FLOW - Earnings call transcript Q1 2018

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

Operator

Good day, ladies and gentlemen, and welcome to the SPX FLOW’s First Quarter 2018 Earnings Conference 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 provided at that time. [Operator Instructions].

As a reminder, this conference is being recorded. turn Investor over Relations. to Vice Ryan like of President now the to conference Taylor, I’d Please ahead. go

Ryan Taylor

Thanks, James, morning and Smeltser, joining our us. good and our morning, everyone. me President the Thank Chief on Financial call and this CEO; are Officer. Michael, With Marc Jeremy you for

Safe Portions our of and Investor appendix note the spxflow.com. later during Web with our QX is also This with provided that, I’ll our Our comments morning also earnings our Harbor Relations the presentation on you to found measures site risk on being the all along factors webcast to over A was presentation, And recent release today’s be presentation be XXXX reconciliations the provisions. of with Marc. In will Web for SEC located our replay call filings. the in our non-GAAP section call this webcast in Please encourage available are follow today. I have issued and can Web we remarks. site. most of the subject forward-looking prepared turn site, and of to presented. presentation the

Marc Michael

we elevating on our capabilities talent and business. and three of drive objectives; our and delivering aligning growth To excellence achieving by we in are in our customer first-class phases on all the distinct our early the everyone. accomplish on goal focusing and sustainable executing global this experience of expectations applications we lifecycle to improvement. customers, our for is customers Ryan, now strategy successfully operating products. presence the exceeding the SPX market high-performing and customer are in With expanding beginning throughout our operating delivered highest the to established, structure where to to our enterprise. Thanks stages through Thanks, continuous value best of This a FLOW the call. transform improvements, our next process centered continuous serve joining morning, marks journey us XXXX on good of phase in a strategy

step and performance pivot of reflects of and QX of $XX level. to $XX by quarter including growth XXXX. XXX our million reported the in X% a EBITDA, to expansion, we at up Our generated improvement margin segment highlighted points first in XXX operating solid million XX% as We margin organic revenue adjusted points growth of improvement EBITDA compared

the below we resulted the that line. Act. benefit line, Additionally, to by year finished was on in X.Xx total a incurred the primarily the we more down In We our net in of Angolan currency and $X.XX guidance. EPS tax $XX of currency. financial line notable operating two year-end position the million Jeremy net And at our improve from from with to recorded will $X.XX period. included we these items. X% prior This from quarter loss two continue $X.XX in reducing of other at debt Tax related devaluation leverage X.Xx, U.S. details year-end. the or on items expense, the the midpoint Xx with quarter, provide

the our highest segments. our orders. orders three products and in line disciplined food and value selective our we QX aftermarket on X% order with remained all and midstream for were growth strategy, front, $XXX order We our systems. down This lines reporting large across product was Consistent energy in the our concentrated expectations On with million, product line beverage was year-over-year. comparisons difficult in underlying anticipated and as

for the $X remainder the over and revenue sequentially guidance and our per in million to $XXX share $X.XX and between affirmed XXXX $X.XX is year X% for full level our which we EBITDA visibility EPS time earnings to morning, XXXX. increased billion $XXX since first of includes backlog provides backlog the This million. This of of year. now Our the solid range forecast

also We conversion represents XXX% net to million XXX% cash million income. which $XXX free flow to of of $XXX guidance maintained our

translation with OE operation energy, consolidated a was in shipments cost margins million margins And $XX of actions. This grew revenue by the XXX our from revenue related and absorb by Segment X% growth expectations aftermarket revenue from restructuring year aftermarket million, recovery reflecting Currency million income or and from expanded power helped the at in of or organic in dollar. savings each X% low-single In improved by and highlighted and in of prior across British our and points a million, was sales. level at the flat versus income. repair margins mixer savings during in industrial, and growth currency on revenue up higher in shipped X% by actions expanded were XX.X%. $X Looking good petrochemical on sharp the XX% a site largely points of was XX% progress increased Overall, benefit. to and aftermarket This segment to year a a XXX built. points ever installed the the and and up China organic was sales, restructuring of segment. in operating driven in benefit Revenue largest a execution. to driven large was one last mixers customer plants $XX QX. critical which failed euro ordered was digits. titanium world. at driven the while XXXX revenue food the mixer the and year-over-year. Incremental the It site is mission we largest in customer million one margins XXXX, in expanded double-digit $XXX growth strengthening Organic pound XX% beverage, $XX line XXX and saw year-over-year In sales growth

customer’s operation. the impeller plant get safely. root have Subsequently, our quickly running the remedial place. to mixer while access until our customer’s team QX, in was an of back provided and the solution was was down Larios During José plant shut damage damaged temporary cause in and up action responded a to and

customer. We’re actively with monitoring the site our

will building mixer that high-quality solution currently addition, provide new In a customer for our are suitable application environment. their we a

we’re business rare team extremely occurrence customer. the mixer to and their is and for is with for its responsiveness our This an engineering situation, design. while not applaud Our the Taking highly pleased $XXX down I regarded look expertise development declined orders the or million. order closer was were $XX or $XX benefit. at orders million, organic year-over-year. X% Currency million an basis, a consolidated in quarter, X% On a XX% quality

and systems heat in this I to beverage oil decline products, and industrial As food anticipated exchangers. mentioned, concentrated lesser and a extent was midstream

business. spending selectivity to of engineered While these customer and patterns, declines it these partially order more reflects in highly project-related increased areas our discipline reflect our also in

growth orders our that component positive basis. high-value offerings. front organic aftermarket on X% And on an growing across focused In we saw Our aggressively QX. in the plan very year-over-year aftermarket grew in is aggregate enterprise, strategic developments on

I’m QX investor our our We in drive this in our executing expect also early dehydration in order order and development our mixers for meeting the on strategy equipment. higher growth we consistent in margin over to drove at strategy product by key focus and pumps profile products in Overall, described that above line March. gross valves, a business with which food encouraged time. growth including select and was beverage, we’ve areas market

On imports food on down dairy selectivity to in QX $XXX in timing mid-to-high XX% and at the the year-over-year digits systems. up were an segment, driving on opportunities aftermarket basis, and of organic is particularly customer healthy with beginning market spending orders discipline and systems. process, with benefitting where in the and due our and Currency positive prices. food declined growth orders million, year-over-year. low-double systems digits. level trends maintain dairy single and sequentially with market Looking we organic by to of X% in X% of was beverage, The is remains China higher Component orders orders active benefit. global beverage Overall, grew continue were rising demand a the strong funnel a larger strong

selectivity and He opportunities new Dwight over strategy quarters. level team few offerings Gibson benefit. power energy a and to were our the execution added growth screens our that four Our a driving and his at quarters. fit with component component project average higher a and his pull-through past product aftermarket performance steady of the currency aftermarket technology very value has to business the order and levels talent discussed our and On million, enhancing annuity. offering year-over-year systems the in high teams criteria orders $XXX while was drive meeting. management are the in for In consistent million QX past segment, $XX investor our basis, or we over X%

XXXX, supporting our midstream a a oil and in range I customers in orders basis were decline American QX North mentioned, seen but remains subsequent orders past to concentrated orders orders America our quite moderated six increasing of in were of over strong in the midstream. sequentially we’ve steady demand the with steady As production. orders level on were was QX pipeline the North XXXX, Aftermarket and In levels organic quarters. normalized aftermarket and sequential In quarters. in supporting anticipated consistent the healthy

growth order line in dehydration year-over-year. this concludes our level pickup tools. executing strong turn lines. an in to in higher acceleration That encouraged and José orders and the our was each On review an hydraulic detailed by remarks. a pumps of industrial equipment organic now On were Moving benefit order highlighted growth was lower results. line time, we organic tool value exchangers hydraulic sequential the over mixers, sequential and a I’ll and to product aftermarket our call across and by a basis, for segment. his orders. and a offset product a QX At saw organic financial are aftermarket of Currency strategy basis, by was offerings X% Jeremy we in up X% growth are opening heat X%. team product my orders of our growth

Jeremy Smeltser

share. share the reported morning, in our per period. in guidance loss I’ll significantly up the $X.XX per a line from Diluted with Thanks, earnings Marc. were earnings and quarter year with Good everyone. prior begin in

beverage a due through valve of in good $X.XX primarily segment Power As level, shipments. came compared certain guidance to of upside the timing strong performance had year-over-year at and to our operational execution. our yet delivered $X.XX food guidance below and the energy

industrial costs offset $X.XX headwind segment Our to a segment. lower repair which the also across due performance $X.XX guidance, than were in the solid mixer to anticipated by a our came partially

of the currency two approximately U.S. peg from two-thirds during related led of In an included XX% balances result a which line. below shift were QX in away to the decline to dollar. our notable value by expense, reduced cash million. Marc currency as our EPS the $X.XX value As the to Angola’s $X other losses headwind the Angolan income decision operating foreign a quarter a items and in This our to the about to Angola currency of mentioned, guidance,

the for rate quarter was tax X%. Our

were further As compared taxes refinement $X.XX. the tax of foreign provisions tax transition of related transition the tax Cuts to our Jobs This guidance, additional reflects net a U.S. within & Act. to Tax credits specifically benefit calculation

offset as to up on expanded beginning prior XX% year-over-year of sales. reflecting beverage, growth organic was and revenue Moving million the growth XX% revenue revenue. to million and X.X% points expanded organic $XX with segment oil was a volume our revenue XX.X%. aftermarket was $X with in $XXX applications. decline by driven to and investments was a to and income million up down $X.X both and The midstream a QX growth to revenue digit system prior million, Segment and second half initiatives. revenue in offset year. compared margins realignment was benefit margin strong cost by year partially productivity In points and million by loss was driven OE market our in more year. incremental flat the revenue or increased and supporting power in was was expand service improved nuclear by The aftermarket, valves X%. line million, $XX the $XX as shipments Currency due by to our in points segment, income XXX decline. customers growth margins driven a saw OE XX% well The the revenue both was growth lower million strong end a level pumps was X% our organic In to or X% was increase and growth the results, more partially driven saw aftermarket the we and was food from facility $XX and center profitability prior of period organic from margin sharp over top including Currency by a savings, million, of in other footprint. the revenue organic stability in margins of consistent savings XX% in than the execution income higher XXX was benefit. XXXX. Revenue better the XXX year growth $XXX realignment Poland. growth XX% improvements up These Organic Segment project and expansion. prior reduction we were high-single our the than as of and energy

driven million or in an revenue are and products. higher in normal new sales segment have segment years. hydraulic applications X% also adjusted Organic We of and were the for was energy on two this heat modestly Aftermarket energy emphasis over to with grew where segment pleased XX% $XXX income in reflect sales market the in his exchangers. the revenue up growth difficult was our the structure increase José team disciplined see And quarter of tools continue $XX they and and this was project capital the $X with off coming X% Currency review be million, an prior opportunities performance by new growth we up XX.X%. the cost year-over-year. markets. on to the year. orders a million Wrapping was with benefit. Segment very pumps, industrial, margins

As initiatives offset XXX were the million cost prior reduced also compared mixer benefitted the savings contributions by points. by of segment year, which $X margins income These growth. the revenue organic to from costs repair positive and

provides of end XXXX organic We backlog. growth highest just This level XXXX. build over billion, backlog total a throughput X% priority first lead visibility to our up a from factories backlog X% accelerate continuous our and of reducing growth was on This QX comprised X% improvement and of over opportunity benefit. revenue the the for Moving and the currency $X of is with quarter since backlog see key revenue marks and to improve Increasing to in as ended progresses. increased of balance and the year. productivity We the conversion absorption efforts. great times and our year

Looking at now QX. specifically

between is year-over-year. are X% a million be of Currency We $XXX about targeting $XXX and revenue. million to expected tailwind

are We about about margins and to million expected million. charges targeting XX%. $XX segment $X to between with Special are income be be XX%

about share to per and range Our tax XX%. $X.XX guidance EPS a is $X.XX of assumes rate

are approximately EBITDA of year million a growth over and We the sequentially. targeting X% about $XX prior representing increase XX%

profitability growth higher and translate in year, margin continuous expect higher the increasing improvement of of As from the we in a move volumes, half we through to sales to the products our benefits year. second efforts level

EPS, as free the For full and EBITDA year, previously guidance mentioned, we reaffirmed today. our flow cash

updated we reflect outlook. assumptions In addition, exchange estimates revised for results, on are certain underlying this These updates and highlighted rates our QX to slide. our our XXst March

this food to expected earnings for a modest $X in discrete with reflect in the to impact recognition QX. reflecting revenue estimate current that estimates, Note the to the of of adoption Based year. by currency to expense to we in rates. on target mix XXXX reconciliation. and assuming are tax benefit Our standard Other XXX for up is our million increased benefit segment target improving income revenue no reflects from the full due This between favorable organic by reporting we new We the we geographic foreign the approximately million X%. standard ASC about of beverage that XX% billion $XX the million and execution losses also $X change currency. we incurred now our currency items. expect rate X.XX And revenue our new revenue to be current and year adopted year the and a XX% additional are of increased

regulations, additional year we the from the anticipate in to as receive on the the continue rate tax more we volatility As new U.S. progresses. Treasury guidance

remains free Our the same. flow cash guidance

down reflecting leverage of year X% million in million. We Net $XXX XXX% sharply LTM flow from quarter total look at QX. in are on ended growth was $XXX of the brief of our year-end. Xx year-over-year the net now to EBITDA end X.Xx, a targeting as position, range million and $XXX our with at XXX% hand conversion $XXX income of debt, free the financial to cash we with down cash Taking from improved million

on continue $XXX the with X.X by EBITDA. of By net Xx net XXXX, to focus capital leverage. reduced generation million of turns up end the we flow cash an reducing allocation. of on Since will debt anticipate end EBITDA update free by and I’ll net leverage We have this leverage wrap we the decline approximately to year, reflecting growth. and

play we our while focus Mlingo our President of Business XXXX, that our to team serving organization on a Vusa remarks. performance. To we variety important Vice spent turn and recently prepared Development. and corporate for to debt as roles leadership my through last our organic the That us Rand concludes growth our build this organizational capability development as years role and strategy our I’ll capital we the call For to for He end, will as organic At improve deployment of Ingersoll intend product and management. operational time, including develop XX prepare acquisitions. at continue over Vusa joined we investments an back reduction further growth Marc.

Marc Michael

highest QX of striving the That operating level level we our backlog much XXXX. pivot year. marked is are growth higher as to we by And points quarter level In were first and organic value were lines. growth. growth, drive healthy Thanks, with Orders XXX of consistent Jeremy. expansion operating and as performance at said, through to summary, our a highlighted step and us higher our EBITDA solid XX% improvement. a its move since results margin at growth we product for our a X% in for strategy

we XXX operating are deliver with XX% value our higher XX% expect digit And the approximately this to growth we a revenue And points of product high of growth margin EBITDA. level around in we underlying full in growth For targeting with low-single margins year-over-year operating year, expansion organic lines. year. as are exit targeting we

the to our are create and processes. stages value FLOW products a Looking journey people, believe broader high-performing potential into which as very picture, tremendous there enterprise. is We around on at operating we on our early to we strategy centered transform in the SPX execute our is

throughout continuous members We recently and growth to some team have our to and added our our the help lead are key talent efforts. elevating improvement enterprise

this benefits parallel product in we drive moving have in seeing strategy, defined execute improvement are we will our level We through for focus we drive to work as have And order and Ultimately, line these streams multiple of process we and each strategies and sustainable continuous standardization. a performance. higher development. simplification areas believe in our

are through importantly performance our prudent decisions. aggressively, continuous large the projects, capital growth accelerate on and and margins high by value of cycle, to working improvement objectives in grow staying allocation our cash generation streams, disciplined capital key Our investing and selectivity expand product lines orders value aftermarket velocity with our and increasing and

anticipate on XXXX based position. XXXX to the about available leverage over addition, capital $XXX three-year maintaining In deploy period our to prudent net million a plan, of while having we

continue encouraged lead I’m members positions our in great to the efforts. help by our growth our I’m high our performance, also journey enterprise team with we taking. are talented improvement continuous As key team energy, and members to adding pleased in highly pride enthusiasm the success across and

operational where facility global firmly to has manufacturing gained a operational who roles. business measured, FLOW. multi-product This his over of execution financial XX-year satisfaction, background of a career of week establishment rapid a He be played delivering committed manufacturing by Ty enhancing chain questions. sites, our variety without across drive continue and personally the recently in retire succeed improved diverse to brings newest GE performance us. us in and to dedication successful higher will team confident of his Dave Ty At plan program supply driving greater remain his six track Global achieving and I remarks. Manufacturing on highlighted career Ty take background XX-year this I’m to our expanded our at and thank of in shareholder with to broad Kowalski, Dave we phases concludes approach all the proven value. he of a He who President continuous ability a a to serving we’ll Bydgoszcz, by Our notably closing, Poland. compromising after most is joined leadership SPX disciplined a in this our experience. a and announced In customer growth SPX your year. member moment Jeffers improvement for take want this unwavering key customer our to role excellence performance, leadership realignment our operational and prepared happy time, our to to the record

Operator

you. Instructions]. Thank [Operator

from Our Nathan with Jones first Stifel. comes question

line now open. is Your

Nathan Jones

morning, Good everyone.

Marc Michael

Nathan. morning, Good

Jeremy Smeltser

Nathan. morning, Good Hi.

Nathan Jones

problems Was often us I figure during one-time up? don’t I color important this customer think this What you of periodically? break process? want whether some a to Just these us here So to manufacturing crop or us can problem is kind can of anymore of really maybe whether problem more did problem, the dwell actual too how the mixer item to was? the crop color that give much that a this kind something these there. on things out but problem for it’s on it up kind give on it? you Was occurred

Marc Michael

history little A the project. Nathan. sure, Yes, on

application. XXXX. XXXX a it event installed in was commissioned XXXX in QX was in It’s in and shipped during It’s this rare experienced We received really the a here. the started order we’ve So and that large it customer of petrochemical January December to operation year. and was

happening And blades We design to when business mixer the capabilities strong. environment, applications. the our production translated forces unforeseen to some mixer the of case, experienced variety up proven apply fail. caused impeller into a particular this the that What Our design petrochemical we a we product for particular in application. technology this ended that the and really used line can in overall are quite

get the an And a in of got improvement mentioned, and temporary them impeller. design as take place, right So always first now back implement running. we’ve the for for customer step design a care the to up and solution us to is

building in largest half This type its the year. equipment process world. in We’re one largest mixers world. its second of replacement of of this in type and we’ll It be the installing of was plant the the of petrochemical the that in is the the

rare unique that for So it’s in line still product saying the like don’t historical again, it’s our more regard, occurrence a a standpoint. from even that it’s right mixer we in but the through pretty we’ll have that, now. something right present backlog as work this now any backlog through We projects the we the rest the that’s but of putting customer at point. solution permanent move this year don’t And here else in place like the for anything this in have

Jeremy Smeltser

this would add, around Nathan. all. seen rare. It’s a very this this at failure of mixer I’ve And years in my the In not magnitude business, like I field XX

Nathan Jones

expenses Okay, all coming for you’re see you are likely through? going more And the we that to thing fix accrued expenses up, or of to you’ve that helps. as this incur

Marc Michael

the expenses at have time. all accrued we the we permanently foresee for fix that this problem So to

Nathan Jones

in that with you back you XQ? get to half that? talk backlog? in into got margins. Okay. that will Can XQ good I’d rate here are specifically more How pretty coming you are of guide revenue half the through Then implies visibility about both up in back little your confident that where exit it in backlog coming the margins in anticipated you and even which roll in ramp to the that that much below is in, How a XX% a is

Jeremy Smeltser

start. I’ll Sure.

million revenue midpoint is out $XX an And what million when five kind four point quarters $XXX math. about the ramp it’s of from ago. about you So up backlog’s I’d do or

X margin. about increased driver in of call see say run that that have and the which drive aftermarket by visibility that sequentially the by past rate we’re talked example, It’s components our And the around revenue we driven what a into that the Marc leverage comes million. do about a And for But volume the on revenue and the to I’ve food level increased in plants. of overall, of already from by industrial, And systems at second in two-thirds really the really earlier half. big for backlog absorption hitting outsized and and on half on start we’re I by level we’re beverage. are the in first increase to from And in that would about we the specifically to revenue of expecting lot business the a talked increase that margin so our other nicely predominately we revenue. that’s leverage of continue pointing probably rest second hitting half really to levels

We and have are about it’s run in rates in to mind what and visibility projects really those good plants my execution point. this the at

Nathan Jones

Go ahead, Marc. Okay.

Marc Michael

improvement Yes, value I which seen has continue to its again and down a mention backlog did single we kind going an is kind progress part in sequentially The in industrial been two sequential in orders lines and had our important focus Jeremy to going focus high were aftermarket what our was indicated. perspective. overall we’ve just is for our be the I’ve that very what and execution laid of us. And we to continued see mid-single presentation. of high sequentially. up product a And digits also investor from see good we digits in up sequential were the be March to We of

So to that profile focus; lines product a – important. that’s be high that margin our value and will getting continue better get carry those those

to year managers cost we’re We’re make something is on been on sure the product move standard some of the performance seeing our of to then our through different as our already a on excellence this mentioned cost. process help as overall to been as place our right improvement. gone going they’ve of that some really improving India working in global based as we as we’ve operating with the also and team the other these some the process to that cost point price our in to be and that’s put specifically, into us Ty’s place. implementing a where future first these place really Poland are putting things on we price to profiles I really the mention in And lean through on important year. prudent performance the Day, process that Barry McGinley make key we’ve working got in and we right steps All aspects. in That’s the And in Dave’s in the taking already also really quarter team has the side Investor us. work overall through we that again, SIOP year improvements would which going at managing we facilities sure initiatives is We’ve been move key

Nathan Jones

the fair difference it the own is end high and reliant end execution the and of say there on really year? here your range your guidance this low improvement the to between Is internal

Marc Michael

Yes, said earlier, ramping see, up I we visibility there really it’s as production on is revenue based I what and the think about levels.

Nathan Jones

right. All Thanks on. I’ll it pass very much.

Marc Michael

Nathan. Thanks,

Operator

you. Thank

comes Our Halloran Mike next with W. Robert question Baird. from

Your line is now open.

Mike Halloran

Good morning, Hi. guys.

Marc Michael

morning, Good Mike.

Jeremy Smeltser

morning, Good Mike.

Mike Halloran

And on what then you’re engineering and on granularity projects? give there doing on quarter comparison is business up impact of part a I’m little you have the of on growth for stability following selectivity had year last you things types indication not of with where going you’re full certain end a trying questions, of going help strong bit the selectivity to Could like things this midstream walking orders anymore pressure products Are what perspective? some away some maybe those the the up of year. order of in sequential order at kind basis? just some though. the this try of like just you So And that? kind of on year get It to was from more the a sounds you Are after kind to thinking give side, is obviously side? the from

Jeremy Smeltser

let selectively Marc I’ll Maybe the and I’ll numbers start the then come on front to after.

Marc Michael

Yes, sure.

The that of sequentially we that important sequentially again products the the profile. as a have kind is value highest thing emphasizing margin digits. product doing we’re including these as components, well mid-single were really those aftermarkets, attractive And lines up

the So because be that’s emphasis and expect that continue case we’ve we there to is. got where good traction our to

and and sequentially the for last midstream year-over-year business basis in and as again power was and accurate, on also in not energy. a some biggest lower, midstream as you’re unanticipated On on projects in in year-over-year well change the is that valves basis our that had year food again larger we beverage even and QX pump but systems Mike, a

we’re piece beverage, us, with. factories profile around selectivity generate that So too projects be the have that the continue on profiles margin that out the for discipline components that projects our right have to that our that right aftermarket will discipline that choosing a of the come fit and comfortable food those technology the for capabilities the

the I we the the a where that’s which a the is that at from where generated. remaining having what our given quarter-to-quarter and is more would front log, As healthy log perspective, towards anticipate liquid projects annuities aftermarket look component front robust we’re and weighted bit is becoming focus are

oil be conditions sequentially market, and that there areas business. valve the that’s we’re specific have we’ll to large in as type in both fits to pursue José and pump out So terms comfortable Again, the in going pump four that the those Dwight space. been very our we on will that quarters the say some around continue profiles, margin And projects focused thing larger our then in the area. same I profile, as look for capability, our continue in team And systems and F&B very over steady. and has look nuclear we business, at the technology projects that his that that past our be as And would we’re with. well those being again are

a coming were these it, products at the how that larger counting a projects. into looking got applications. lot at process our about of that of go on run develop. a really you think had year wasn’t we orders our in of key into looked would And And place more So we if large we’ve normalized around rate good how

on, as it can the up shape key component pretty to you kind our should of through So if well areas us. we’re focused cascade progress we in for continue year, that see

Jeremy Smeltser

to in that and greater were them $XX call $XX in orders North around orders, greater none than to level in we single so addition million over billion did expect we the a out that experience for Yes, as as large of XXXX so XX QX your million so you’ll point out. called which million of orders. did on did individually year, project last attention from year year than last And just orders, had million America recall you Slide of pipeline that, $XX back we if million, valve didn’t progressed. consolidated then X But X.X in $XXX moderation to the with

QX run little started call and what orders last a we XXX at looking billion year I’ll in year orders. million you’re X under in here so of with rate about non-project-related this And

what Marc’s we’ll then orders sequentially. project little would expect of with continue some year a front bit the level of we have to growth tune of point, log, last based would to So that in level consistent on year-over-year if with large year growth the And some on the relatively a I in. say would bit come we probably those more. We today, based projects expect perhaps order to see

Mike Halloran

life quarters range the side? question relate side, this the just an energy of That end stress the to market you of is makes about sense. to going And mind of move talked then forward. aftermarket a other Wouldn’t Any and gave. and about looks few going from to pipeline some opportunity perspective? markets stability them. the you The that how over obviously continues the What nuclear the going specifically from that after perspective? then from just some energy power about hearing Midstream, pieces answers on in more selective And be certainly signs the you’re there. like of last to power

Marc Michael

some is dehydration look log it improvement we lines. the have yet the front Again, we If and how we to product of flows aspects the our improving. seen log infiltration through. hits have that that well seen at of into there. is that It’s across improving where products, business dehydration some Yes, these flows be space front engineered

to order translation. see We terms how in have develops of it

And to expect of steady And improvement. that start QX, the we pretty at bit don’t this improvement. has over we then And QX time we overall a still I sequential remained we’ve opportunities. hope see midstream dehydration so steady greenfield of mid-single new steady. you would don’t nice pick aftermarket of into digit stay but seen that to mentioned of will it terms would out projects. kind difficult pretty was necessarily does in this about projects was There We’re Again, sequential up. year aftermarket, and staying say we expect the for though as it anticipate improvement coming optimistic most upstream, us. offshore Nuclear, new is point still

get in So it I quarter-to-quarter it perspective didn’t would guess worse. of as not lot define summary but I definitely a any from a change

Mike Halloran

guys. it, appreciate Thank I sense. you. Makes

Marc Michael

Thanks, Mike.

Operator

you. Thank

Our next comes Susquehanna. with from Robert question Barry

Your line now open. is

Robert Barry

morning. Good guys. Hi,

Marc Michael

Good morning, Robert.

Jeremy Smeltser

morning, Good Robert.

Robert Barry

out to order Nice my revenue just margins. are the a maybe kind on on organic revenue down other I’d main I questions be like to see this your But organic high. reading coming and talk it was take move it and expected is of with restructuring why feels in the the curious slowly in the it the and backlog Frankly, is revenue outlook about might question but little? dovetails the better end target. markets direction the getting have

Jeremy Smeltser

in, I actually standard. don’t really would the first we the we organic level recognition of a of impact as implementation, as lumping started year, say And out in in different organic volume. of new the calculation finalized separated quarter is of say the the I’d were X% here the we we’ve revenue. we that that revenue expect what Yes, revenue that

we’re And flat. actually so guidance-to-guidance again, wise staying pretty volume

do progresses, revenue that at year $XXX very the large QX we a quarter recall million. had XXXX As

So that as as is comps just year tougher on lead to to goes well. really going the

growth is loaded front a us. perspective for So from the half organic percentage

Robert Barry

less say cycle picture of the about you optimistic or equally quarter you short outlook kind it. Got broadly? versus ago, I mean would just big a were or more

Jeremy Smeltser

say somewhat more frankly. optimistic would I Yes,

the progressed as from in quarter product see good the market. called value high we as the earlier, Marc coming – out sequential quite really lines we sentiment aftermarket, see bit think saw a I in and and customers improvement we

Marc Michael

F&B across lot where value And for Yes, completely. that our sequentially a mid-single I kind again continues good was high be us of lines which in Aftermarket up is industrial of would kind low-double of single product digits. lines digits. with up high F&B again reside, were to agree product we digits components

So the a progress where overall, emphasis good and we market capturing placing is believe to teams what share. our are in tribute of that’s doing additional the terms what we’re also in some

Robert Barry

target. in and particular the just margin also follow industrial discussion Maybe earlier Got to It like business around waiting, pretty a on the second think up a gap beverage. it. seems out the about that and we lot getting second big half actually top the I get you to there in the given started, here a especially on of food called is ramp where half line

color maybe getting So bit on margin industrial. just a to in little more that target

Jeremy Smeltser

the in think we $X charge. XX.X% the Yes, mixer quarter here did and repair I first million margins the with from headwind that’s

expect And the quickly mix improves, mid move year. that’s so revenue what half in to as we’re And we particularly the second basis, into we quarter the past we’ve getting of into can and and with right teens. as seen the teens the low pretty happen in the a on

that mix from the of come comes as rest improved volume absorption lot from increases a and so And the does sequentially.

Robert Barry

cadence restructuring. Got it. of the Anything on

that half is that expected second or you year. incremental even? think this I Is waited more also an XX

Jeremy Smeltser

year. So X.X I’d incremental QX. bit heavily to perhaps say just the that little through in a the XXXX, waited then is I relatively front year, weighted restructuring over expense on the the was half And the think evenly more in of

We’re expecting in QX. X million

there savings year. from of in that’s so the not second the the will half the that And be first obviously half year in of

on year if or not answers. the it’s it’s year this depends it from restructuring whether last So two different or

Robert Barry

I see.

you. Thank Okay. All right.

Marc Michael

Robert. Thanks,

Jeremy Smeltser

Robert. Thanks,

Operator

Thank you.

Seaport comes from Walter Global. Our with Liptak question next

Your is open. line now

Walter Liptak

guys. morning, Thanks. Good

Marc Michael

morning. Good

Walter Liptak

cycle I just you not to something value are still are if or even but on want time the projects aftermarket competitive going with you just you’re just I cycle? but longer spending too long and and high focusing cycle ask where jobs product, through to about market’s customers process on wondered the bid long as on bidding – not more and the

Marc Michael

into coming we’re year and for Walter, front year. really second the doing on changed this In longer projects. through our beverage been that systems, last half of still in cycle remains Nothing’s the the we’ve – past No. bidding log food active. approach

towards mix the pursuing is more better. liquid projects of side. Our we’re It’s

that of level typically We’re the creates liquid is that our annuity projects ensure looking business. of our disciplined that content aftermarket of out the more technology as out and well we’re fit approach to comes that at right in on part as has that the factories

still the projects, projects large ourselves we’re terms pump in put signing yes, So conditions. margin again, want P&E the where very space, for food for don’t and don’t we We goes large in active a then just we’re same position being difficult though. after and to very low to go up for where And example. want see beverage. segment We disciplined the in

a broad our So mix again, and good In too the fit beverage say again being or and technology the log bid seen a remaining XX our if space so. with technology the again consistent, past and customer. across P&E, we look selective is fits that again, and then days match improving font how have it and and selective scenario we’ll developing. for it’s the there’s that the where that industrial are front industrial to. see and is to sure similar in that for just in over being you that months that’s better it’s a just food orders an we’re And segment. log into pretty would projects I comfortable capabilities based making through terms several that as next we move translates the are us agreeing we’ve we the And

Walter Liptak

That’s Okay, makes strategy. good good. Yes, it a sense.

is second pricing the quarter? And shorter how here inflation, quarter? the price in product product, have you the value On material increases raw or with the cycle aftermarket this done

Marc Michael

and of pricing. with those that all management to against chain good I our Barry’s team a on across his what be back Dave cost up and product mentioned Barry lines managers position assessment tie working cost a and Yes, will Ty price, trends need has our very as in our McGinley inflation our for process do place team bump Kowalski then and for product good works into supply got that Jeffers. product lines we and team’s

we and this in any we pricing cost the the year, in increased We have do And making move as consider be But and in this each and price pricing We assessments look year. at at what And right changes we through we’re move to the monthly exit through that assess on and to the on price balance equation. looking positive expect month year. as want we a adjustments the the year, good we we’ll accordingly. basis. we equation modestly now as be

Walter Liptak

sounds Okay, a great. And just couple more.

improving. the you think could elaborate that On I you wonder food and on market’s the beverage, I if China in bit. that mentioned a little

Marc Michael

quarters their really just seen trend a on China into price we’ve basis China perspective a now over steady purchasing improvement volume several a a basis. of Yes, into from on on as well global of price both and imports the with markets as

good sign. it’s quarters pricing. the a support over is underlying the which market commodity which been from global China can several now is improvement products buying Again, steady So different

Walter Liptak

And a XXX there one. top up ASC picked margin only Was just that or line? any Okay. you is last with that

Jeremy Smeltser

along that relatively revenue margin with that margin there’s our income levels. comes with Yes, segment consistent that’s

Walter Liptak

Thank Okay. you.

Marc Michael

Thanks, Walter.

Jeremy Smeltser

you. Thank

Operator

Thank you.

Barclays. Mitchell with Julian Our from next comes question

now is open. line Your

Julian Mitchell

Hi. Good morning.

Marc Michael

Julian. morning, Good

Jeremy Smeltser

Julian. morning, Good

Julian Mitchell

morning. morning. Good Good

QX rebound for year. Just had the last pretty is the three in maybe for to growth you up and in sort because a you on considering year. But accounting on underwhelming segment, industrial of industrial organic that organic the the check I for had that in guess the about growth been watermark to said has wide down accounts of particular that years business guess row I guidance wanted high change what the and firm the I heard fact reduction your

maybe wondered in project business. food thought you’re I and like The more particular. power to just seeing beverage things would relevant if actions So that market have loss I selectivity would and be some share in

be? in participating on So seem and other short maybe cycle bounce much of a thoughts industrial own as lot your to why as not in maybe just companies industrial the you’re

Jeremy Smeltser

though capital book the we back haven’t across Well, really I would think seen order say lot what lines product all coming yet has a in is our projects increased. I of log our front

expectation an we probably growing those Investor see level an what that might area year-over-year is and hydraulic the And do We in so we overall, at it PMI. into at year don’t Marc have seems this growth like which But earlier. a of tools called isn’t we from seen pick about feel back we and say haven’t mixers, level that any an see have I come we’re out talked expected losing area well, seeing this order up we’re we areas our with did we share. market area was would as which dehydration where with Day. HEX. the where competitors expected that the in we but relatively consistent will

rate do XXX expect experienced year. is margins of that we half the QX improve and year million of we why in the think which expect quarterly I better absorption of part at progresses we do as revenue second to the the from

Marc Michael

the a anticipate cases indicated And emphasis increased would of That’s heat mid-single what thing as goal some area trend liked. our the improvement. will that certain we to that that improve our key focused meeting, haven’t around just in orders be as that’s these the up this to one that that that we we’re profiles that meeting, with Jeremy margin in The product business have Day on for we in Investor on. the indicated. the market of team it what continue we segment, the I were would the go year March through they’re working we exchanger that parts and our And had we’ve add to digits. lines and Sequentially, dovetails as in

selective. again, are so being we And more

of So focusing be better heat exchangers the again as profile on and order bit but may we move better we’re a projects margins. through more in being year drag selective the on a

with and them and industrial grow move right confident we’re we in place the invest where segment headed lines through with to and in year. organically overall, the these product the we key have So we’re comfortable strategy as

Julian Mitchell

apologies following second the the year-on-year. if mentioned, not up headline had, beverage Understood. specifically, one the is Thank sure Do other you. sales well? assumption be within you assume may if X% again two segments as sales on And I’m that so and food that? up down guidance what’s then you’d of just you basis got around organic we and just the quarter but

Jeremy Smeltser

assume is on fair we Yes, now timing it organic we on experience where the that specific guided right an to would haven’t decline of QX but for backlog based rests organic growth beverage QX the to to half saw of in not but growth would the in extent and food I somewhat year. second we expect QX, in in a of shrink turning probably the

Julian Mitchell

should other And the two segments in organically grow QX.

Jeremy Smeltser

watermark Flat for power will would to minus digit right backlog single comp. do now say on I P&E growth a growth. has so tougher and industrial. QX based plus was we a and P&E the low-to-mid low expect energy, be or XXXX much in

Julian Mitchell

very you Thank much.

Marc Michael

Julian. Thanks,

Jeremy Smeltser

Julian. Thanks,

Operator

Thank you.

Deane next Our Capital comes from RBC question with Dray Markets.

Your now line open. is

Andrew Krill

on Andrew is This morning. Krill Deane. Good Thanks. for

Marc Michael

morning, Good Andrew.

Jeremy Smeltser

Good morning, Andrew.

Andrew Krill

some out I Good than we called was the OE power up morning. better organic expected of and think guys shipments. quarter On similar lot kind you way XX% and energy a this had

for of any for give just And us if of of kind can year? on rest with you if wondering to remainder just QX, more was it this color of more one-time touched on cadence and help then XXXX Just the some just the the through in that segment? but you nature

Jeremy Smeltser

year think a a QX on low entering very best as I of Yes, about to model of and XXXX revenue extremely is times, XXXX. look based quarter-by-quarter. think out level Andrew to the an your number And us low back to was last way that called backlog for we go

year hovered power the million and loss. a QX. as had we quarter between in million and slight million did $XXX we year consistently last in million so QX did here And only XXX in each really and $XXX revenues of revenue But progressed, energy $XXX and

rate the or and the what as kind of so that And as well. is current plus we minus progresses order run backlog year indicates level would expect

million So that million. somewhere $XXX in to $XXX

lumpy in to the indicative just or very one-time more watermark business QX the revenues, of the nothing XXXX. of run current QX the low as it’s there’s of rate compared So

Andrew Krill

are there that out earning of Okay, And a guys have spoken before. incentive up I free just have follow quick sort any on, the of know season – this cash to called you comps. some got companies other lot then it. a

headline kind like Just any than different highlight the little you’d would pretend? other a to be results of just that bit dynamics could Thanks.

Jeremy Smeltser

those are consistent year-over-year. of relatively Both

Andrew Krill

Thank great. Okay, you.

Jeremy Smeltser

Thank you.

Marc Michael

you. Thank

Ryan Taylor

be Stuart our call. answer questions rest is next the us day Thanks, Ryan again. This again time on QX to appreciate concludes XXXX time. for have. the joining earnings. everybody. the usual, This around to any you Thanks I the you and I follow-up will and might everybody throughout talk we’ll joining the Per that of

Operator

very much participation. Ladies for and you today’s that gentlemen, does your conclude conference. Thank

You may Have a day. all wonderful disconnect.

SPX FLOW (FLOW) 2 May 182018 Q1 Earnings call transcript