've the of Turbo there, really Howden attractive Roots opportunities the that Some opportunities between some been organization. there's collaboration Siemens wastewater and and some rest driving parts of

we high-growth going we do and set growth that terms whole, got market about the a aftermarket and chain quarters we're we're Siemens technology here and of But the on of over extra business. aligned. got have there the project kind what on now, is plant areas certainly, collaborations on some larger and very and drive on to of part up also have of in the to been small And able in few to think opportunity of focus the that around new there. and as developing in the opportunity some we we've the put more had a maybe our continue our and first that important some to have well. supply from it and world, Europe we've the so, world getting focus – in And a just things time, grow presence as world going picked to we're we kind supply And chains be been of in market play Frankenthal to do We've around aftermarket growth part regions. what efficiency active also in reshape up going

with with there, great we real happy So, talent the see gotten how just they've about really us. I'm excited opportunities and

growth part over going that's growth that leads And healthy, Howden. story so, to diversification story key like sustainable, we industrial in a the to feel profitable be really of and us time

Unknown Speaker

Okay. great color. Matt. That's Thanks,

Operator

next Barclays. from Our comes question Mitchell of Julian

Your is open. line

Unknown Speaker

Hey. Good morning, guys. This on Julian. is (XX:XX) Ronnie for

Matthew L. Trerotola

(XX:XX). Ronnie Hey,

Christopher M. Hix

Ronnie Hey, (XX:XX).

Unknown Speaker

second. Hey, line came go to QX. more wanted a the in to I sounds kind back guidance just of everything point like less for It or for

for less are You the that year rates same. the more the just or growth stated

from So, assumptions the that by take a midpoint the the at kind do of I to guess $X.XX change where up couple guidance months ago?

Christopher M. Hix

we had tax we facility Yeah, on And the of in into you little sale prepared full the QX year. a of we roll bit to benefit remarks, that chose had China. as in mentioned in the also the the gain

year into for took full we rolled And our them year. the the those so, two expectations maintained full elements, and performance

Unknown Speaker

Okay. to And it. if a want addition. kind then, Got go in go back the third of of we platform to direction portfolio, different I the

you guys As willing bigger you sell the are portfolio there with look Handling today, at that that make pieces deal that. to You Fluid have you're maybe like shown last off? the moves can year

the into year challenged if there's the curious this just the in structurally areas future. of some looking I'm of business additional potential for more So, selloffs

Matthew L. Trerotola

a and committed where as to with commented I think first, the portfolio get that we that. Handling and there's and that portfolio we're time, we and show our Well, the attractive, we're of to more Fluid that if point Yeah. invest over into improving piece to a you grow divestiture in opportunity on, something there's not ready scale do we're to an ready to redeploy

they're growth. the sure, focused our This future. sure, right things year, We've for our proceeds it'll We've of the some last – forward. So, and are got ones decision we're number the from the year, stronger successful. was really making the of of finding that of a a to the our tough we're business on for those, that I we're now. as good business shifts number healthy focused that But for in we're right ones we we've we've platform. done, environment right calls tough in really that And got we're we We've making the new of And and that that on sure a deal the got Howden of has on company. mix think activities on growth (XX:XX) a on sure an work to focused growth lot going a make important that focused restructurings organic sure on make lot cooking. doing company focusing got path for through deploy that, make pipeline that given bolt-ons that very went in doing the

Unknown Speaker

anything for in savings one more that was Of in. Okay. if Great. I QX? squeeze And year, just million could $XX of realized the

Christopher M. Hix

Yeah.

given than starting I in were think ramping of and largely year the of in communicated the initiatives get the we in half front QX the those is that this as and year. expectation QX previously, benefits more QX half in back that the we'll

more front year. So, that you'll half see in the than benefit back of the half in the of

Unknown Speaker

guys. Thanks, it. Got Okay.

Operator

Giordano of Joe from comes question next Cowen. Our

Your line is open.

Joseph Giordano

guys Hey. me? you hear Can

Matthew L. Trerotola

Welcome back. Yeah.

Joseph Giordano

Yeah.

Sorry.

times to You was this connect problem a with like had the three been I because host. – asked might have there different

out answered and earnings what as there? facility give But apologies that if short-term asked to keep rationale take through you been the but me was back the color loss into So, it's to already. the one sale Chris, can investment me some and

Christopher M. Hix

Yeah.

on their earnings that took always to off, First the visibility can and on the the we is own Fluid shares so specifically, folks provide CIRCOR as in question loss result you make But decisions of answer cases full these of evaluations a as business. the was to the our the know, transparency company. sale and of approach, short-term your Handling

And the of until equation. they're overall that really our is part those just shares that's view monetized, so, around divestiture move as

took the As for multiple. that the sold we healthy know, we of consideration And shares. a business was you part

for a value So of we volatility of eventually value but we'll over the those monetize on shareholders. that. There'll still be represents our good equation, bit little a think, time

I'd quarter. it a and it's also of it tend not in will if operations part Second, property, but estate our some we've free the you that ongoing case, case, the us which there going CBS this occasionally, that always we're that's facility. got. value material restructuring we've put we'll gain to real the out recognize the we'll results, we that And the driving are call then up enable of gain that, sale in all actions done in the that's improvement CBS, with up taken continuous know and like And of as our contrast with improvement to through restructuring to continuous free we've of lump which on occasionally if activities. that in with that overall

last a of gain from project did we significant year that that that carved big we earnings and our where to net call sale a it a adjusted out out and related saw as restructuring part was had restructuring. You on included facility

Joseph Giordano

Okay.

how should that? about the is quarter mark-to-market we you'll that's monetize, think So non-cash you a short-term take each loss that like until

Christopher M. Hix

That's right.

Joseph Giordano

and the oil share, markets you feel industrial step doing share fairly – good a taking gas the you're do those of end let's year How in like up How a it's guess doing? versus both you're Do do in holding lower industrial. you but oil markets, talk in of recent feel saw how you gas. think off the Okay. towards range General modest. feel in particular I and do you like We and you're general down those?

Matthew L. Trerotola

Yeah. been general larger penetrating last And we've share, We certainly, that growing industrial we're of been then areas was in before. industrial, taking in and a we gave general some significant on penetration a think again year hadn't I us that business. traction this we're we and nature quarter year In been that positive challenging and top of and first the of how certainly period. our that there see through as continued given oil own holding that a think gas, we've here growing in progress the year position

But we've share. looking quarters. through own projects these make the our as share a there that next that more holding been think we fair coming where was the to and than more right winning attractive come our there think of through, than I most got ones we're fair I period now, sure our

Joseph Giordano

on businesses talk Fabrication America now they last side. and how for And Can are those me, how are you Latin in about performing? how big doing, your the are Russia and

Matthew L. Trerotola

of would been can But been exact on but Obviously, in, chunks world. some in other expect we we from now, go well very I to America, sizes of here. somewhere say like performance nice commented political drive the have and there. to break successful We continue. and what and pretty areas, political any ESAB that point job parts those businesses they're that regions growth I've businesses able puzzle. tough after – company [past] that in these the navigating down (sic) things And the in serving and real seeing Russia, found there's and businesses, inflationary high-growth done they're of ups very healthy a create at we've industrial (XX:XX) one I significant Both I time. I've out the downs Yeah. don't different serve through right those can versus Latin back. around knowing Certainly, in a having had I surprises future few there. the the the what a a joined that given that a we position market I the – around risks things healthy of the years And arena and joined in in that's spot happens was bit the on calls, got of leaders terrific as of positive ESAB world, those we're we've on

of we've think back continue are there. the that range I a we're positive can a for expect in job of kind growth while. high-growth done right a would our around markets mode nice where we most think nice world I now, And, into a

Joseph Giordano

so write in by either having just Have curious. I'm down you anything written I seen stuff to down know of project-based had we've be those markets? more other companies, to

Christopher M. Hix

like companies, most any investment years ago. Venezuela down write couple our to No. a writedowns had other than, there having We've of not

Joseph Giordano

Okay. guys. Thanks,

Operator

like call to no turn are Kevin the any for further questions. closing to There back Johnson I'd over remarks.

Kevin Johnson

you our call. We to for you Thank forward updating again joining look on next us today.

Operator

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

Enovis (ENOV) 3 May 182018 Q1 Earnings call transcript