PH - Earnings call transcript Q1 2018 | Parker-Hannifin Corporation

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

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2018 Parker-Hannifin Corp. 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 given at that time. [Operator Instructions] As a reminder, today's conference is being recorded. to call like to now would turn over the Ms. I Chief Financial Suever, Officer. Cathy begin. Ma'am, you may

Catherine Suever

Thank morning, Chelsea. year you, Good XXXX quarter Parker-Hannifin's earnings fiscal first release teleconference. and welcome to

Officer, number for are the information and slide Chief today call. company's you'll Officer, Today's audio investor with Banks. one website the today's company's slides, Lee and On be webcast me Joining replay, Operating Chief Executive will year President find Tom following Chairman X, Harbor statements, Reconciliations Williams are appears forward-looking and fiscal will together the our XXXX. number first phstock.com statement X. disclosure presentation at Williams; accessible non-GAAP this to on as Safe Tom at posted non-GAAP Chairman well included quarter the of press on slide and morning's as website financial agenda also for any in Today's begin, are Officer measures measures. provide To on reference Executive and year for Chief release highlights Parker's financial phstock.com. addressing

Following fiscal for quarter year refer performance, open comments call Tom's the we'll the session. company's question-and-answer number then full with the get a first provide and guidance for started now will with Tom a comments, to us few together will the provide as summary of Please slide X, a XXXX. review I'll Tom the highlights.

Thomas Williams

joining we appreciate call, the your and Cathy, for Parker. everybody morning good in thanks Thanks and to interest

general comments conditions talk few So we just the about business a let make me quarter. about and will

but of our on is as across engagement safety the in priority the is that encouraged also on increased which driving company. safety, by top that. focus I'm very from [Analysis] first the well, company is safety our obviously, all across is improvements people, thing do improvements the operational company so continues which right for an turn to impacting a be driving to So the

industrial improvements The Win that. saw greater organic a based so the about the continue last three regions. quarters initiatives general, a generate and standpoint. in customers out feedback margins. across operating increase general and positive, is than growth The an there there production broad business I confidence our in business You from Strategy [indiscernible] confidence to growth orders, growth was would a row markets so in nice characterize very excited announcement both for from If we're on environmental

I two it's years, and since imagine hard announced thought the actually kind to of lot a two so introduced happened but it's Strategy, years. about since back. in been two new years, know we So I has will Win it's reflect been

ago, Strategy sales our actually strategy lots I people of implementation. think Parker can the of this new or our the in previous it think numbers. of think performed years down better back two about The There clear listening, of the for within news see people still and Win the objective the good the working, who days early and two years, that evidence you I is last upside and all that. is is we're are the excited pretty look I tough with is in shareholders, if we're the turn for you're But if on evidence biggest downturn. at second ever the looking the company Win in whether and results climate, any we of in working, than new we history is debt hard our industrial you Strategy

big they and being out. and creating Parker all that creating introduced went when rolling the all part now from after So progress a were you members thank we of the first new a great we're Strategy the for the launch team world for to two the of Win in partner say I because wanted to strategies years around around it, the

the record blocks start, quarter, safety at well. order and it's up on XX% look great So the increased as across the highest you the normally there track at reported of operating XX% move reduction on slightly metrics make segment And performance in out flow organic we great EPS was a this injuries look of you performance since EPS had EPS, of above was adjusted quarter strong quarter, key fully change order level Starting really continue performance. cash XXXX. as and that all recordable that we've nice in on with which come to the and quarter, XX%, going the double-digits and growth increases solid for the let's first to always for do, as rates improvements increased The to first When margins for growth are deliver is XX% at record we so a quarter X%, those, nice sales an the for basis, us fiscal was to nice forward. QX a quarter well. operating

to the the efficient we're on share plan the program bringing maintain to a grow be we and in with for XXbX-X our focus dividends track the So two We're long debt. focus, so it's one growth priorities; to to to CapEx, just comment that buyback way most invest in deployment a consistent dividend have maintaining to quick number continues continue going our on and down and or we're organic the standing record place company dividends of increasing increases. capital continuing our going

from the guidance. outlook; standpoint to $X.XX. This first EPS about So the organic [beat] $X.XX and quarter we midpoint so that the reflects by want outlook I increased we into from that was $X.XX increased adjusted growth estimates to had the at talk an baked

total Parker total another as guide to our So growth new for that company. X.X% from organic X.X% increased previous at organic growth guide we've

goals, driving people. So to Win obviously just two the I'm new a four comment first and now the of each starting going with we're or Strategy to forward, going engage going continue make one quick about

owner, intimacy, responsibility accountability that act your much creates an So you this of if because it an area really if level owner like ownership better of owner like of about you're drives all an is with and culture, an results. creating a think and level

mindset, is premier holistic have focus customer so on our going interaction and an Second with a distributors. to experience to experience; from our experience service going we're customers mindset

So type being fee obviously do that's digital being that's that's space, Things, our of the those so to business delivery quality areas. of leaders in easier to and business create Internet with

under Third really driving as profit couple that's plan the growth goal margins so EPS X% as as that Growing is there on or our operating performance new lean performance; and XX% we're to Fourth initiatives growth; focus. we well the simplification, value that global our strategic as behavior mix. higher. production growth. market, want is of still financial goal the four rolled is enterprise, the new kind And through so the faster financial out organically year-over-year Strategy initiatives focus underpins And performance; ago that supply of incentive than Win pricing. financial well our have the we chain years big industrial a doing that segment grow for and

just separate combined very about is one comment with team CLARCOR Parker as one I'm proud is track, one it's Integration it's really Synergies come one it'll Q&A. going filtration are the and you. has well. CLARCOR, the acting a it's Parker Parker really and team, up we're longer no we've new or group team, very that team. sure functioned a separate And to So really how of communicated team

really continues to forward across board. anticipating and a driving record sum, And in year. we're improvement So the looking we're

with so back to And Cathy you more going on that give details it give to to quarter. I'm the

Catherine Suever

quarter. to for by $X.XX Tom. the first for to I'll earnings compared the now X. year refer like begin This you $X.XX Thanks, addressing per a an I'd to share per same to Adjusted were a share XX%. ago. of for quarter the number slide earnings equates increase quarter

was option out increased that of On to share is tax $X.XX and for been $X.XX. from year due from due higher increase credit on and tax Prior per quarter came adjusted adjusted Operating this income attributable of $X.XX, business the related and to Strategy primarily performance point $X.XX investment. for to of lower improvement by been from income share a Adjusted first an year-over-year year. equated year-over-year has been earnings reduced $X.XX earnings first I'd expense $X.XX. result result The operating adjusted amortization due the $X.XX. adjustments of equated expense. other on $X.XX low and the A realignment year acquisition. higher share meaningful Win higher organic have XXXX primarily of per CLARCOR margins realignment quarter increase taken The earnings segment for $X.XX significant initiatives. as earnings $X.XX growth, of share pension incremental our the rate expenses to walk the most favorable to to expense, of largely For G&A, first income a this adjusted a like with quarter of by have comparison of to X, lower by $X.XX CLARCOR income per new expenses costs of loss to to per higher expense corporate XXXX, include depreciation you'll business purposes, as interest fiscal operating compensation due of the a net total find components of adjusted significant while fiscal income $X.XX of expense expenses stock to $X.XX. to income a lower quarter slide for achieve acquisitions a first

EBITDA for you'll the basis the XX.X% the the points fiscal quarter the new to periods find and better from versus to There in segment in by Strategy sales quarter. a last from year. year the a Parker in be X, amortization EBITDA new adjusted number an slide impacted quarter contribution XX.X% basis adjusted margin of the year currency quarter XXXX. XX.X% an margins for higher improved that first to acquisition, from XX.X% Total basis impacts reflects X.X%. like to XX.X% on positively incremental include quarter fiscal positive with was XXX would Total company from I remind acquisitions, combined year-over-year initiatives. total first while EBITDA benefits improved XXXX for operating quarter operating the improvement on fiscal volume, depreciation margins same sales our prior comparison operating margins. and Win in increased segment so to by X.X%. margins organic Moving margins the This sales will XXXX same

starting America. number North slide X, the with Industrial segments, to I'll Diversified business Moving discuss

the XX.X% sales sales the for organic this volume and during in increased compared American the quarter, For year. reflecting margin in for Operating sales, Aerospace same in costs, reduced on prior positively sales commercial quarter. acquisitions by by versus while impacted impacted of I'll for in Industrial currency for North costs decreased XX.X%, first sales year-over-year XX.X% prior with slide move impact I'll number year. XX.X% Systems were the the rest an versus also sales mix aftermarket positively and quarter. on X.X% first year. XX.X% increased the volume was XX first for Operating segment XX.X% basis Reduced of year, the partially quarter anticipated XX.X% in strength prior sales year. was the related the contributed to during aftermarket of to the quarter the the Acquisitions X.X%, sales, by revenues sales X%. X. segment. X.X% last the of Organic the the first first the volume increased Operating to currency basis XX.X% quarter. was quarter review now the versus for military quarter, offset quarter margin timing continue the quarter. the first margin number development of adjusted Industrial International of for the by adjusted as timing by segment the of positively greater to fiscal slide on Organic aftermarket is Diversified while realignment sales quarter in adjusted an International was impacted OEM and Much

XX, number show rates we order slide details the by on segments. to Moving

and North sales a on X.X% as strong sales increases we an As range of growth The positive cash to cash Year-to-date number a percentage the On a have X.X% are positive Industrial the the from on X.X%. XXXX. or expected year Diversified for XX% fiscal year expected a activities. have International reported million segments is be adjusted are compared in Industrial is operating This while and contribution a million the XX, for expenditures represent was same Total reminder, rolling end. to orders. by for sales. from year. $XXX repurchases XX% XX% The to prior adjusted pension for X% operating currency capital the activities million Total sales divestitures from to period The rolling guidance in or a significant currency. orders of guidance X.X% XX-month XX. outlined average be year-over-year XX.X% the shares. Diversified been an the full and Parker report expected reported three-month for X.X% both $XXX from sales harbor or discretionary on Guidance improving of Acquisitions Systems Aerospace is the a capital of safe Systems Diversified made continue to $XX slide the absolute orders, allocations last is XX.X% XX.X% number on of orders earnings shareholder $XX midpoint Aerospace acquisitions, as impact fiscal organic and basis. based orders of as million made average. to provided Anticipated payment on X.X% common report last Industrial at and the are impact in average, dividends, flow of company's full for slide and year the are from to flow sales year-to-date American year improvement $XX for dollars XXXX compared up being increase trailing excluding year quarter year-over-year, year million positive

rates calculated XX, quarter September to have impact the spot We of currencies of as the XXXX. ended

impact steady fiscal resulting those for have rates year-over-year held remaining as of the quarters estimate year we We XXXX. the

tax be segment of be adjusted the first is and in The forecasted result favorable forecasted quarter. total as now XX.X%. operating down from XX.X% margins between be between as while XX% guide operating a tax full projected XX% XX.X% year For Parker, rate to stock margins are option are previous our of and reported to segment XX.X%, to credits realized a

the full range guidance now $X.XX For the earnings on the now guidance at at to reported adjusted an per midpoint. the $X.XX basis, midpoint. or the $X.XX range $X.XX earnings On basis an as $X.XX is $X.XX share to share year, or is per

the to excludes on or business basis initiatives XXXX. loss million sale In expenses of guidance approximately realignment million this $X.XX $XX addition related to of year $XX Savings for be are full investment adjusted fiscal of from the the business per $XX share, an projected realignment to an of million.

from in remain $XXX forecasted an ask rate costs on 'XX. the business consistent realize realignment CLARCOR representing achieve CLARCOR year fiscal are adjusted publish $XX ranges. are in by the of Savings pace $XX continue 'XX. your year-over-year guidance to excludes to to margin you achieve to all We In million a addition, savings guidance basis operating estimated year savings reflected CLARCOR adjusted purposes both expenses. estimates and and adjusted for We of synergy fully costs that as synergy on to run be guidance the more comparison. fiscal reported million million using

Increases adjusted second quarter half; adjusted first share per out. to are EPS CLARCOR the earnings half, gain for of at of XX% adjusted XXXX second at projected fiscal interest $X.XX your this reduced share $X.XX $X.XX these fiscal a year excludes I'll during excludes $X.XX XX%, per 'XX first comments. on please income, $X.XX remainder $X.XX costs previously acquisitions that for Offsetting major to call guidance assumptions turn second $X.XX to higher year forecast share my midpoint, are, per concludes increases at might of divided sale slide include midpoint key QX you'll This $X.XX comparing segment which you not XXXX. fiscal forecasted. additional earnings segment half a is to per stronger G&A. Tom, of find per On the share. and half; is first the is number that XX%; be the compared prior the other adjusted projected line reconciliation achieve. divestitures guidance income half, XX% than divided and rate XXXX business of year Please XX% divided the per was operating close When per second corporate from guidance share realignment and prepared from from is Some back share tax full midpoint; decrease comments. $X.XX $X.XX XXXX FY any sales to remember components the or product operating of expenses results, XX% projected projected expense remember and the a that summary XX, last a share included half, the adjusted from for of lower

Thomas Williams

Thanks, Cathy.

So with we're pleased very the of start year. the

sales continue will here of lower going Win Strategy. even lower of structure the integration on past think we couple cost the I we on factors; but of the combination that to working further, to CLARCOR have have what a of and we been work growth, on execution is

of that's XXXX. to driving provide combining a these us a to project record forced All very together fiscal are powerful in year combination

again for all hand you team Chelsea portion global it hard your So the start and And the efforts to your call. Q&A I work, all thank to to dedication. your of the off to want

Operator

first Jones the Thank Instructions] with Nathan Our of you. comes Stifel. from question line [Operator

Adam Farley

morning, good Hi for Adam Nathan. on this is Farley

So it from growth what this changes big guidance markets looks going to out also of the regions the like driving the Industrial, came in end the growth? -- driving revenue midpoint. and XX.X% What International are are at one

Thomas Williams

single So North details. just to Lee changing growing Middle particularly it to give over Africa teens digits. low in consistent more America then we Adam of and America to was saw was in months. Europe, start and international. be low is and both Well But entry Latin and it region last was international Asia the in at in quarter East order in continue three the But throughout you the in me strong, kind entry looking that hand order interesting what's our over was let guide the pretty

X%, XX%. that plus pretty grew combination tough a of was comp that plus pretty against So strong. Aerospace

about that looked in put Africa at second year at the a second only, FYXX. I comparing itself we you what when X.X%. and you and Industrial were piece the so North we and the that had customers at projecting I'm looked -- we for the feedback to first if whole the guidance and it's XX.X% half by our X% But the all is at second the half, half. in Industrial from of looking America So recognize for look company X.X% half the plus at for raised and taking we then distributors, we for

standpoint So calendar remember so but clicking started nice is an this from X%. against year January and we're comparing really of of organic of we pretty this plus still on there top gross growth

So market I end is say let that base the -- comment This and details participating. broad would Lee about region every every for here.

will I further So color. give let Lee you

Lee Banks

Yeah.

through entry you just the the and one to markets. I short think just move of for the will and for the off give growth then Aerospace piggy from Aerospace our a the and Industrial was backing commentary with will of fall I will know segments, we in last the my we're start Maybe walking come just will did QX, but segments forecasting and maybe to up, order really participated. the into added on it way question because work broad I call different I still regular expectations continue year. Tom little direction all regions based expected

was content Commercial All of for on. was by the really year breaking MRO it look on being side, fiscal for will OEM place provisioning goes we this manufactured production close negative do fiscal the strong OEM that and goes we strong at just an primarily then slightly for mix really fleets I'd would spares for we're MRO military But the new in underpinnings see a quarter, down, a soft. see as see MRO platforms the expect we of was today. which clearly year but timing, market that by some negative gap being really then the say as of for different F-XX of the really confident as us continue Just that slightly growth market and headwind much. positive was the be [varying] in us. the different put are platforms amounts And for I'd but It timing. this move was and still increase Again as us. some year through last the negative not to growth military that with it's being we the the as for to in on say headwind market. used accelerate impacted commercial we in year. We

high find resource we the look quarter. North just strong. a natural that broad to continue any land as Industrial, have strong. strong. in So agriculture Aerospace. entry A really based highlight some significant North end we very positive but quarter. mostly region, in a of our to America America map strong, that's a end would equipment, through talk see of and the some heat mining really second. more it's in market if based level markets gas to by construction markets, during hard is and a markets Really This On be kind areas on And year-over-year very include I'll about order growth you oil growth natural Class talk Micro truck we during and electronics industry about continues to those

storage pick doubled last they're out. for up did come coming since about rigs oil gas. all cold although refurbished entry have great an order these we base. nearly also Just in are appreciable out see Rigs But some which little of year, quotes and a distribution our is and being activities. bit all And and really

[to good. activity be continuing optimistic. that the continues very They're rebound partners So world. from very around distributor our see] to We're also

we loose project in real about market in country. talked markets telltale natural today to is strong a And which of good been base And very end our be year-over-year being Tom end and all mix then but increasing and us an for of and market. and the that's in of It's resource really globe, growth. order the about power mentioned lot markets positive growth of on from for strong by then in we when activity. then we economy work. starting only sign very one applied just are been do really project say they've encouraged just we're think strength infrastructure partners, with generation. seen around a see me really distributor talked with has our the the real an about. that EMEA very not increase MRO in by capital continue signs North marine. lead China we they a the I opinion to strictly customers, EMEA some distributor Asia, activity turbines -- across markets. industrial the feel is see continued the end notable the strong. I resources end China end second investment talk to And when continues commentary. forecasting America I increase And to housing natural from really This the our strong saw for I year organic regional quickly and was work. on the entry to led has I'd

I just global right encouraged now. end to say would very So sentiment strong and markets really internationally there our domestically by just with clear positive happening both what's we're growth is a and

Adam Farley

All it along. so right. you much. will Thank That's great. pass I

Operator

Thank you.

Tiss Capital Our the next line question Markets. BMO comes Joel with of from

open. Your line is

Joel Tiss

the including second, a me take if amortization? dilutive was to going Can was not prepared. to CLARCOR operating you I margins, that accretive say That's the or

Catherine Suever

beginning we the additional we're accretion the amortization deal, CLARCOR year. of accretive of That $X.XX that on that year, $X.XX year, the gave the as and so depreciation for we from see track Joel the the as we includes are at guidance of for Yeah. because interest incurring on impact the well of that.

Joel Tiss

operating what I the in was putting the there? margins meant from CLARCOR margins, operating the change on in

Catherine Suever

Yeah. what filtration They with historically in so you normal saw with in margins. line group, CLARCOR our are and for line

Joel Tiss

why Thank operating down And Okay. flow you. Then year-over-year? done. I the on the cash was am wondered, just I

Catherine Suever

Sure.

doing sales. little we're in percent is the us prepare footprint be higher capital quarter the for first normal to our as the out that some bit trends quarter through or moves of volume year. CLARCOR, We capital the quarter cash for and a we're higher we We're quarter to some unusual. greater First But than XX% of for at that also so building the operations. a we year In inventory still from the of are to building that the rest investment not will always low match recover to integrate incurring. expect for working of

Operator

The you. Thank Cook from question comes line the next Suisse. with of Jamie Credit

line open. Your is

Jamie Cook

that how any in guess the terms first revenue sort then the second of in Parker's international of in front? just [gaining] laid out are of 'XX you my or talked $XXX CLARCOR plan some Was question. I that questions, international couple sorry, I we business the tracking just to starting guess sort that's on my gain core and question, savings you of of the -- the we're strength you all markets. guys about And potential traction synergies, should seeing million? see traction terms in CLARCOR that to

Thomas Williams

and all far legacy as strength, same The same, that's saw strength the Tom. we international are is of as that Parker international. across markets this because end Jamie markets Okay. the one CLARCOR's the end

I've of million them as the working on hard, to our we on deliver synergies we revenue but mentioned view the -- we before On of commitment also make always synergies. $XXX them shareholders all have have sure continuously always our to we

we so going if FYXX encourage because the realistically if not, the into publically are of FYXX, to to that anyhow. trying some we do that even disclose you were I won't would you on it, stuff to not into Regarding -- we're see revenue bake which them synergies, any of

on you still comments we're target, we've just integrated the got an making these remember to revenue million, But cadence end office, about encourage regions. $XXX would we here. have formed around I overall we based And So savings very feel great on on -- good management synergies on markets a factor that. the and management we product

track. We all categories have value are productivity, the key SG&A couple adjusted of buckets; creation manufacturing, on would footprint, around a synergy of and be the major teams material, all them

very by the the what encouraged we're technologies seen the culturally projected So savings. fit and both we've

we them. about feel very good So

Jamie Cook

markets And where the commentary. sorry Tom, overheating on any or the markets follow-up on terms market a strength is end just looking at there you're based of the in sustainable? not that is

Thomas Williams

Jamie, [the last thing]…

Jamie Cook

can Sorry me? you hear

Thomas Williams

ahead. go Yeah,

Jamie Cook

the market Just in but of are there seeing very just warning wondering of markets terms talk people not was concerned strength that everything the for in I'm overheating? lot -- any any you're I are know signs. being A sustainable. China about end commentary, positive

Thomas Williams

Yeah.

from going to some digits And China that something going it's look -- growing at normalized make those usage. down will glide digits at be China low continue comparables grow be some And good -- -- is to a double going very in us. glide electrical strong when comparables, for naturally it's to of just macro But it is continue to going to rail at we and pace growth it's going going there. to up but look it's to to rail have to that's not to freight plan double usage against are indicators now. the output general, you I bump more type think like the that

Jamie Cook

in queue. I'll you. get Thank back Okay.

Catherine Suever

Jamie. Thanks,

Operator

Dobre Mig Baird. Thank you. is with from next And our question

Your line is open.

Mig Dobre

who been the Tom question, here. word the that's over the And last and I And your from stock. of has impressive months. Good someone Yes. a just sidelines everyone. really team the my especially has on coming couple been morning ask performance the on XX before quick last years,

job. great guys, to hat my tip I So

Thomas Williams

all I and Mig us. ahead on let thank question. your you the ask just of Go ask before of behalf you question,

Mig Dobre

more one is progression of year. half discussions to my I question. about of organic in here comps the that how last the collectively of So the we had quarter growth difficult was and remember back think

least order from the to nicely. enough quite out? what you thinking from potentially momentum to you comps? those we're quarter puts more your how I the that Do has are at is and at business you more comps that intake Looking difficult perspective, difficult these are your ride buck this of guess able about takes seeing think

Thomas Williams

is Tom. this Mig

that on On to in of week] will order our the the business, Industrial entry standpoint. -- visibility typically be our like portion remember [X the X

year and going first and the confidence into So obviously half lot the January. more have we visibility in of a

mentioned a reflective the did bit pattern the XX.X% like what that's and easier -- comps order but half growth, for half last the this again little this So, of two internationally I before that industrially but we Industrial growth quarter year, X% year. X.X% we're two quarters our of fiscal that the in had that Remember Then last second of range. the seeing. quarters organic we first is calendar again first

or that when a So X% of all top was in we that feeling the given norm. pretty growth the were living good. we world about it that, got growth on will we negative I feels feel pretty Especially were like new be X% if and X% good

update very So feel an January, good. of then It you there doesn't And update we'll course we'll growth if January. of too that, that than think kind feels more is over in rate you in give like give far certainly SKUs. our there we're we an

Mig Dobre

my And maybe margin the color Aerospace. more Understood. in follow up, on a little

of of the for You've changing things that exactly margin to the some what's order us guidance? get rest kind to called out year your in quarter. this help understand helped Maybe

Catherine Suever

Yeah, terms In Mig, quarter aftermarket overall of a this the take mix mix. in just I general will of we one. the better saw

We a little on than also bit development were lighter costs. our usual

of the the those the will development Now of rest costs, during costs of and the year. some rest incur that timing was of

X.X% They first the costs quarter. were We X.X% subsequent quarters. for shift to than the to the in will And mix that for be normal still lighter Aerospace expect of we the think the around aftermarket in back trends development to sales year.

Mig Dobre

cost margin from from or costs? dollar impact Any value this shift, sense development on these the the

Catherine Suever

compared The development $XX million the to to light roughly quarter million normal. this costs $XX

Operator

Thank you.

the with JPMorgan. comes Our question of line Duignan Ann next from

Your open. line is

Ann Duignan

think that? going Are I How to have cuts Can about the integration? accelerate to into year cost How the achieve we pulling coming going forward, million should from to the just are or perspective? little you costs the mean bit our we in integration. should about $XXX $XXX we million? a than that more synergies about a and think achieve CLARCOR there, we model talk we

Thomas Williams

let the on in think Investor Tom, one is obviously lot number still spring staying of I whole like what in picked some quarters this go in Ann, right should at people I and detail date], marked give the number smarter you a more the we $XXX is to we're we also we think $XXX of of progressing a are [save and to a our land. do educate know, year of have might year. going one and acquisition a where that part the that next we and with be we the lot us have think our seen million investor for with would posted because next you because point. so Day of But this to want the like more the that in spring time We how the million. to year, thing we update, question, at -- that couple The at least of anniversary the still feels is

Ann Duignan

to total? questions us will China time. but would Okay. that. been take other my for I be share have you appreciate big That of with how Parker answered, willing Most is

Thomas Williams

No.

off effort see East really can than South are remember third probably region, where Asia lot know from know the North our We Germany won't China years has our not for Asia Then just second better doing You Korea with China is competing any. one at or It's comeback was, U.S., look But bottom. so be and is progression. you that. I me know the coming years. spot. only a Japan able and second better of the would story. you probably give good entire of you largest it But I after Australia our I country of in of Asia, kind having that is the and strong. than it India across to

it's Asia singular not good So story. broad a that I is a based with for us part the story, feel China about it's Asia

Ann Duignan

negative better, see, there Is it's before. the about top And you recovery a right out never end sustainable in speed that to anything cloud as mean we've hard markets do always. coordinated worried for any find [I about are such I there now at to that have seen this? wanted] look, as but What you will

Thomas Williams

more than business in a And and you've not because you across period PMI previous at strong But had I the been your PMIs seen that in is different common feeling is Industrials. the It board. gotten consistently but have to treaded most great regions and across 'XX has to the this a on. a pull encouraging that described, this of customers if think very is recover where had and 'XX much is Industrials There the it's we you then a I course an and think pretty analysis activity time this My 'XX somewhat Industrials. starting eras recession Industrials 'XX And general 'XX. was really When 'XX the time Then water memory beginning that 'XX the of we look point same year. which like at your 'XX 'XX this lot of led industrial this we've sentiment kind just from data where word made for era. XX feels the my I've I calendar start, rare the spot conditions strong think a China beginning question was years the you time have whole to to resource to the way now answer 'XX, done. recession going the maybe and little different be period to then the and we to China from going of look Industrials of long is as a that it's and rebound period, sense outpaced distributors recovery driven at and in Industrial the because back right, natural globalization to to 'XX really feels to for last 'XX. GDP have and and

slightly of out up going of was growth sky PMIs we in day But this 'XX I nobody have treading be that to go what that different. Where but Trees a 'XX. expected. I'm to that to kind pattern sustainable more So the not finally water spotting forever. have have ends so feels their don't of I may look this heard we [influenced] does grow the up what for are -- not industrial Industrials to break think

world. X.X% talking that think we're next lands going like learn Strategy, now, number I we're Win all we one the about feel the years. to when Doesn't new quarters and but launched right several over it

Ann Duignan

in then that And will leave I Thanks. any inflation And labor there. world? note yet are it seeing the you on anywhere

Thomas Williams

out No, again will Tom. the norm. say of Ann, -- I I'll nothing it's continue,

Ann Duignan

thanks. Okay appreciate. I'll the in back get queue,

Catherine Suever

Thanks, Ann.

Operator

with Joe Sachs. of And our next Ritchie question comes Goldman from the line

Joe Ritchie

morning good and Thanks everybody.

Catherine Suever

Joe. morning, Good

Joe Ritchie

bit distributor XQ I strong build And like sense. side, with you on when rates is inventory quarter. about this the curious in see still you Maybe you growth on for just through clearly of mentioned lot tend of you where makes think maybe a a selling the color you prepared in sell comments a which you really I'm versus today? can think the distributor inventories guys typically think your seasonally that are provide [Parker] little of to XQ

Lee Banks

the distribution reacted its Lee. a market order rapid pull would the part. statement the of distribution Joe level. this entry OEM last build right through say quarter about end inventory for in the market end like we level most general to through. and at in increase little I a level I at pull feels rebound would at say now, talked as it I is a the have bit will People and characterize

Joe Ritchie

then some And million year. kind asked synergy if quarter costs questions versus $XX CLARCOR targets. around about earlier put I is $X you for through One the achieve on noticed of and million were I the through that of think it I this thing of follow the to

the any once that? more to support loaded was just there color any wasn't front on end reason again Just why just expectations the synergy spend curious and

Catherine Suever

did Yeah this mergers some of a that shift we the the Cathy. timing of footprint in We Joe integration. little whole had is bit the planned

year. the the costs were quarter for later those more towards in so as projected originally the And shifted

million favorable the as get. for $XX to However, track year on we and predicted other expected, about so half we some than coming savings year. savings savings going are in we savings about the we're the the would we in We're offsetting that for had have half for the with the second see XX% of the first earlier XX% through of

Thomas Williams

more just thinking they if traditional just general to accelerate if when the on do be Joe, we this going are closures, whether to is the our to add planned teams related closure could characterize In CLARCOR on. were ambitious its of Tom, or I I on more coordinate timing tend and restructuring, the them tend always so came tricky to is and timing to recognizing all we they to things can a closures the all try done. target, we're But announcements from that savings let get the their that that. run aggressive and sometimes planned forecasting to on conservative

for So for that QX, and we the what don't costs, out actual why back see that's in us savings of our and year. the you were come QX like the come was will QX you see year projections, savings up with this conservative on QX rest the

Joe Ritchie

wage I it. -- margins impact going know much Ann I'm this as costs be on That's well. I there a quarter whether America America the was margins? about an there from of any last you was North curious issue inflation quarter. price commodity But, asked hear saw and question. mix know there on was clearly this may great inflation. just to just know Got North impact the I

Lee Banks

Lee, mean no. is net the its I Joe,

such seen commodity really inflations lot is that we where of a have an copper, we issue some exposure. have but where We have as

through. have hits customers We a contracts got we that pass with our that it level certain

year-over-year kind the that's others So really think of they the that I but out. up can of, volatile flattened only are one are

Operator

with from And ISI. next the Raso of question comes our line you. David Thank Evercore

David Raso

of the anniversary and the I to book I'm year-over-year on price I'm sequencing the really so incrementals, it to way if the of of this just push the just forth, you the so majority of the back your at by the least appear much you just the about trying It anniversaried breadth half you laid year, the comments and trying second of we in have deal. to that doesn't understand, that And are given CLARCOR half properly though the of by reading market? and order second you're ability of then improvement out in on real think the the through assuming am year, have sort where even way splits. half any and

Catherine Suever

with currently you, legacy the adjust because a to share David. me today, to -- break we're like enough out margins with we're looks We're doing Parker Let seeing good first struggling numbers it what CLARCOR. job year anticipating the for we the integrating But balance XX% Parker. still rough for total internally as we're incrementals estimates, very in for year nice at the of it legacy or look

the year have by the to the we impacted on but by end, and the we're full track low CLARCOR will for amortization being we're in So depreciation expense, incrementals have additional XXs.

David Raso

half? Well XX% I be if on little guess you given trying or in incremental for give the year. I costs to pricing would the color mean a looking more I'm we the to think are second thinking the second half CLARCOR, getting I a XX% the about bigger versus have through you're in first us just improvement in half put the anniversarying just natural thought not half, numbers, the all-in price improvement, help of first could maybe you from the incrementals half, it I'm and the for second

fiscal exiting run of calendar Just as earnings people try of to 'XX. think rate about the thinking a year

Lee Banks

we the to selling Lee. positive our separation I back its going ever guidance price We're expecting we say year. a would gave. on -- price David costs index, forecast it

We separation and index. expect be we between year positive a and expect mildly that for that to the purchase price our

the year. the in second forecasting any in we're So pricing not wild acceleration half of

David Raso

the it on in actually was of just half, guide the is mentioned guidance, growth rate comp? And is really calm. in of a second any in slowdown it's the end in you've per markets that Industrial, function case no the the se there the And largely slower

Thomas Williams

And it. It's characterize how Tom, I would that's David.

David Raso

All terrific. right Thank you.

Catherine Suever

you, Thank David.

Operator

And Wells is comes now Casey, Andy our from with Securities. Casey line the Mr. of Fargo question your open. next line

Andy Casey

that. and about morning Sorry Good thanks.

maybe chain supply what have based components? of us broad you you did some you give strength, sort the on can constraints With any seen and if color

Lee Banks

it's Lee. Andy

abnormal. obviously It's we would ramp that be is it anytime was this we're managing I everything that like nothing noise. have to a there through. consider But So

now. really are out. nothing components strike causing out is problems there would strike major no there that right So And is, could really us I that I

Thomas Williams

are just not at or even indicator of if from standpoint. Tom, is basically this you okay total three Andy it's company One we pretty, order of flat whether the on. backlog, is with to look stayed increases a our strong quarters entry good tag

up. customers have of we our strong go do not our our been improve So we able increase But customers. to and if recognize to want times this are better and delivery backlog to pretty listening, any we've with our absorb

Andy Casey

longer Strategy. Okay, thank And back I Win step the if term and look you. then at

multichannel You to above selling bunch Industrial production. get of talked techniques about a whole

left there parts than Win running the already. it would to Is kind is better any or are Strategy certain big have just you there You're of of within thought? accomplish thing it running

Thomas Williams

Tom. it's Andy

a still there of at lots is think still systems If I opportunities lot look I of services, there. opportunities. innovation,

mix this round share distribution use than do still it is see whole internationally, lighter to to XX% just to would like opportunity numbers, motion that. is so still Our there we're Collectively, we control space. I'm going only about market in

points that XXX What we bps, top demonstrates quartile cycle take and So a when is what cycle. and there demonstrate a companies XXX at want want industrial is to the over But to easier we refluxing -- over demonstrate I that our we opportunity us for because up. basis also do greater global big of refluxing be period rebounding is that's production share. average people to over multi-year than cycle. It's the can beginning and are of that really to intention can grow to -- would we time

that's trick real time. So longer believe me a three happy quite that. over quarters we're happy period it will of The we're a be why in with really with row, doing

Andy Casey

Okay there you're and still acquisition kind pipeline, you're thanks if you Can looking integrating the but are on know and allocation. capital I'm I then integration, wondering that of at? with track opportunities last question the CLARCOR any more on comment

Thomas Williams

it Tom Andy is So again.

there our So the organic the I've most will effort And just of standing first company. strategies. would switch and be down growth, the is just it CapEx the to to going at going give debt work because know on because are dividends our going still growth can as obviously turn those on. the capital side But obviously the off, not the things, We're for grow I pipeline, some we're relationships mentioned earlier, and those to deployment sight let everybody back that These as going I anything to corporation. pay we share still to relationships. something you're plan long ability part to respective right reviewed we're well. targets vision have We're acquisitions all as so work can't point the of that as glide are at I those on efficient our start -- fit turn -- debt. we path that of looking of will a organic we groups repurchase growth in do continue strategic way down Those strategy line to

So are we we know to have -- them. and what those we will continue work

acquisition. the assertive and will will that to cash you And let balance of great and heard and to side be of deployers want at we time, includes appropriate some great sheet me and we certainly side know an deployers As of before, of we continue characterize] [whatever have those ready. we're we work say will generators you great cash that cash when have

Operator

Jeff And Hammond line our next question comes from KeyBanc the Capital of with Markets.

Jeff Hammond

the clear opportunity? you as Just revenue showing groups want synergies have on the to early or identified are what of together are quantify that but up you know you synergy talk some they I opportunities just revenue as get yet, where don't CLARCOR,

Thomas Williams

just Those [indiscernible] there carried XX% is can complimentary, balanced channels Jeff you it level. is are so we opportunities. this globally, this CLARCOR why I Tom, are have we are on channel strong, for various since high these opportunities, stronger the so we really are our aftermarket is America the characterize OEM which being we will because and the line curve regional And the a channel is partners. opportunities then so North OEM. business, at on is more CLARCOR much opportunities, line regional are product number one love

breadth leverage to be going we're can in, a as well those relationships, filtration may we that which as if technologies have we of broader leverage. growing OEM So

Investor could Again analysts think that and CLARCOR are the more to a they the part So And on take discussion hard. you would OEM the go we're three 'XX being channel, area. I OEM broad region just when 'XX Day numbers we in to you in again hit those more they the if as plan to areas, I lot encourage going with. extensive we the into big we work will certainly and spring. portfolio not be the working are update because clarity, a those of and give And can more those

Jeff Hammond

And then fastest? the one if opportunities, look where you move at three you it which those expect -- to would

Thomas Williams

going Not all that know comment to on as you Jeff, equally. of working we're them

Operator

Stanley. question the next our comes with And line from Morgan Nigel of Coe

Dillon Cumming

CLARCOR of quarter Good kind sight you CLARCOR, at bit be Cumming in to kind wanted headwinds? just guys you that you clear have of so manufacturing guys efficiencies. possible come Nigel, sort [indiscernible] short-term here some margin have last back morning on next and of through do you worked will is are guys. This a or expecting pressures in to there, XQ, Dillon integration pressure couple of margins back still some still some about line here on quarters in consolidation kind of those for of the there, talked through Obviously a

Catherine Suever

into than though seeing consolidation. did had planned. in in so that footprint less we're and other savings see footprint And push quarter that we're Other Some fourth on we're savings for footprints the of quarter. track when of and synergy we out, come play third than the come the in emerging more first the merging originally inefficiencies than we areas you'll and that we did other will the quarter

Dillon Cumming

Got maybe that's a helpful. longer here. it then And question term just

a the to what see have still strategy in just wondered some in growth sales international the kind you extent, driving I the distribution to we region? desire that upside of out of think international segment. are how grow if I in progressing is you and and could the the footprint

Lee Banks

new --this the really We've key people This of on developing working got around Middle a continued talking. us Asia progress progress globe. senior and we've has initiative This a and some EMEA, of parts this our great EMEA throughout Lee and key developing and the been Europe. refresh a really Southeast as dedicated Win Strategy. Africa Asia, in had for is prior And has been parts East of

bottom So line we're progress. is making great

think I in our and that our you sales margins. reflected in see

Dillon Cumming

the Got guys. time it. Appreciate

Catherine Suever

Okay. Thanks Dillon.

Operator

with the Research. Neil from of Frohnapple Buckingham question next our And you. comes line Thank

Neil Frohnapple

sales on to pertaining Pertaining you're organic the organic congrats quarter to Hi expecting last a digit you factoring this I'm on curious what I revenue growth great that growth. think quarter. indicated you're guidance, year? CLARCOR in for low-single

that? provide update So you wondering if can on an

Catherine Suever

say at Yeah. I now would digits. we're looking mid-single more

Neil Frohnapple

Okay.

similar the business. base So to

Catherine Suever

Correct.

Neil Frohnapple

about a increased International. more to margin And for as then maybe David's outlook I the you Diversified could mean follow-up question. talk

similar midpoint guidance. I implied in margin implied the incremental think for the incremental to the segment the at the margin original

in is higher approach growth given wait year? see something from early or precluding more in experiencing of the still So we there and organic expectations are you a guys step is a flow how through to it up

Catherine Suever

the in early it's say would I Yeah. year still.

Win that's lot we're yet. in are to a working. hoping costs result the the Europe little the as seeing improvement margin comes a been helping. through we've fixed But growth margins initiatives as it's We've and the see We of Strategy eliminated of a early but incremental

Neil Frohnapple

Okay great. Thanks, I'll pass it on.

Operator

question our the line Thein comes of Thank Research. next from you. And Timothy with Citi

Timothy Thein

Great. Thank you.

been costs really back guess extremely today? at from and where circling are for [facilitated], strength going that is room you facilities revenue volumes? on I'm I meet additional just discussion just that region whether Is earlier low spirit back had Asia benefited that a given which is in the in obviously ample there up years few going a while. is on or operating creeping back where facilities the are facilitated a you've higher the has there wondering the obviously operating to And in question Just the within And rates. start that be to still those pick the we on able their

Thomas Williams

it's Tom. Tim

So on Asia right. you're

memory. good a have You

with what some Over more targeted Asia in from in pretty good we need some. really into growing a to add advance investments in the any It things additional be the and [lease] will and don't really grown and XX be CapEx those selective. some years very of or here it have shape. equipment purchases, we've will of But last made be very combination mortar, well equipment brick piece two. and We we'll of lean --

Timothy Thein

Okay. In margin at about least still that a that is to least relative I'm to relative above well whole, Europe? Asia region -- at and international average as just thinking guessing

Thomas Williams

a So margins. grows Tim, is. corresponding yes And that's Asia why Tom this why as we that's lift get is international it again, nice

Timothy Thein

thinking you're Just -- division terms about potential those And Okay. where I'm when count consolidation, the rather on are FYXX? come looking end what thinking there? of savings just group Tom in you obviously curious you're and where the then to just quickly,

Thomas Williams

Just refresh for refresh its again, phone. people as -- the Tom on to

we you end number, XXX to [editing] XX XXX It's process. to sense to We're to XX% require as The the So growth our cost approximately of kind technologies. as that's so that XX not going a XX, in something but that's going people to as is and company this logically makes consolidation constantly working we're change pace that's what will for divisions look are or through XX XX roughly common not synergies from the far started common a truly and to year. of we at. of markets synergies, going XXX divisions And we're something remember going grow to continue go some from be if slow. combined, that

continue not cost we from customers pace. it that makes be for So sense a will whatever point. will at and our And stand

and that the to positive little the revenue out some become big the actions on going the But bit whole it's go business or with. driver glide down, being more. a XX-XX be look so year less complexity a more able simplification will So by of to

simplification out the of is complexity. several next Our business [indiscernible] strategy the was next around the carry we're XX-XX years. going concept revenue to That level

Timothy Thein

Great. Thanks Tom. Okay.

Catherine Suever

Thank Tim. you

Okay.

Parker-Hannifin (PH) 2 Nov 172018 Q1 Earnings call transcript