Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the IDEX Corporation Earnings Conference Call Second Quarter 2023. At this time, all participants are in a listen-only mode. A brief question-and-answers session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison Lausas, Vice-President and Chief Accounting Officer. you. Thank

begin. may You

Allison Lausas

highlights. This IDEX Lausas, joining idexcorp.com. company's Corporation. of XXXX our operating everyone. press can issued be Accounting outlining to at release the us and company Officer discussion financial second-quarter IDEX for Thank the used today's night, webcast is morning, we performance our accessed Vice-President a three Allison Chief for Last Good you XX, on June website slides ending financial the press The presentation and be our XXXX. release, for months along with during for

business. Eric markets Joining providing and Bill me XXXX. Eric for Today, they financial second-quarter today the Officer our update will are Financial the outlook will third-quarter Grogan, we Ashleman, an Bill overview President; segment discuss our Officer. Then Chief performance an and in IDEX's results, serve, and of with Executive on full-year our the begin and Chief of state

final Lastly, Eric will remarks. close the call with his

we call prepared our for open remarks Following questions. your will the

you two log ID company's call replay. access and beginning for toll-free conference need XXX-XXX-XXXX replay any or call XXXXXXXX complete a reason, our you approximately may number If exit after by for dialing to entering concludes on the webcast the to number simply hours the homepage should the

IDEX's Safe we a language in last the Harbor with the that in this and brief subject call reminder, are may press Securities Before to begin, Commission. filings statements contain certain and forward-looking night's Exchange release

this and Eric President, will With CEO turn Ashleman. now call over that, our to I

Eric Ashleman

flow. share with sales everyone. delivered in and per I'm earnings Thank on you, free-cash Slide record morning, along Allison the strong second-quarter IDEX and adjusted good X.

strong exceptional both high EBITDA Safety and delivered businesses market growth with strong margin. FMT Fluid and organic all-time Fire performance Metering diversified an profitability, and Our fundamentals, delivering products posting and on

our destocking and Our to Science challenges semiconductor markets. Health life in impacted by segment biopharma Technologies instrumentation, analytical face and inventory continue sciences,

two years, the admirably double-digit in drove conditions. and the growth business difficult executing the within very teams customers organic Our for last over segment

are Now, on that higher the to backside inventory levels, of the have partners with pre-pandemic quickest lead suppliers post-pandemic beginning demonstrated the returns our aggressively reducing OEM times. recovery, those

Our declines, of cash-flow they continue our as strong cost overall, a volume to teams these balanced execute customers. reductions to drive portion innovate and mitigate are appropriately for targeted

During revised our HST call, last the assumed second-half, slow our our in our for outlook businesses earnings segment year modest a the would moderately industrial experience while rebound. would

has year. no While our in in HST view of industrial projecting second-half are longer markets the not on recovery we the volumes changed, the

from are is on demand our forecasts who Our inventory end-market key reevaluating current outlook customers revised based their their alongside levels.

profile, year-over-year They're HST additional and complex XX% EPS organic overall, pressures out China, an us with improvements, considering factors rapidly the verticals. demand a moderating orders. macro within guide. pressure of in overall market QX in drop $X.XX lower-than-expected of which This our This many their containment net midpoint for evolving incremental cost and our growth in previous drives is versus context, supply-chain including played at a actions

our full-year updates. guidance revising adjusted $X.XX Bill as share. $X our our XXXX to detail are specifics greater the per press segment we discuss release, guidance in With EPS that, and in we during noted to will

announced science filter solutions earlier second-quarter, and optical the deal the closed Iridian we custom another in life Technologies the market also telecommunications In Spectral year, markets. on we leader this serving adding space,

and taking out environment, innovating come. driving business times, inventory cycles customers. on We regardless focus strong and lead best agility for within world-class performance our driving speed positioning operational to growth delivering businesses to our driving us of We're continue and for

market long-term in the our deployment technologies our the focus deliver growth critical the and investments cycle. while short-term enable people, in above losing on our to in through We remain over committed to of performance differentiated path capital development and managing not

With that, results. over to to Bill financial turn will our I it discuss

William Grogan

Thanks, Eric.

to consolidated All XXXX, unless against second-quarter results are comparisons otherwise of second-quarter stated. the Moving slide our eight. on financial on

organic Orders driven of well and HST, sequencing $XXX XX% mainly of in orders OEM analytical, to due as instrumentation, life million were timing next-gen project down across X% decrease down for XX% overall, markets. a sciences, the equipment, and by as semiconductor pressure pharma organically,

XX.X% operational sales organic We organic X% and year. decreased $XXX segments. were organic by favorable lower-volume driven of HST, decrease dilutive million was strong margin Record mix. overall by organically. across in offset FSD price-cost XX% the within and XX and X% HST. by of within X% FMT, last up basis points impact the This Partially compared leverage up X% growth acquisitions Gross productivity with experienced growth of and in unfavorable

points. margin was on basis adjusted XX I XX.X%, EBITDA EBITDA discuss of drivers up the will next the slide. Adjusted

$XXX $X.XX, tax of million, our of net Our second-quarter resulted up XX.X% $X.XX was rate rate Net comparable was X%. $XXX which or year prior million effective adjusted an an income with which was tax was with EPS XX.X%. EPS of Adjusted effective income was $X.XX. in

through Finally, operations of million investments CapEx of up quarter year. in higher was XX% returns million, versus $XXX we And year, last coming and in We targeted working inventory versus flow to income. quarter. XX% due capital in adjusted the improve efforts. out drove quarter at business primarily over net Free of our million lower last versus was inventory reduction included up cash last from of cash $XXX saw $XX XX%, for the the

to of which our EBITDA details of second compared the Moving the million Adjusted drivers by $XX adjusted quarter quarter increased X, EBITDA. second to on Slide XXXX.

quarter. negative adjusted by at our of flowing impacted margin through million X% growth $X Our EBITDA prior gross price, X% adjusted year rate. unfavorably volumes organic the included volume placing This lower for over

versus drove flat accretive last approximately our components. operational productivity continued and mix $X volume HST and declines The in that due Price we unfavorable cost instrumentation year. Resource centered in spending to employee inflation. mainly was million, offset related life margins, discretionary analytical by was to and was science

reduction balance of volume the We we to cost the have executed given identify for year. controls our tight continue opportunities pressure, and

Reductions flow-through. acquisitions, yielded of delivered we organic Knight adjusted Muon expense of contributed quarter. contributed our of FX variable KZValve the on FX, of compensation and updated XX% the EBITDA. Inclusive additional million These million divestitures and divestiture an flow-through. XX% acquisitions, $X a and in $X based outlook benefit and results net

the of impact variable compensation, Excluding flow-through XX%. about is

X% With But that, by I'll XX%. at our segment performance. mainly provide In the did technology experienced our fluid we growth slowing contract with a industrial organic sales deeper driven segment, look performance of metering by landscape. organically, orders strong

factors expanded We last by XXX margin cost industrial by rate of strong the quarter driven second influence decline quarter lower a Customers their half early that as second at a our steady of are EBITDA that second of year, the Adjusted in the day remained variety performance price process points basis taking level. cautious volume leverage. economic demand. saw view versus and they

technology market funding, The weather, growth. to American with necessary and Our water improved well. positive business be infrastructure all fueling continues performed extreme and upgrades North

our and the to pace to Our down energy teams of half markets remain backlog, work past mixed. investment lower continue strength but oil due Improved mobile the second chassis the year. slow driving in applications look availability of the in is prices

additional market, we opportunities and mixed. are Europe results strong. saw positive In providing with the and US, markets Farm remains battery Asia, OEM chemical landscape agricultural across business overall, fundamentals demand our for the growth. The remains positive

season. down we through a material planting as high, we levels remain not inventory distributor seen have progressed the have bleed and However,

& mix Moving adjusted as orders and employee-related and analytical segment. biopharma margins semiconductor to in by organically instrumentation, inventory of X% EBITDA by basis price Organic soft the Health down were partially cost quarter, life the as Sales well performance. orders, demand. higher and driven Science points industrial by leverage XXX volume destocking, costs, and slowing offset contracted strong driven unfavorable XX% Technologies sequencing timing contracted science by customers' next-gen

of macroeconomic Eric driven businesses and lower-than-expected demand. and improved demand. are Life Instrumentation Science inventory and our As impacted a customers' by by supply chain conditions, China being was noted, factors reduced This Analytical destocking combination

We the expect balance customers softness continues semiconductor experience to the memory of remain this oversupply, the pressure to from impact The well US the as export feeling resulting market as controls. of year. throughout

quarter. value parts will multiple We have chain with the demand and fourth semiconductor in third the expect the of exposure quarter recovery in to stabilize

pharma, by customer due driven hesitancy business Our softness Material across nutrition Processing and Technology concerns. continues capital and markets, availability biopharma recession to tighter experience to

our for these activity some in aftermarket HST seeing positive in are and quotation line and and days. quarter slowed markets strength opportunities market we improved from Industrial battery results. with impact We early signs of some the FMT in see

productivity, versus & turning growth segment. last by favorable XXX to year, and both double-digit Adjusted last strong year, Organic grew BAND-IT. cost Rescue Finally, leverage, Diversified dispensing performance, at price operational Fire safety, points fire growth by positive Organic EBITDA sales X% and by driven and basis mainly with and in driven largely versus X% was favorable Fire our mix. margins expanded strong results. volume orders by Safety & Products

positive mixed remains continue to share strategy. American and our North results, we remains of by truck integrated our paint with The continue market offset investments. and positive America OEMs customer through system business, output. North Europe and to Asia gain fire Within China mid-tier Underlying with demand delays improve OEMs their

our inventory stable growth being are off burning BAND-IT in results markets overall some by EX Rescue positive. distributors balanced remain excess with products.

which gain and in by an industrial to otherwise slowing offset continue share markets. partially energy market, We automotive flat is

We quarter, HST, I'm expect range full third EBITDA I'll sales. to decline projecting are we to relatively year-over-year X% and FMT outlook adjusted to single-digit update XXXX. basis, GAAP $X.XX in to low for from growth and X%, that, a declines revenue expected Organic mid-teen declines in negative sales provide third the an project $X.XX on organic is FSD. negative XX. flat range With the for $X.XX across from EPS to are the Slide volume adjusted estimated and XX%. our and we be quarter to $X.XX. low to decline On In to mid-single-digit sequential approximately and EPS year margins HST FMT FSD in with

Turning year. full to the

and leverage We year reduced lower low declines mix. implies mentioned, related X% spend. targeted with actions mid-single-digit and growth offset and softening organic This compensation and the $X.XX Eric outlook. our As this restructuring we guidance revenue with guidance $X.XX containment EPS HST additional $X.XX FSD. by full our in our have variable We HST in to midpoint, have response and discretionary the second related along FMT to half with revenue with investment, we lower resource to associated unfavorable to in expect approximately contraction single-digit revenue pressure X%. reduced of cost of high now volume At to

adjusted of will of about we anticipated $XX is of Adjusted revenue estimate EBITDA XXX-plus $X.XX XX%. million $X. EPS to flow contraction and income. $X.XX are to approximately summary, be to X% expected margin to In $X.XX GAAP cash X%, be and full percent net Capital of to year be adjusted organic EPS expenditures free

it With turn that, his I'll to closing back remarks. for Eric over

Eric Ashleman

I'm Thanks, on Slide XX. Bill.

As economic opportunities the we've franchises. IDEX well-positioned best customers, for our our objectives, said with our delivering across teams short-term in capital in deploying growth diverse invested foundational global always fluctuations to past, execution discipline. building great and our allow will not our We've leadership our strong alter

years, performance best towards advantage our through Over the and businesses to and platforms last and adding XX now application potential We're power we XX/XX and faster-growing capital fine-tune thoughtful our business next deployment. portfolio level sets. aggressive leveraged optimize to

Technologies. businesses Sealing complemented Our of markets, a applications within Those within most Muon businesses role broadband critical now just Spectral acquired optics Technologies. in acquisition play difficult and by the recent year, like Optical Iridian our Solutions last high-quality most supports business, space our semicon, also

Our acquisition solutions. even for of Banjo precision opens deeper for agriculture play franchise the fluidic KZValve within handling door our to

world's to technologies. business Airtech and minerals gensets. ABEL energy required reality assets within channel Nexsight revolution. that, products IDEX to opens doors the customers the into playing Pumps platform. deeper advanced water find close of the e-mobility the core software helps mine are alternate everywhere intelligence brings Our to The is more power the most

Our allows the to and for pivot maximum resources components flexibility fastest-growing tunability mega trends. to orientation

teams for source this None with recalibration advantage appropriately, term with hard dynamic course urgently the IDEX. was without year people for possible knew to predict. culture. would We're a This things be ahead. of and a be talented of of going We and great potential is to thrive in near managing entrepreneurial and that enthusiasm who is this the competitive aspect that a an transition recognizes an outstanding but

over your operator like to it questions. that, the I'd to With for turn

Operator

Our Thank from now W. Please Halloran Instructions] Mike with session. first [Operator a question-and-answer Baird. question you. We’ll Robert comes proceed. conduct

Michael Halloran

Hi, good everyone. morning,

Eric Ashleman

Mike. Hi,

Michael Halloran

questions. of couple a So,

well. of of analytical are about And this talk as in biggest let's piece life a the First, cetera, context love the the recovery we your customers the little look any pressure publicly couple the instrumentation, you obviously, science, a you to don't would think guys of you back but things curve? normalized you a not about curve? quarter, investment, surprising -- given biopharma, sense the to at for oversupply, differently Maybe I are environment talk et When et here, in feel funding, growth get saying some overly over what how bottoming know bit more points. the cetera? maybe how can thinking about curve, long-term about the get the internally

Eric Ashleman

Yes. Well, that. thanks for

to more normal. we're a to step-back entering So, I capacity the think have is only that's about the going of back thing this end signs get something over QX, those this it mix capability, and if essentially course and tune of long-term, virtually To sustainable the where that, demand of to constraint. some went more to okay, we kind we year. I first and unbounded traversing the think kind of go

a play-out as on just much we that lot over So all inventory, inventory of the focus place. saw initially too

think here and of I a closer a we second-quarter, -- got the and lot we in over-time saw people especially our with that customers. analytics to view attack to start as

that of the QX. component long how much for secondary kind burn was it; was it going of was kind a off, see of to take could accumulated, depth -- it how became in us You that it where to

think this customer's really played I another second-quarter in where really -- lot the And part. of the then assessment I a we piece they saw the out on think and that's was end-markets are and calibration of

And markets closer of at the now in I at moved kind of back-down clicking those pandemic, I think started of about to top-end had factors of year, they page with normal, And along mid-single that I'd the say, the I to the open that an the pronounced and being So, digits. QX. kind of think talked and in in assumption -- was maybe I high-single-digits, least, more we pop had most balance you really single of the kind probably be the digits, of think out in the would the more that that low remarks. strength China that one -- for in to conversations near-term

as look took you here, of sort rest see we that deck at the a So forecast, can backed-up, essentially, those for the the and cleared of situation, year.

July. you levels that perspective. at can here two analytics, bottomed-out We've seen have of kind inventory, I Even the from we now think orders see we've hold an today we're working the kind the through together. with all an of

does spirit So, then I think your is, that all of the visibility in shifts get to that's question, probably of when rates. the growth of something back start traditional terms to real this to which more

approving and in plants days as I The ahead beginning semicon see into leaning funding and everybody certainly and how starting are there better cycle well. that everybody get what's uptick? CapEx to watch. of and think, into of long-term us, us, environment, We'll pointing that that to have six there -- think be intensive listening past trough see that this a the the sides best somewhere I about. For of all a our are and of by the watch people kind the the tracked for we us, probably have on of and honestly, But see can ahead to projects out intelligence easier. We're certainly, ultimately that of lot we is to call I probably China. -- that's year. XXXX, would for in kind comparatives mean, outfitting Is -- we to an business, going see things leading in the feel months a piece, past QX going the still probably obviously of we're I kind

with XXXX, we out more comfortable as there a through think that rates derisked variable it's with. get make lot think arrow up we've coming we assessments of all and in out still I the So in that of laid probably it we sort some period been that a way a to now and can go got

Michael Halloran

Bill, I a prepared short-cycle the Great. And same in exact the context the side where conversation gave just that's recovery super understand context that helpful. clearly you a and think would softening like some remarks out things. curve moving of on of there? that -- on to how how the plays out of industrial is. bottoms Obviously, No, of pieces in weakening maybe of lot that pieces, lot the out

Eric Ashleman

I it it's want the And way would. side Yes. of emphasize that to exactly thought businesses that, run its of course the we kind

order here, that recognize that's are the how normalization actually we clear of to close rates backlog. So it you've everybody now. all seen I to declining, want you to normal make

when compounded higher-than-normal, to year. aggressive certainly happened you the over backlog, sort the the and of little of the there pretty We're compare out that's years get our close. We're the a net soon, So of back-half we'll levels. pre-pandemic but price last basically sort couple price, it in of

that's So of the the on industrial business. side

that coverage there we the quarter with have, We're quarterly go familiar have the covered, half talk now. we if about half we to typically us, other and you're Our find.

And mega for so, and don't like the of unless we as an about of into trend really of than -- see and really a many able And absence ways catalysts that of think now with you're markets kind re-examined a it's I through. understand bunch to lot these got of more water tied the we And funding seeing, in us. really, why to markets went space identifiable list sources, think the kind the are that's past. future

things wonder big going. large same to for story projects. reticence of funding A You're of, seeing of kind go capital little ask that I hesitancy. are hey, where

the to think be And of that going good of start one. think still do near-term much will into So, be going I same to of I and to going I at believe world think kind catalysts to the what of the story of broader in But kind are. point cycle is of the will it's inevitably kind there. a it's calibration for macroeconomic a here catch-up a as of watching next head rest move-up, we we're to which we some be XXXX, and point out conversation get well-positioned then, be that bigger, I

go, rapid an kind innovation. good with spear on really we once tip short IDEX know you at this I the news the lead to we are know, times, from and well The do is, the there point, ready entry point hit Mike, of of recovery out perspective

of take are normal the how where my on kind is an that's things So, positioned. with close on to now actually emphasis company

Michael Halloran

That's I just more could great. one in. If squeeze

mentioned positioned You growth you're the where that some that, context just about for like confident you? talking you algorithm in for added you What you're what cycle, XX, growth. you Could are looks well markets how what think Slide give the in can of growth profile the on organic that talking or the relative are versus a horizon longer maybe you about we sustainable get terms doing, whatever us? for context in put outperformance looks, of

Eric Ashleman

Yes.

the think that outperformance been closer that some delivery. with to really, us there, augmented they've been XXX% examples capital I for really we've now that It gets of deployment. of in terms strong I particularly potential cited shooting

algorithm contribution from kind which the think nature as and and of And capital to you company, expecting and say, earning deploy the a of kind the we looking-forward on enter of top run everybody that then we with combination that of through to IDEX. that something growth it X% is nominal of margins So have have, would we be capture, then, up a double-digits kind of compounding X% let's expects price that what ultimately to innovation, an solid that, the we to I a continuing level. closer floor, assets that if, has drive world if sets of

Michael Halloran

Eric. Thanks. Really appreciate it,

Eric Ashleman

you. Thank

Operator

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

Deane Dray

you. Thank morning, Good everyone.

Eric Ashleman

Good morning, Deane.

Deane Dray

one-step to follow-up industrial instrument, destocking, terms that the OE's. well us, analytical want has just sense on HST coming, And I we the public in the discuss, company of the this these the on but of saying agree, is companies as we're you're and bottoming supplier to share removed getting with vetted a side. on some commentaries, both and the HST, been

So your you've with that had destocking times has this what happening? how changed? visibility and happened level is of what of has now that lead -- And much

Eric Ashleman

and which it's system then there, we don't with absolutely market. you're people or solution understand bunch mean, out things here right. goes consumables streams it participate component, that a And Yes. -- the I important device that IDEX Well, some a of the going out come there's is is into typical that and into service whole there. other that revenue thins it,

and talking they're you conversation on the first-person innovation side, so, primarily obviously and of change, that the going talk And factories on to with but commercial purchasing kind where in we're supplying engineering typically a about to people not they're seeing.

always So It's little us. a that's have. conversation been for harder a to

center end of can you played of have mainly essence because we don't, factory for get we're think crawled the up out our of -- what kind does front the of so, we conversations, criticality. We're a from kind way because of into and has the And place commercial probably others floor as where making this and of the there it device. in what

one able through absolutely I inventory better our before, than it's is be we've philosophy, kind it's have So, different tell positions a in to it be. we've of been ever deeper and we to of because benefits into, here has now come you of lot relationships, of what we're understanding the will that than been conversations and

system, good are have question essentially shape of the then seeing why we some and second did was rapid XX/XX. mean, to is and lead seen the taking -- related that degradation Your inventory order When in we out of We're really, ways times. in really do thinking we same of thing. about the in rates. I you're kind

together, dollars factor and secondary OTD things the two orderbook. essentially assurance your and capability. is supply You you supply, always those lineup hammer of come When

are And aggressive, of seen So from given we in do. the out probably what that lead-time. an we've most ways it's play we we who where and a many indication are

rates validation the for coverage backlog very we back also it's to because for a very, typical ultimate where company, are, quarterly of order position right levels us. is of Our

Deane Dray

connect to just really and trying dots a All right. trying how I'm result industrial flip to industrial do just on side, is the parse That's is out and slowing to the your about slowing over And commentary about landscape of supply-chain shortening helpful. of of industrial clarification here kind and much what itself end-market we're doesn't orders the which inventories sell-through end-market, anything on and it the there's lead just times, of buffer process. release normalizing of demand, in But side is like I normalized that. sound but on the disturbing a the get wanted to this

normalizing much how this side end-market So a on any is of industrial from on versus strictly supply-chain deterioration the demand? the

Eric Ashleman

Yes.

nobody I the these know, driver thinking Absolutely. into in couple wants this of do system, physics. of to the the or of last the to and keep -- just this I alter capability no about I think calls is here the I don't There's that. you times right. that said unless permanently need run you're normalization It's eventually all mean the to you're backlog around going -- predominant cycle. it

So is a this of out. playing lot

to industrial you times That's and get want we last at of last eating past-due particularly here, environment side, backlog getting us where that's in organic we not growth, necessarily the double-digit quarter of look to. out lead there. the own If posted on our the our indicative the the it's

really and expect allows before, environment you'd of as said it's to, would. And Underneath through who customer rates I that, is the As both tomorrow. we this right. way of that see, us all okay, doing out order then you're are they to today us, dropping front in that's that, the what this is exactly their telegraphed

overly I things are that don't see there in of lot a negative.

saw of many kind purchase some things. all the before capital of same really a big I behavior the bets make those reluctance ways, But either. fact, here to still of couple of honest, be In last continued to years In over weren't that lot this. we see those and

from tons super a So there that there's noise A, go lot isn't are people of now we're where well, though, know that's this actually on of I But to say, a "Well, is lot positive B behind C." different that's saying, that Project don't that's curve would things us, not we've been. there I of happening there. also and behind that, recalibration negative as ready where

know. don't I So

of close your I ton is fundamentally underneath helpful, and market. opening but what's think there's market playing on cycle to of is out not going hope noise that's that a in terms here it, major I pretty statement driver the that a

Deane Dray

we're for, Alright. appreciate exactly color. what that's looking all Eric, and the Thank you.

Eric Ashleman

Deane. Thanks

Operator

Our with question Fargo. from comes next Wells Poliniak Alison

Allison Poliniak

Hey, good morning.

on the Just for thanks think in organic to of HST, the decline on how QX. color

EBITDA this another the down? just quarter? now, Or margin, should sharp the any given obviously take of decline on stemming we through that you step cost, quarter, given color On does that year-over-year down to decrementals think just are approach the in aggressive just the how organic next

William Grogan

Yes, Allison, it's Bill.

third in in quarter. out bottom will of side in additional volume QX. steps Sales the I out bottomed the And here down think in little we pressure the third quarter, a in bit as you'll QX. see orders

as quarter. journey margins back leverage the the start taken the in EBITDA-type I cost our back start hit up additional Obviously, we to build and have we'll its point, back start we the We'll set fourth get a then build we'll that. helped low progress mitigate have And through to think volume to XX%, we recovery. XX% to margin actions as

Allison Poliniak

any driving just just or of unusual there. in of here steady then is that it's kind been? incremental color the nature analytical Just given any the instrumentation sort the terms of it M&A of as in market, dislocation And opportunities,

William Grogan

and to anything haven't folks but I clear they term, it out different that short the really. said not It mean, us. because some the might is there. cycle because like been prevent funnel is than there for now as things really in matters. and playing let backdrop the I something not from No, mean I certain or be Yes. noisy nothing out seen composed much that's topped way, want a putting quite something has the

Allison Poliniak

go it. is that? Bill, Got more did done And The in guys the you on last inventory quick to were then you your half drawdown one. there Or largely say with year? second just one side. still

William Grogan

there's still go. to No, more

from bleed. there's Inventory but little to absolute think with a half. here track, the another I reduction I volumes be probably $XX $XX the teams think will in continue pressure there the and of continue inventory bit turns, to within back HST, just we'll dollars, million to million decreased

Allison Poliniak

you. Thank Perfect.

William Grogan

Thanks a lot.

Operator

Our Bystricky with next Vlad comes from Citigroup. question

Vlad Bystricky

Thanks call. taking team. for morning, Good the

So wanted of ask things I FSDP, a within there. just couple to

the better the your offerings relationships is terms much sort seeing of that are Rescue, have In OEMs you strength retrofit chassis Fire OEMs & and with able the mid-tier at to you durability growing availability of how parse your with of now the you're out available. versus of traditional

Eric Ashleman

that, particular itself, positive fine-tuning is around for don't is period I the knew inside of would it generally terms we would chassis the catalyst nature saw extend it's say category would are us going a put business. but pretty it, positive expand suppliers backlog to all. big we be who for, The I margins, of I time it's that say of long for business, of interesting of improving start -- it's it we driver for a but the when probably gradual positive in and ultimately would it here. frankly, something that positive that be the to and composition and they that that for availability know in knew as that a

Vlad Bystricky

versus dispenser and little think it American that a segment. I that's Got anyway. in paint strength it, The what within follow-up a the I helpful surprising was was North okay, expecting business, then just

deliveries are outlook that any And how contributed you to thinking forward? onetime the there that for strength? in about business there type going were the dispenser NAM So larger

Eric Ashleman

No.

Then third here be, orders quarter dispensing within as and I over. And American we part, of as they that end the year, think quarter. think couple of the emerging we cycle on they're most the the the the for replenishment market had will some the I project to passed for a North large in opportunities progressed delivering then on look second continue side. the

the of progress slower of the next back there's to start bit that. especially bit and little a a recovery offset for this through was But year. decline, the see on will us Europe business into that to year orders as a half if going year we help

Vlad Bystricky

get great, a that's thanks helpful, Okay, back-in queue. lot,

Eric Ashleman

you. Thank

Operator

Thank you.

Giordano Our next Cowen. question comes with from TD Joe

Joe Giordano

infrastructure a square I morning the your is of about interesting. -- kind how of levels non-risk good commentary optimism and guys. of kind very here. you you Eric, And juxtapose do of kind catalysts kind bill markets lot just a like in to chip and wanted all Hey, How stack that of with lack manufacturing, high like do spending of around right confidence around and square stuff?

Eric Ashleman

been understand what people position absolutely we what planning describing, Well, not kind current see on. way in have at I'm, where to. think we're all things tuning we're a next of the ways, years, for look, be. helping mindset It's those to that I'm in I company the some a of in now able the the exactly the people we in of can -- quarter we're legitimate are

And so I'm that kind with think to the are we you have runs because go out many I are going of big trends nice forward. as of there broader

now. underway Some of them are

this that I a or is. no, to some a and just point period that. it's then taken term that in now few -- say, backlog it next world like noise link to everything lot things right see own And the it's years well, talking easier be those of we again, But their come. of trends processing that are in system in That's near and to get unique the about the I there's of us. do going people is to actually validation. think a are there that's front sort says, where, Some us is to to no,

So We of chassis We We talked talked some again, We chemicals. some the just about walk. about out. are that -- talked decent about things in water. some the in and things happening had those playing of

Eric Ashleman

Availability in this building.

some to different be want play we any show inevitably them see to those able in as in start we've ways, But diminish in way. I'm in don't curve I So really go they here. We'll just at as the solid and points forward. visibility got layer to trying that to along

Joe Giordano

this are would -- And things would most kind guys you categorize like kind like there and be and just their fair. like orders Yes, this quarter you I you getting commentary industrial around of that's companies certainly It first, like seems of -- feel And just weakening think you -- and is... distribution that. changing -- you it are worse. were like to seems maybe are

Eric Ashleman

I will be in a category now.

distribution. weren't already one them. We're were others We of us. for I about for these there actually, new we're and always seeing it, part of in looking curves with with talking we We're frustrating opportunities, live the out think when the sync that. that which beginning is of

side time element. but way have in So says, we'll a is take going into, it's example. that walk of see about be you'll which I kind to other solid the then catalysts of talking it, maybe to to I some that back this knew other puts others a It this things, that to was think us for year perfect going

Joe Giordano

Fair enough. Thanks guys.

Operator

you. Thank

comes question Nathan from Jones with next Stifel. Our

Nathan Jones

morning, everyone. Good

Eric Ashleman

Hey Nathan.

Nathan Jones

correction. if coming dollars to business, customers' start some this just point of inventory that on repeat of businesses out or complete inventory wanted finer you with of out taking to think coming get Can this the a obviously, will that year. the we headwind quantify the are year that growth what won't next your destock the or I you year, of

Eric Ashleman

let Nat, crack that. at me No. take a

think I the amount of folks down. volume reasonable calibrated pulling supply that's of as on months current the their have declines a

in the really So first quarter. that expectation was our

end As balance they again volumes the here had demand of second second-tier through. for our and year, their are our the the with, look and position a at down order holistically patterns in quarter then where their think inventory that's bleed I market

lead relative expectations true market times around really are new then really what demand, in talked calibrated And being shifts reflective to end volume our going is of be with where they've to any volumes. Eric sync their of us about

far experienced portion a it's pressure So so reasonable we've this the year. of

Nathan Jones

going on got out really a Okay, all think challenges, about I up. last with chain a supply to metric talked blown is then I'm on-time because which there question the delivery has everybody's ask that anybody delivery, metrics on-time years, don't for X the

times on-time improvement you in that? have how they seen Now normal, much fairly improvement of were much where left to more that how to they And COVID? on before back go relative is you're about to kind being talking lead delivery metrics? are Where

Eric Ashleman

Yes.

that So a question. is I mean great

really about really, piece mean, need the it, on-time That's where measured XX% in plus. of A be. good that, that against this we so delivery to lead I is expectations of have. time customers in shape. huge think is think when you that's Our

So businesses is do of years no the queue one couple the of can say, potentially like what's or taken buckets, to it, things orders you that's put level. as really order have soon people one they've yardstick or there's in as your my into current capability, ours for really the please, which changed it either two well, from here put is okay, last in that

to kind What's important it. we get is operating one you of make it communicate own That's start understand within where they we things model, better, that your first the so people our have to know you are. sure to customers of teach

So frankly, can they way. to into their start they better factory that, requirements, can we dial that a understand own that that plan

closer times. And so I'm is improvement moves you're that a lower -- against that lead citing bar with the actually moving

promises our for in point metric OTD actual to the interesting of of that that requirements. customer that's with the with ultimate really So those, are world then make the And to it we're really, on of lead number. that out a times that kind and sync moved always sure prove says we've lookout

really, And shape. so we're really good in

William Grogan

of sure sync the times of to a metrics OTD That's and world actual moved lead for those then requirements says point number. ultimate are that that our that in interesting lookout that prove and we with really-really kind make it to we're with of customer the out promises always-on the

exact I actually couple to where a still are have been been we're lead of on have still highlighted Those fairly shorter comprised think struggling seen in we're aligned times all those behaviors, so calibrate And good with. where businesses are because order shape delivery. point orders a customers Eric to those new or on-time is lead for really-really you've and their improvements, earlier, Extended positive, able the times. we the haven't rates with seen business

Nathan Jones

term year. that not you're last and markets actions one the going just correction target a given out I one understand might that sharp short And you're about taking deep the talk you taking to be this could that Can the taking recover on plan you're too not next out? type cut guys you of here. that here you're and cost long that probably for costs costs the

William Grogan

bit talked been That's even the to done [indiscernible]. the the economics. weren't across obviously last implemented mitigate that helped of has quarter, little costs. Yes. I as of is side, We've things about the second impacted of phase discretionary the They saved internally. mean first businesses that profit that of on And as the shortfalls. we've We phase some reduction cost a portfolio. in broad-based restructuring volume-related some the

into XX/XX But at point, resource time and drive year. of to allocation are this we're investments the now to a your majority next phase through making I as point last fundamentally, point, that will some to in results leveraging model be we Eric's going we're The resources, future. our a growth vast preserve think

Eric Ashleman

And Nathan, take so and know don't already it And possible, pressured. you as head XX/XX to the us as in existing And essentially, its and it use you're that this is of count helps simplest hire incremental a says, you this powerfully think -- Bill people really mentioned company as your company. to it, XX/XX here form, a leveraging we if where is but at time work them guide have that. that

be make this maximum kind the base. at you're and with through work just can much of impact and get sure maintains point And So you'd a then surprised and people that how do. power you

Nathan Jones

for my Great, much questions. very thanks taking

Operator

Instructions]. [Operator

Robert Research. Melius is Wertheimer Our next from from question

Robert Wertheimer

good everybody. Thanks, morning,

but trying kind little the if a there's of risk channel X if in throughout the about in business been I and talk on think inventory how put dynamics HST You've of applied back bit the touched segments? that the the on you And the other throughout assume focus wonder differs I broadly whether clear, HST your you've business. that is comments step analytic from could process then pretty you in HST relate to channel a the and to is happening. or how of the this figure the out issue call, I rest and

that of of sort with just destock. that can channel help you understanding the if wonder I So risk and

Eric Ashleman

a was That understand. that important question great people that

markets with So relationships. direct those in are about generally a everything we massive HST talked those change,

and of they're concentrated -- some we have. sets So most the customer

to directly So linked we're not a lot and them. of very names,

important different the side first and a world when even of is of there's point industrial just the think HST, typically are But where the happens a So it's those element distribution lot Not is of your very people. stocking that more of into over environments. there. go it, of FMT you kind lot

partners, lots natural way down, so you buffer a dramatically, swing or positions, typically So it any you've it's on got and see up optionality. you And and of the there real that way don't just against the lots numerous of got markets, either just fragmented. just

carry people like that I make seen aggressively. But there calls. does mean some here, tend to inventory And out most They're will choose more going move of OEM concentrated to a differentiated all to we've it through pack. this. move set the

of curtain participate It's we known where a participated was and model. analytics. for point long on in need last this. We've other a stocking the a time, and partners actually to markets. end this each between We're there's kind Your had great cells. us It's always analytics. distribution in model not the We've

So good things. we're analytics that, inventory we've got it on had thinking -- we've who selling long of to, how positions, they're because about

forward of move have OEM nuts the I of to So where relationships that line even we to referenced that's getting more those the that been a earlier, direct say and closer sight. I'd staple. was bolts something positive

Robert Wertheimer

you accentuated Perfect. China That know it general is was don't educational. but economic And there. within that if And obviously, what know, that not China just is you the that's China, I I something is weakness industry-specific or sure in I'm don't weak. because for say, HST. and slowdown mix

Eric Ashleman

the a and to instruments us doesn't Well, like end selling North it placement typically is we're their ping of commentary things. partners that. sale China We're really something American through for or reading because about

Robert Wertheimer

there. stop you. Perfect, Thank okay. I'll

Eric Ashleman

Thanks.

Operator

this the further are like There back no you. in queue to turn Thank I questions Mr. at call would time. to

comments. for Ashleman closing

Eric Ashleman

Thank Thanks much. you joining everybody very today. for

play I recalibration. the this balance mean this of through it. economic itself out. proven of takeaways final But will year beginning, of a year be the to is to here. out was Just with from done we be going phase going pandemic. aggressive summary I and here That's the think this a of couple said the certainly It's truly

for be that look, means, soon. almost here normal. us, It will to And back backlog is our

normal abnormal about Our not I is I about, more order trends and assure I be on to good. now. going that, of coverage think quarterly and back really, got we've pandemic-induced lot be order The looking here. that to could is we're I'll that to don't talking just a talked processing kind the to of you. going go then slide what be really really, I forward And last intro future in

will whatever positively for see We next out there. the us. accelerate than others is, quicker We're is diagnostic cycle plays We'll that. good

perform couple here, very over that because resiliency years well to the we're strength we when happens. and the last built And going of of very,

intensively in thinking going terms talked too, outperformance, up deployed we're capital in things I about that basis we XXX the of our the another of where it's us to as referenced take core points that about around All done we've earlier, work strategy, markets. and it, outgrowing we've

these in listen just last, to for thank I members just team of particular, HST. on our solid, I really in execution a it, want know calls. in lot them of And our solid through teams all

over of stood amount all for have short of kind IDEX place. down been time to imagine the in to there, employees that challenging as them. the way slowing has the up And the fast might from do they go we You that know as absolutely go can really you duration in --

day. a soon. So Have that. We'll to you thanks talk great for

Operator

today's teleconference. Thank you. This does conclude

your time. Thank for You may your lines you great at participation, this disconnect day. have a and

IDEX (IEX) 27 Jul 232023 Q2 Earnings call transcript