DCI - Earnings call transcript Q2 2022 | Donaldson Company, Inc.

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Operator

Good morning. My name is Shauntel and I will be your conference operator today. At this time. I would like to welcome everyone to the Donaldson Second Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator Instructions]. [Operator Instructions]. you. Thank Director Investor Dhadwal, Relations. Sarika

your You may conference. begin

Sarika Dhadwal

morning. fiscal Good are and quarter for Chief will conference for CEO, you provide Thank outlook President, details Financial call. XXXX. XXXX Quarter and balance of Tod the With on earnings Officer. Fiscal a This our me and Scott summary performance today and Tod morning, Chairman, joining Carpenter, of Robinson, Donaldson's Scott Second second our

reference non-GAAP non-GAAP will A reconciliation within During schedules to we today's this metrics. of GAAP release. metrics the call, provided is morning's attached to press

Additionally, With please are in that I'll call the that, which release Tod described subject are made any forward-looking press keep now this turn call during uncertainties, to mind risks over in filings. and Carpenter. SEC to our statements and

Tod Carpenter

Good Thanks, everyone. Sarika. morning,

our term. expand we throughout the while and worked will growth global to and to actions meet to pressures. values to demand, business quarter our the strong delivered footprint in company with investing levels prior system, Strategic as pricing This combined XX% results. XX% sales the through in an supply challenging labor expenses on of again a synonymous or continue chain exceeded robust once our were financial implemented an milestone continued of in disruptions ERP over last large our hit on longer was global million, adjusted quarter balance growing EPS inflation, the and initiatives.To call, Scott for was sheet year. drove Upgraded part later pricing our shortages needs team able story. our solid offset our our with a Despite up the top discuss which line basis. environment, flexibility Donaldson invest which our additional this point, important thoughtfully to we $XXX customers our of and inflationary XX% use managed produce our After effectively

expansion North directing various We have and geographies, capacity capital including towards been in Poland. America, China,

in areas businesses, including Industrial capabilities and manufacturing our increasing strategically often as our Advance such are important Venting Solutions. We Accelerate

our future in R&D, In create the M&A and of continue terms technology our filtration meet innovative are to last, as areas, as we needs technology life pursuing new existing including process to aggressively but customers of not well And key sciences. certainly activity. filtration least, we leverage

with Biotech We progress Solaris Services. being the on acquisitions Industrial and are the made integrating two announced last P-A pleased quarter,

about capabilities in back is to financial acquisitions additional excited are are technology the teams half of challenging. been additional confident and scale our ability these has services. to the first doubt the the performance, bring Our and Coming no year there we Donaldson, our to

the of gross to we the As to look balance to margin. expect year, headwinds impact continue macro the ahead we

actions meeting given build and a first and and expectations half to we compared sales second that That labor are freight to benefits results, noting stronger buy commodity, on due continued pricing combined said to the potential ongoing demand lag Stepping from prices, to drive inventory. pricing sales As normalization, first the operating should to and continued from required additional half. margin. benefits will impact aggressively with actions, progress mitigate inflation higher half back, while we customer emphasize, with our the take cost lead leverage. It to there ongoing pressure. a continue, the the delayed worth time is Similarly, and raising is

share about outlook will our and more line fiscal We bottom the XX Scott fiscal for are later in XXXX. our details call. raising top guidance

million pricing from contributing XX% million $XXX were on In last $XX replacement parts, and million road across with geographies $XXX of both with markets. in reflecting end fit higher with So growth in our production up of XX% up I sales. strength will Total our levels Sales now off equipment year, sales Engine were provide were first up some quarter X%. second businesses. roughly XX% total all context in sales

was benefiting a in related emission up Europe. ramp supported are sales, from growth exhausted new to which emission production further Additionally, standards by

sales of it million However, worth some at a equipment be to lower by sales come to from point we the continue On-Road America, customer. mixed large basis came discontinuation directed prior of XX a buy is year. decline a from modest a presenting of noting The that these headwind. OEM $XX where North margin, reflect decrease impacted majority the

after strength market strong and aftermarket OE end channel production channel North sales results. quarter both Sales output up North On-Road our impact, teens, with XX% in sales all up and $XXX total this growth in notably second In drove most across with in an independent and in Engine market increasing the most broad XX% America, were of across million, channels up geographies, America. were Excluding sales in were markets globally the sales and twenties. the mid approximately XX% in increase high up

I Before aerospace defense. the sales China X% covering were want quarter. touch on in to approximately China. down Engine and

a in Donaldson's awareness geographies. in as relative this the market Despite optimistic However, than from China weakness in XXXX PowerCore technology massive and market. brand XX% are increase as winning we faster last using we other this year against platforms China, rebounded is build the are pandemic

were the up and from $XX benefited million sales as Aerospace commercial XX% to Aerospace strengthening we industry. year-over-year Defense, Moving of second quarter

increasing success our segment to We also products. have had this due our high-quality recent share market within in

$XXX IFS, grew with to growth quarter Industrial filtration Industrial equipment to segment, over the XX% important market. utilization. collection. in with growth We serves from industrial Filtration coming to saw with Industrial process million. food turning capacity replacement $XXX and sales Now, solid segment dust area, both remain beverage high total parts industrial We within Also to growth growth. and our due this double-digit in contributed of sales new or performance the which Sales pleased of XX% increasing that another million had the half Solutions, IFS,

eager leverage the expansion and We customer and market Solaris have increased through are to portfolio market product penetration additional growth. the our contracts drive to of existing

Second timing in is Systems drove variability delivery on $XX increase approximately GTS quarter, Gas this were There as first quarter. sales always timing or Turbine of as the project sales to quarter we shortfall some GTS an in saw degree results. based expected, delivery million of XX% were the offset and reflecting

Second products is growth Special businesses. quarter of sales within double-digit and product of Special semiconductor This $XX our Applications were year-over-year. our up portfolio, increase. membranes sales Also across Applications, venting grew XX% million with including in

reach industry. given pipeline opportunities of a the particularly is strategic and strong. This of the proud customer wins and key vents environment. high-tech including for We the power for this new done, I'm us new and with Overall, the sales tough are the expanding team our has in auto is globally, through program trains pleased our work batteries quarter area

for I Russia, over, affected Before account and impacts. the for call closely Belarus of to sales. areas, the to than the we're total like acknowledge I'd monitoring the turn sales else, business company Like any Ukraine, Currently X% in situation Europe. less situation Eastern everyone

I turn financials. Scott. over Scott for details call Now, the to more will on the

Scott Robinson

Thanks, Tod. Good everyone. morning,

runs. pricing, year, of a to since inflationary fiscal leverage, This the of beginning the continuation quarter themes and we've operating mitigating and expense dry demand, pressures, the strong seen reflects

or Second up adjusted year's for and XX% quarter XX% charges, or X% basis. grew last income restructuring up up prior adjusted EPS on was above sales was an XX%. year, $X.XX XX% Operating the

freight experiencing basis on margin to labor. points to adjusted continued reflecting This quarter in and basis XX XX.X%, pressure points but for increased materials, down Similar year one margin was operating an a quarter was costs the to we're around by basis gross the increased margin due that ago. environment Second was quarter. compounded pressure XXX impact fact last deflationary gross significant

a fiscal margin be the reminder, our quarter second As to expect we for [Indiscernible] this year. gross

margin which significant was pricing is the quarter, strongest the second the actions. instituted month month, gross Within January we

pricing of quarter see in, to layered As each the sequentially second improve we in margin continues year. half the get gross should

our portfolio. remain terms the thoughtful accelerate our with in operating and Strategically, to spend investing advanced expense, are on we continuing future. to by for challenges we our spend, In term commitment near margin allocate line portfolio the balancing to of gross following our approach disciplined

expense points leverage. basis. Driven Second an volume quarter basis favorable as a XXX and GAAP percentage basis, XX.X% of was on points on primarily by favorable adjusted basis XXX a operating sales like by

to statement, to want I on segment sheet touch balance the profitability. flow turning and cash Before

a was X of segments. quarter tale This

on Second year basis. quarter year Engine profit pretax points an margin was over adjusted down XXX XX.X% basis

implement While industrial Through performance on in the certain able more are margin the XX in pricing was basis the of actions largely to areas industrial of and benefits realize to segment an due increases points up is institute dichotomy business. The quickly. much of and time the XX.X% Engine takes of adjusted it we between segments to the X basis. Aftermarket, price our

progress we do. still Engine business our place. While OEM pricing, to our with the contracts we overall while longer and of made in to work Therefore, certain portion process takes due have have

deliveries. balance flow had approach to inflation. our inventories the supply to Now chain order demand, inventories sheet impact cash with a year-over-year, ended the customers to of up proactive million build meet we've Taking mainly million with and sequentially turning due XXX on XX to quarter customer challenges statements. internally and the We and

invested quarter as million $XX including various capital we capacity were in expansion. expenditures projects, Second PowerCore

outstanding end we've quarter the remain our our the the our track we to $XX are repurchased dividends and returning year. form $XX of with we capital line on million to adherence million Also reach acquisitions. target always, committed of amount invested and of in fiscal Year-to-date, this capital repurchases. by As shares shareholders disciplined to X% to which in to deployment priorities, on share our X.X% two

be X.X EBITDA to debt important financial providing flexibility. ended environment balance the with ratio an Our to to this with asset, us net and a quarter continues us challenging sheet of We times. allowing navigate

walk our I'll through Now XXXX outlook. fiscal

sales. on First

increased fiscal XX%, of by for sales negative X%. guidance translation This Engine We guidance previous XX%, ongoing pricing as currency a our of XXXX from driven to actions, full-year first-half about X% XX% to between results, our raised as are momentum and a segment well impact certain in businesses. we've range including Industrial. increasing our and guidance From of both increase, perspective, is sales a

we a For expectation expect revenue up XX% the from Engine XX% X% our previous of increase between and XX%. between and segment, of

mid-teens to forecast up higher we globally and reiterating guidance us our our grow Engine benefit in with combined range low for We for Defense, from continue proprietary of are XX% from continues we low previously as as growth Aerospace now up and Aerospace the the to to in share allow sales from share. Aftermarket. the commercial gains market pricing In double-digits driving estimate gain a high Aftermarket to products the utilization and Defense, forecasting outlook Incremental are while of improve, expected the and and the in now levels first-fit our high-single-digit Engine are Aftermarket previous sales have increase. equipment Aerospace increased businesses. our

In of high market grow versus to our fit continue terms overall expect we first sales demand Off-Road to last due equipment high elevated year remains levels businesses, teens of the end to production. in as

We The issues, year including over Tod also high. remain to Exhaust shortages chip Emissions anticipate mentioned are strength digit driving forecast as ongoing well the prior line single a decrease a impact sales versus as weakness On-Road, broad low discontinued continue as we backlog base, product and customers levels In chain year. year. from earlier, ongoing supply

expectation industrial Now up be our and previous XX%. sales on X% segment, to to of XX% between we the expect versus X

mid our along process special applications, up our single Special drive replacement maintaining and as collection, prior Industrial equipment to guidance in disk with of and the guidance expect versus increased business. range, growth. low digit are double plant our our our for IFS forecast now of are in up for single GTS. for filtration sales within outlook Sales digits particularly dust have applications parts, we digit increase, Solutions will the be Filtration We strength, of drive particularly strength new continued low we

well, acquisitions are fall recent while the as sales we not two category yet material. with and pleased Our integration and numbers into process are outlook, the this

to we the digits continue year-over-year Moving driving to large to GTS, with high-single increase. turbine sales sales be up expect 'XX fiscal

on be margin we the touch on expect year. half the of trajectory positive of gross margins our I'll we growth as do Now move second through the to dynamics,

we However, recent decline points previously to are below expectations only the the results XX this points margin to basis and expected gross to are as quarter XXX cost our down inflation, price reducing XXX anticipated. outlook XXX partially versus be in basis second half were increases offset

XXX to raw to basis for expect XX% between XX% more year-over-year or pay about our We materials, points.

this are labor, headwind and providing freight, energy also Importantly, year. a this notable excludes inflation, which

Although inflation there indicators is off P-X could whole. leveling some as that be a

trails advanced our to Also basis through We indices. have the our be often not cost yet the found buying case. terms, this

driver slightly Given year's an XX%. than XX.X% are expected expense margin operating range the our year of EPS last to our XX.X% of leverage for record a the be our discipline raising of gross are margin $X.XX An is margin $X.XX. dynamics operating on combined operating forecasting slightly on range increase XX.X% of a over versus adjusted $X.XX Based XX%. our and which benefit. we between with EPS to new we from $X.XX with XX.X% Last a to the is the year now XX% and range year's previous previous outlook line, forecast, Expense updated between range. the was adjusted to lower and

as profit first investments to record And be summary, taking made anticipate protect year, for are are earnings business been challenging. for sales steps margins this managing balance that we half capital committed free term think our this outlook, and to the to the we for to about results year. $XXX in of conversion XX% and deliver have the margins regard. Moving the million. $XX forecasted for to expenditures we In year. have flow and financial sheet to to the cash cash Further, the remain fiscal about the flow we long XX% But between and right levels million in our fiscal be

some completed call for the this to project well-deserved Tod, want provide we back to team turning the Before quarter. an I to recognition important

amount our system. shutting our and place. ongoing thank opportunity a tremendous have to the effort, part business systems commitment, involved their cement upgrade execution, days This efforts global for planning, significant infrastructure, the would our upgrade requiring our put want solidify and have making As on not last for without We we five system team plans. in over an our work impossible and in achieve our December, incredible success. week the it of capitalized the the we growth of despite been to in I efforts of to to employees procedures process which our ERP technological a place for completed down

the turn back will call Tod. I Now, to

Tod Carpenter

Scott. Thanks,

to for While this I right most supply I've year inflationary years we're future. my has the seen difficult path been continue on know with chain and in building XX company probably the the Donaldson, environment our

vision Our is clear.

portfolio businesses. our First, and approach existing

have filtration, These to organic in our growth. help engine and industrial will advance accelerate replacement drive parts. aftermarket, We process our maintained and future commitment investing businesses portfolio, including our

the Second, our talked needs diversification. future earlier R&D. globally. Donaldson existing I is about evolving and to to meet commitment of our customers

innovation We prior against year our XXXX. versus year will demonstrate to is that commitment XX% XX% again was this expected up as and prior related investment year, up on product be fiscal

string sciences Our solutions and our remain of Last on years in the cutting a to Diversification acquisitions, the the technology-led the core of come step of the come. acquisition. will form edge engineers strategy ensuring took now in are Solaris we with we and remains for filtration life space world-class quarter, also first pearls focus.

further have already businesses, integrate the As beverage and seen we penetrate we market. tangible food working to the are opportunities to

our interest customers. beverage Given existing and degree food a of high from

regard look hired the people, and out forward deliberate and People inclusion I backbone we and as Our and we and been and Diversity are diversity, about responsible in growth and and Equity food ESG our investments socially to a years the beverage, this this teams of to priority. are people recently company and our Inclusion, life in and of such in equity of build investments our areas our Director come. We employees. how sciences team a quarters efforts in thoughtful have building

to questions. will turn line Operator back the open to call for the Now, I the

Operator

for we'll would in a ask to the question, I compile to like to Instructions], order a moment pause remind roster. [Operator Q&A this At just everyone time,

Blair question Our with first Oppenheimer. from comes Brian

Your open. line is

Brian Blair

Thank you. Good everyone. morning,

Scott Robinson

morning. Good

Tod Carpenter

Morning.

Brian Blair

growth? And your top-line to year, about Thinking team contemplating XX% at how XX% the now lift price the X% within your revised midpoint guidance, and much for price. is the of by what full contribution driven is for volume

Scott Robinson

Sure.

have we XX%. a can of price revenues XX%, volume impact we approximately to X% stay via of increase about you FX of full FX In year So feel throughout about have in have the a And for second -- total quarter, of a a think for at in and FX the impact for year, the a full of of X% total and then X% for headwind the price guidance our XX%. and volume year. we X% of for

Brian Blair

Okay, appreciate in share guy the direct been detail. than Belarus of being That region a And Donaldson. sales. of terms has X% for gains And there Tod, exposure you of mentioned Ukraine, good understandably. been the investing Russia, you've less

impacts strategy not you forward? the understanding potential is are your to the thinking run-rate So the investment how with about material operations, that going to immediate that and impact

Tod Carpenter

a a Yeah, days to the longer-term little It's bit there. just make little call. early to Brian. conflict We're the actually overall over into

choices at. so more -- figure we'll we Ukraine. a Ukraine, we strategic a little after different We to we for area make have fortunate are the have where in And bit country so from out out example, some settles employees actually service do

we have there. However, with employees do many families

we And we we'll longer look so term definition. get more safety at but them, more were that really strategically after consequently, to

Brian Blair

That level portfolio of Advanced what the makes perfect the company? the half, sense. of growth Into your the Accelerate first rate remainder and was versus for set,

Sarika Dhadwal

give that's was it of for up the and combined Brian, quarter cash about flow XX% the I could but XX% business. a

Brian Blair

double-digit is is still Is comps growth. in as Understood. assume healthy And growth it that terms the to double-digits. year. fair for obviously facing before very Process that momentum said you'd expect Filtration that's that Again, intact and of there? growing Tod, full was noted you're stacked you that

Scott Robinson

Yeah, so. we'd say

in current have outlook do that and guide expect we the We yet.

Brian Blair

Okay. Thank again. you

Tod Carpenter

Brian. Thanks,

Operator

Stanley. Morgan from next Our comes with question Cumming Dillon

open. is line Your

Dillon Cumming

I questions, start, the [Indiscernible] guys. getting just Scott, that gross Great. maybe January Good highest which expected it's said went you that that wouldn't speaking. also Couple was a Thanks margin question. have month, morning, guess for of but the

do So is margin the that We're that end absenteeism the was headwinds. you it and the feel like from was quarter? January or confidence of giving the quarter, exiting and worst headlines called still hitting improvement deteriorating gross dynamic here you related the do agree and the you like to in feel margin saw that, you is business you the of that chain supply you sequential improvements kinda all despite in the out or

Scott Robinson

the mean, continued in pretty we I margin tougher performance feel quarter. time the us. Costs the the really for We with increase quarter pleased gross to is weren't in first

days holidays. lot upgrade had absences. oracle our COVID we more increasing We X during system, chase took also have we to to same and And are We prices costs. a of time, that

So we increases always up our to January price going we're was price the saw that gross gross would and and lowest be in come January. in margin be big knew the month layering we second quarter for margin increases. a

We going to prices continuing as to increase. are be have to costs continued increase

the in prices our holidays, in be benefit. throughout position of quarter seems will us, point, move our are going So strong. feel us quarter There's better, Certainly, gross in of fewer just we health over the terms layered a and getting good gives help our as attendance that margin pretty be should in volume that to COVID employees we year. percent, about this to continue be growth to at

continue what give So that confidence those we increase are to margin. things us gross can

Dillon Cumming

color, Scott. for over maybe helpful second. Solaris And That's to thanks, to a then go

now. a of been kind for have the guys quarter hood You under

the new prepared sciences that Tod, beverage new of with can kind Solaris your having think side, of leveraging discussions just terms but is life life any that remarks expand that you customers. food of wins. on I portfolio helped in just of helping learning And conversations and you in in mentioned sciences for kind portfolio those around you has kind

Tod Carpenter

to-date. We're really integration with the happy

had opportunities, well. with bookings to that exceed little the combining been very had we biopharmaceutical corporations, the able that the have partnership. but expectations and have pleased it's We very We specifically prior, so not the actually some on a books bit had and quite happy by the we're integration with some two beverage going food now do and the we within, also meet of so

Dillon Cumming

into sales perspective. hear. That's maybe are comp. off of then good obviously from strong kind I The question just to mean, an a revenue for of there's end that last Aftermarket curious line market goes really quarter this And that I'm me. a tougher lot

in bit Just wondering of of give are color end kind the you little quarter. the on a if markets more kind driving strength which

Tod Carpenter

I the tough and only America, quite rates would would vehicle are side, probably Latin Europe, In is spot. you. and weak, China of going they're Everywhere good, however, be of States, is United so China The parts On nice actually. all areas them those replacement all and strong utilization else Asia-Pacific, the strong. tell in are

Dillon Cumming

time, Okay. the color the for Great. Appreciate guys. and thanks

Tod Carpenter

Thank you.

Operator

Daniel next Rizzo Our comes from with question Jefferies.

line open. is Your

Daniel Rizzo

taking guys. you my Thank for Hi question.

you the wondering goods material You energy if raw out cost of what part sold. headwind a is mentioned was itself was. at and your if meaningful spelled large the headwind of I

Scott Robinson

Yes.

commodity to costs line in So we continuing certainly did are with spell But our quarter, just freight relatively is out last expected worse. increase. slightly what we

Our labor continued well costs increase have as as to energy.

the additional really the commodity that's driving the of majority of so cost increases. price we've seen on top increases And

we've for -- costs really this it of basis we've year. And just minus XXX achieve minus increased where thought estimate our energy of estimate terms gross points. prudent a we in that's margin to our cost as that So and decline move increased were to believe increase was certainly we XX for that we and to to But decent caused XXX experiencing. pricing piece at add we us in that XXX also to can we're those

Daniel Rizzo

follow, I to of -- your so you're And product, any such signs year? affect rough so where because that does just Are taking a if I showing been it's of you price mean, speak, guess customers value-added when pricing if conflict there's because there when are wondering offset also I something a there introduce raising of environment? the we with price just exhausted kind prices new, raise now well, costs, customers -- as but you to was fatigue,

Tod Carpenter

I'm are us well. base, some are and with sort and with our for stabilization out our of everyone sure I there as looking we think normalization customers is supply some

we're that. yet, a People in world tired when it. what with there second you I bite the actions is third apple, it's activities. just doing a cases, many of at it's we're and They our not get in or and look frankly, taking pricing, aligned necessary the to taking those actions. Pricing think However, it. so pricing understand of the and We're fatigue, do

it but be -- has So And get to environment it's and done, cooperating. to are people done. in it

Daniel Rizzo

then And free that's on. flow getting with Okay. again, finally, you was with last your think if it same at everything cash I wondering as I given going conversion, quarter. XX%-XX%, kept more challenging too, just that's

Scott Robinson

are but we are our capital earnings in of account adding of sheet balance working to increasing Certainly, to terms higher, sales. for levels the

So Tod than be ready some going XX%. demand. increasing as demand time higher want to We to dollars There's customers the to relatively to we balance be screw everything inflation. need driven ship conversion. also ready when have want But up. to add We're our it, really their meeting the we're to by be feel when we revenue in to it needs that with in is finish customer levels sheet. And meet our going to cash and our queue XX%. inventory calls shows help to be to and a we grow, Over XX% to comfortable certainly golden

it challenging and on for So estimate it's But think think a top we're to reasonable XX%, I little right a of I the XX% bit now. year.

Daniel Rizzo

very you Thank much.

Operator

Instructions]. [Operator

Operator

is your line Baird, next Mason Our with Robert open. from question comes

Robert Mason

prior question. comment may a just your think the morning. exiting? where you evolved Maybe the back bit. question morning. Thanks you ability how you're rates, on taking -- to Good go good To meet over just the back for fill Tod, go and have quarter on demand to Yes. could

Tod Carpenter

ability however our supply backlog, backlogs for remained company. you delinquent way improved slightly, our has tell our the and the very actually who operate we slightly, chain very and are would remain high our we this fill We improved that to uncomfortable customers

And to so have do. we work

spite holidays the Our we system quarter. hit factories. the down and days impressed shutting improve. still X in were very were our of large across ability able of side. the we well that In our to fulfillment But $XXX with did fulfill on absenteeism them quite fact business spike [Indiscernible] the did We for million to

So we look for a half. solid second

Robert Mason

some you gains the market aerospace aerospace in Okay. share I related area. mentioned commercial

if You quality so the that mentioned sounds just of based that that was sustainable it availability. on than fair? was more the products, Is

Tod Carpenter

Yeah, absolutely.

Scott Robinson

Okay.

will I I question, [Indiscernible], last pricing no expectations, no capturing back trail there, pricing change what picture, this that -- and is was was outlook, half trying any notice your given pricing to point. actions, of the just lagged if timing you just get that could one That's the the the Just to into at your of first calendar in volume? year? pricing larger A this you're there step changes reflective review potentially into actions year what specifically, second and of so

Tod Carpenter

not but would bashful. environment we've commodity had aggressively. the where the end We deflationary much than good things environment. line okay. When were at go and the expand Everybody through We had actions, we we look very gate great able rate sand cycle. greater with negotiate We've cooperation. a the at way chose we pricing executed to to We done We a we even went On be of out OEs. close, continue a come to the we in things went We basis the thought up. knew expected.

And of apple. a the and the very a bite sometimes but of we're third at apple second often not so bite

increase. So gotten I the first the increases we trying add numbers to don't two when the we're think our execution on you get days these would have

world take process. won the and way that wasn't thought we'd planned labor the and So way process a way to the evolved evolved two-step has has freight unnecessary unfortunately be and We it. we It it it's seemed overall and the done now but energy.

yes. that's So

Scott Robinson

thing of headwinds currency one to picked impact Rob, the up a maybe bit. consider And, also

we to have offset that. So

is quarter, compare guidance, last our it than our you're to was at right guidance If of now. to trying old currency the end in new less

having we're to So that. offset

So one you're the variable more in that's think just equation I running.

Robert Mason

Okay, that's helpful. Thank you.

Operator

next Our Drab Blair. with Brian from William comes question

line open. is Your

Brian Drab

affect you my build Good the gas the prices, curious, just questions. project that increasing there over or just potentially? how potentially to the taking I was the And so? pipeline morning. energy year for next business on does turbine Thank

Scott Robinson

long-term types turbine say from would We'll so those see it our down visibility gas any parts be and -- we just because win so bump. would a on effect large degree one-year have term, that probably we than really things oil we projects, Tough visibility to away I of all those bump replacement anything would and that suggest on but the gotten or peak type of have would two-year project, at because remind rather good station. type those more you of pipeline. likely business. moving of we those first-fit be it wouldn't a to are And products, that if base a would that get projects, the I and expand,

The months for bump anything now fiscal into would which likely only next like five this one. into immediate first-fit is than away, year, that we look rather an

Brian Drab

the and in update improved. also, with with could And sure intake now PowerCore? and you've any I if can where your curious in sales America on success share North this, then terms PowerCore, missed give give are What if you not the idea aftermarket of you in how period. an you had us but I'm And the in the too, PowerCore all we're growth now that's with first-fit engine is share Europe? And

Tod Carpenter

PowerCore can within Asia, U.S. numbers with in vehicles. strong, this Off-Road within On-Road is U.S. Within relative tell especially Tod. is the that share you Sarika I'll to in the with model-based lower first-fit Off-Road is Europe Maybe On-Road within I would is Yes, then strong. growth. growing the rapidly. the the China, it's And strong, -- and the within is start in the you give

your would And first-fit is Brazil win then I really We in platforms. those multinational down on really the nicely continue where down Brazil, overall sits say Latin And following America. that quite in that's new is building to there.

And would those strong. market. so very but I lastly, Japan offices would presenting It's it's by driven it not corporate the strong, be areas. really you, then tell by And is the of Brazilian

Sarika Dhadwal

And -- then, Brian

Brian Drab

with XX% after I all, or had just years sorry, at that just first-fit over first? Aftermarket the past, I quantify Can in stick I just I'm going follow-up first like something. share the higher to you've gains -- the in much like like I Europe, or follow-up with was you imagine more can product the -- qualitative, guess? curious, now. line Can Engine like

Scott Robinson

can new mean, programs, programs majority total, we I which as same for have out customer. we increases. quote, we us to And proprietary-fit our percentage as both it's the PowerCore win Aftermarket to products, And with proprietary products. programs of we with our Aftermarket, there, continues Qualitatively, percent drive share, where can. more want percent the the I a of Yes, proprietary grow. the cope say the total, and were the right, of a of those as

so as our total PowerCore you, for a products, percent the non-proprietary And that. So of totals rattle revenues. to Sarika as rates growth a percent, time, our the can feel continues Sure. a you and increase, got off over outperform here for

Brian, total was on a XX%, first-fit up replacement XX%. this XX%, about on So the about side from engine side PowerCore and the perspective quarter,

Brian Drab

much. later. up Thank more follow very Okay. you Thanks. I'll

Sarika Dhadwal

you. Thank

Operator

turn to questions further over no the time. now closing I are at for There will remarks. Carpenter Tod call back this

Tod Carpenter

concludes That forward we wanna our who call. this results morning third to look everyone I thank Goodbye. June. and quarter reporting participated early today's in

Operator

This concludes call. today's conference

disconnect. now may You

Donaldson (DCI) 2 Mar 222022 Q2 Earnings call transcript