SPXC - Earnings call transcript Q2 2020

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

Operator

Ladies and gentlemen, thank you for standing by and welcome to the SPX Corporation Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Paul Clegg, VP of Investor Relations and Communications. Please go ahead, sir.

Paul Clegg

afternoon, good and you, everyone. Thank us. Thanks for joining Gene With and President Chief Officer. are Scott me the call Financial on Lowe, Chief our our Sproule, today Executive and Officer; was our and The close. second release after market containing year-to-date press results issued today quarter

press release live I You the of slide of discussion presentation link release of our Relations encourage section this review the on call and website GAAP will X. of August along our in our as the be until can to and disclosure with and our earnings spx.com. slide prepared as you well results to follow find a Investor remarks. the at the webcast available to during presentation in website A the our replay webcast

portions including comments and and to reminder, disclosures a risk are provisions. also presentation filing, our to the subject COVID-XX in note of SEC our looking factors recent Please the harbor safe pandemic. related ongoing most forward our As

today will Our financial largely adjusted comments focus on results.

can their in today’s respective to adjusted the appendix detailed GAAP presentation. figures to reconciliations You measures of historical find

combines structure reporting is an from Heat which of results. Other results African operations segment Our into Transfer and All adjusted our excluded category, our South the

expense share nonservice also Our associated adjusted earnings per true-up pension and items, and acquisitions. excludes amortization investment with costs onetime

Conference I’ll participation to Industrials the And with Conference Global on XX. Ideas be call Finally, and turn Fall September third quarter, Vertical Conference we the over virtual the conducting Sidoti Annual meetings in September will including August with the X that, investors Gene. our on during the and XX, on

Gene Lowe

your managing remain all for challenging joining through healthy of everyone. and afternoon, you I us. Good you’re Thanks hope Paul. environment. this that that families and Thanks,

and for second driving with second pandemic, call a the half impacts brief current XXXX and performances beyond. key deliverables key We’ll overall our update variables view the provide the results -- of the quarter. also and COVID-XX segment our the of you on discuss the we’ll On of today,

touch from Now of the I’ll highlights some on the quarter.

expectations of benefits strong of were as pandemic our the results, ended with on elsewhere an headwinds. system performance strong the of the QX we Our businesses the quarter impact experienced a portfolio. our during business despite saw in some clear apparent of our many fronts while exceeded number markets expand our liquidity. diverse and end in even additional sheet balance We of our quarter and stronger The

are initiatives, We positioned strategic including well acquisitions. growth our to continue potential

anticipate a half cash level Looking that the forward, generate second of the solid year. we’ll of we earnings in and

adjusted were HVAC our segment our our revenue quarter. Turning in year and I’m year-to-date segment the acquisitions Detection the $X.XX performance Engineered for year. includes results to adjusted and XX% prior strong our margin offset & headwinds levels. operating Solutions in Both Measurement benefit income. with which the the was similar The to $X.XX, of prior and very pandemic. with of below growth performance, pleased EPS segments Adjusted associated also than more in

earnings call. is shifting has QX think the last the since months what Given X helpful over changed it to environment, quickly macro I our discuss

We and U.S. swift performed expectations European-based our a our execution HVAC quarter. strong recovery segment Our the in cooling ahead sales second cooling of operations. in our China in operational and saw

orders on Our were stocking sites customer QX fewer-than-anticipated and boiling order midyear program with with Americas particularly than in and better expected. effective was executing associated COVID-related experienced associated also team Heating delays scheduled we our backlog, rates.

experiencing shorter-cycle of a locators the in was entering consistent QX which have saw this recent look our decline quote As year which in already HVAC business, Detection nonresidential earlier we business, our ABI Index. the QX. end and orders In and our Dodge is the for with leading indicators slowed, we trends reduction order forward, & large and Measurement, is like business at

sequential QX. overall remain notably as early we the period, trough experienced as seen of decline anticipating. from While the in significant several the prior down And over demand we have year were not from severe improvements the was last levels weeks

delivering seeing and log deliveries for businesses Detection pandemic-related in still These hand, the government commission particularly projects. project-based to the on delays limited remains timing has anticipate the issues, are of on timing This impacted intact, of such front Measurement, to healthy we’re and due & projects been and equipment. largely as other Funding, technologies travel to delays. administrative is our orders. of approvals While we communication certain ability by case ultimately certain these

and execution continues of Solutions well expectations perform above business. our to of to year’s our the our prior due transformers Finally, the segment level ahead Engineered operational strong

current As to last the we did on of respect the operations the you our state update with with provide an managing pandemic. unique of quarter, environment I’ll

coronavirus and which members a COVID-XX Our the am implement and and our to protect task refinements meet in force, of, monitor order continues to carefully communities. of regularly I to part team help to prevent procedures to spread our

As case positive the of U.S., testing been with trends. the the has number local employees different of rates in overall, consistent expand virus parts for

the not any sanitary and this the as know for maintain really employee been. over our a our journey to functioning containing I top operations. Our intended facilities To safety directly I fortitude date, priority. has as have maintaining and in safe what address are processes managing is To workplace have not facilities for interruption material challenging a in environment a any all seen incredible shown. appreciate occurrences yet. you our moment, employees And

and exceptional an I’m of. team part to of You’re group a be a that people proud

X long-term key creation. that to Turning today foundations value to our value focus map. of wanted creation are important themes road on I

report And initiatives profile. quarter, sustainability best-in-class made continue in We a we’ve website. have of good published the our about goals. driving the to we during progress the our annual feel the towards right place our in ESG believe governance on sustainability First, SPX section we

a global Diversity programs, range which actions, Second, guide of initiatives I creation a employees. to inclusion a year and training is chair, including initiatives strategic of diversity will encompassing one comprehensive our our Council, expand for all Executive the to and the for plan of

the bringing review develop financial to of to solutions call our And challenges they will also thrive a ongoing across employees that diversity focus success. performance. that to journey develop can faced all process SPX groups will now teams This and have the committed be that effort be I’ll that of in term, remain and We’re turn the am will critical our over Scott voice to along. organization long a and and proud communities. and creating for to are within the this our where company networking our I culture feel and the action a will inclusion, Furthering and embraces and highlight that

Scott Sproule

an start On results Overall, our basis, share basis, performance the we driven HVAC the a Gene. reported solid by in impact a items for results noted Engineered Thanks, our I’ll our segment. for with our quarter Solutions per the were $X.XX. the On earnings in was of which excludes adjusted of better-than-expected by quarter. strength Paul, $X.XX. and GAAP EPS segment

our currency margin down reduction now prior was The the acquisitions to flat. adjusted modest in offset income only a to Segment in was results. similar a was slightly, X.X% revenue Revenue headwind. while Turning year. organic of benefit

environment, Given we the significant very are these results. with current associated the pleased with headwinds

product of HVAC. was the largely The basis HVAC by XXX million by organic our points as the we the very by was X.X% details from sales of X.X%, our income heating and in you margin by of mix headwind. segment. result cooling with lower partially stronger segment are increased offset more execution Now driven performance I’ll domestic our rose offset strong half organic cooling an modest favorable Adjusted business. through impact $X.X starting segment, and pleased decline acquisitions in with strong our operational currency international results first by volumes, a increased markets. a Revenue of in a walk a Overall, including decline and increase pandemic, XX.X%

the products a basis sales delays less mix decline lower Communication low pandemic. segment due currency a headwind. mix anticipate project revenue favorable declined the including lower increased including Technologies decline declined to and lines. to of business, better in modest organic XX%, nonresidential decline in product X.X%, organic in approximately as was margin sales revenues Communication points we the Overall, associated market project and in a single-digit Technologies & sales strong million and stronger discipline. sales softer increased of In located sales delayed less a anticipate of Solutions, Adjusted execution Detection performance and sales. decline for and X.X% reflecting increased and QX, income Engineered favorable locators margin X.X%, In margin in into margin points our reflecting reflecting income our reduction pricing. an revenue due in pandemic-related $X.X pricing QX favorable organic we forward the XXX transformers HVAC for with revenue more operating with to demand The products. year-on-year Segment in basis continued XXX quarter sales a of highest in focused associated mid-teens Measurement, decline Looking execution and lower was the

anticipate QX, to revenue digits. mid- of growth we forward single into Looking high

sequentially than margins increase to resulting we facility in an do QX annual As always, QX expect lower XXXX. QX margins will our transformer compared maintenance be but from outage,

position. financial our to now Turning

readily At balance in cash cash was further and cash available million, of to borrowing of end modestly borrow the flow revolver million. declined free target the $XX sheet the $XXX net range. end was used the more leverage Africa capacity Our quarter, X.Xx, during Adjusted strengthened than lower negligible. as our -- quarter and totaled South

will uncertain, liquidity of cash and the second half generation we balance currently amount further in While significant a remain strengthen our the the of sheet pandemic position. dynamics anticipate

outlook. our near-term Turning to

& primarily For more decline by This in adjusted QX, growth view Solutions than we Detection Measurement. elsewhere organic in total low organic encompasses in an single-digit offset anticipate a revenue. decline Engineered

year and environment. into current visibility macro affected pandemic Our by the full results remains

remain uncertainty, reductions incremental today’s we supply This some we XXXX. comes appendix earnings today, the that not help several shutdowns. discretionary raise largely to estimated expect well corporate color a In and based quarter margins by expect such to facilities decremental segment Given the that most we government not said, these cannot and fully our we year on That respect event-driven restrictions full cost guidance view remain be With sequentially in do as once we We areas included for remain our in substantially where assumptions, and customers our than we would for you such that last as the our different chain material need modeling. as provide implemented with anticipate disruptions, we time the year. to level certain place range specific expense. functional these as of presentation, additional with our we the operational, experience have to of again are being. quarter, will third including travel,

we actions, prepared so if further we do to take remain not the Although anticipate need to conditions deteriorate. do

Now and for the some call Gene over I’ll end commentary turn remarks. on to closing markets his

Gene Lowe

consistent COVID-XX market Thanks, currently end playing slowing, our trends geographic divergent in consistent Scott. with markets, markets. seeing the our and with we’re What nonresidential pandemic cycle is is in dynamics with diverse our HVAC, markets largely of In out the demand the end indicators.

held boilers, preseason residential QX. For orders up well in stocking

trough we for winter As entities. the of we end heating anticipate demand. to development spending near-term to access transformers, our & slowing we sales favor backlog more and second in-process are markets, demand. in be the have China is And in utility customers. markets Measurement, continue frontlog driver municipal other Yet, that other expectations Measurement to & key travel have will although in through we and the are seen normal our we from Detection appear behavior, strengthened change associated U.S. some apart quasi-governmental with seeing typical, moderation CapEx levels. have restraining in current weather And our in In In see made projects Overall, the with a government, demand supports to municipal although locator U.S. half. little cooling, most some among we passed for half our trend mixed, seen restrictions equipment in Detection including second forward customer

appendix end our market strong metrics For the have pleased in key with quarter. diversification performance the repeated our of exposure very today’s reference, the for presentation. I’m about of we

results. Our challenging the diverse and have I have overall operating the continue right our current culture team provide managing end stability a processes strong believe to level helped right markets environment. we and through of to

strengthen near-term health second this outlook liquidity we the our generate subject ongoing point, of expect further and the cash with to position associated significant the risks While crisis, and to half at remains XXXX. in financial

in us this As to opportunity, will to ample for XXXX ahead, we continue in and and look position do the second capital, we strategic the deploy opportunity year. are accelerate so see including half growth to beyond. of to profitability right further our acquisitions help for we ready that And

back I’d over to recognize from XX call. in like all Before the Scott to company soon, begin his contributions recently moment team. retiring this to immense We a want to SPX be turn Scott the call to that the I expected for I Paul, take will and his the last and Scott, in role that for for years. the mid-August. CFO Harris announced role done for last SPX earnings his be you will thank you’ve is Jamie to personally

the organization great it working and You’ve been been an with leader has invaluable in you.

Scott Sproule

the you company over I’m to of great working and my hands. my all since of it and have experience a investors effort. a listening here rest will I With proud has your of the role. SPX my SPX to to To Gene. work And be It appreciate excellent really the and years. are been you the lot with and built colleagues, has SPX SPX, the your fit very all team. leadership you great privilege been the the at been SPX for spin. together at pleasure in a Jamie Gene, analysts Thanks, the kind Jamie good brings tenure This sincerely in, and you. truly all thank team, has an words. with we support with camaraderie team and particularly

Paul Clegg

to ready concludes questions. Operator, Okay. This to prepared we our remarks. go are

Operator

Damian [Operator UBS. Karas first with question comes Instructions] from Our

Damian Karas

retirement. your pleasure the a on years. with been Scott, working really congratulations over It’s you And

Scott Sproule

Appreciate that. you. Thank

Damian Karas

not mostly resilient just here It’s like an mean heartburn exception, second a I’m some Could the you there we just know but time. not was the I’ll you’re opportunity worsening cause I should sales ask. questions seriousness, I sound reason that more to get pandemic. peak what even to last In the activity this, through -- about how X from improvement you I reinstating of thinking guidance? seeing all is the maybe business discuss It was going throughout considering quarter, so does there the your in your was figured [indiscernible] no expect is of quarter?

Scott Sproule

is this Damian, Scott.

on but some could we to clarity what we’re the and could So of be kind up range why macro it’s to potentially want on -- contact around of orders talked are really discrete full the of we of big obviously, some little the that that some outcomes, our We not just put also frame it occurs as in kind -- for nature provide back and guidance and something a best which, profitability kind to to generally little into reasons a which a not there out timing project be some to. QX of and we the on but were something But the of to of swings the of giving the you expecting. expectations detail about more then decided macro, bit year, to large on can QX. able kind our not back, to put provide try wanted

Damian Karas

many Fair nonres there, Okay. X% on growth elaborate I And little pandemic segment? the in you maybe of order was bit HVAC, the just enough. you also decline codes. wondering could points think if on about you thinking a the that do cost how And

modest kind talking we slowing. that mentioned stage? of it this versus year? You Are last than them double-digit is Or more declines at

Gene Lowe

Yes, Gene. Damian, is this

organic not The Measurement I majority businesses we it, executing driven there HVAC we’re you at, you down Detection the say and was by all, about of very and of look are really well. look & actually at both think COVID. if -- would X.X% in decline, the if if the

be So that believe the bit gray do my we And COVID. so data. movements there by is We some forth. and on a have little would assessment. it’s generally, is driven decline of areas -- But

we taken -- in slowdown us. account and But Index, the been that the If indicators what for we’ve or you what into at relevant the most much the QX terms you these Index in for pretty look There look as activity. in ABI look of at forward some we half impact seeing leading a are nonresi the in expect probably the it’s X are nonres, we’ve if the Dodge you some and full for into of communicated see to has back year. headwind And have do that communicated year. we --

HVAC, headwinds first little we’ve to a we be bit of specifically we But to will with that said, ‘XX. the happened to in As expect the of year. our slower due the activity half levels see earnings similar

X in As to of after X ordered initiated. the is of a products a get range reminder, most our months project

in bit would QX impact later. So or little slowdown a QX our a products

Damian Karas

Great. Okay. one. And quick X last

to you planning the to are about through Or you you guys the cost some cost want in for of Just had the the business place that actions about you’re back? I and started being? pulling you keep ask those those think performed, have how you’ve actions to taken, seen items. that mean, time pandemic now

Scott Sproule

Scott. This is

So we have place. largely kept them in

kind So reminder, to $XX about just and million. of remarks, had as be as of we a in it $XX said for XXXX, have the million would prepared the I impact

that range. QX’s So was in line realization with

that and Now down as our specific travel. we such. of that have area visits kind lightened around kind able reengage customer have being up to for others of we we the an restrictions on of A then of some OpEx some example initiatives locked and

see we of full the to have that going gave. that end that the not realization at we’re you previously top So of range

few of year. dollars back evenly X, for $XX-plus and still QX a kind that but probably spread bring over So million the million

Damian Karas

That’s helpful.

Gene Lowe

some corporate see that you’d standpoint, expenses. in Damian, from of modeling a the

little to in prepared the which there, in XQ. we’d mentioned bit be higher we a expect remarks sequentially As

Operator

comes question Oppenheimer. from next with Bryan Our Blair

Bryan Blair

Solid execution.

business. transformer your from quarter strong really Another

good You’ve basis. indicated XQ on year-on-year a looks that

offer you was more color on to a some to expansion model for range could XQ? hoping how year-on-year Is the that? reasonable second quarter So I margin anticipate

Scott Sproule

Yes.

we and down I similar what margin when decline -- the plant the sequential level perspective tougher maintenance. we’ve experienced to But have as is QX, becomes going I in will QX expansion always to So type we in at the you’re QX half. year-over-year that our it not as as looking of modeling comp, I QX, do margin you expect a said, because start of first mean, from our expansion. What have caution we’re

what back improvements call, So if up had for stronger progressively the to whereas the QX you go of of we Engineered saw earlier Solutions. of in much showing kind talked in QX the some these in the we we than year out parts of about results results coming XXXX,

a quarter of necessarily we expecting strength but seen improvement you’ve good this far you So year. are the not so that

Bryan Blair

detail. Appreciate it. the funding can And release? to you point size the projects? Is delayed this mentioned is project chance Comtech, secure. visibility Got any then at there You in

Scott Sproule

the on visibility have We good projects.

decent that the release, through visibility been going of have on or quasi-government is lot that’s We challenge. have the approval process. this really but just slowed down government the A agencies

a projects. getting them don’t around timing through. have we It’s for of funding So the concern the these

as so an I are with reason, at these just -- pace. things And said because guidance another around not abnormally that’s the slow is restating previous question, X moving

we some difficult QX and of And expect half, looked to & we to into those project part So organic over the are in XXXX. delivering them come in decline where Measurement to going QX. showing Detection our start it’s And mid-teens at already a when of carry in we’re that’s projects would second why going to reason they’re out.

Bryan Blair

environment look we expected provide to dry your optimistic a color the And you think Okay. And your to balance say, sound flow what XX cash little can given powder further relative last sheet we strength, should months? you Any as if X Makes M&A forward, quarter. about more current position, on funnel? sense. certainly about

Scott Sproule

Yes.

like we So range. around at confident. any all near trying ended was let why Obviously, the of days We and feel forecast a second me second with have end when start of on put were we a the quarter type XX the possible just around the fast feel to say we low handle the half Obviously, the -- things more of kind variable we moving. decent leverage our how half. ago,

think which flow we at half come and we could us look out, how earnings, give and good stable delevering. cash performance is going as So the the do generation second a we to it financial see natural over

that, back thought let us we can gives So of the into kind Gene the coming now. I’ll get going the a what to back the where deployment capital we are into -- mode. that’s and yes, we year what and pipeline kind confidence about of talk And about even

Gene Lowe

if been And we’ve had take Yes. look the you like X strongest QX, had that And Brian, to QX, think communicating that in that’s years. at pipeline just we back, had felt we we largely I know and Detection Measurement where of grow up our platforms we we to out businesses. and our build and function want want a & strategies, really we tightened to and our our HVAC how exactly we

And good a so activity on. amount going there was of

uncertainty slowed alluded I started, on forecasting. of first think Now a down, forward as things the obviously, lot Scott any there’s to, just COVID when crisis

looking was eyes. that And M&A travel, is harder have big to second and people be then the this a much you it’s properly you you site, execute right? be and do diligence the to and in thing to when need integration, issue. effectively Due on to can’t So

our be during haven’t COVID -- slowed But crisis. during do down to strategies where sit to or uptick is changed. customers, had in need activity. You today, talking been The the that we there -- think and I an the process

you leadership past if we’ve very consistent. X at niche positions the done bolt-ons think I in segments, years, last engineered our over look that X it’s

move to in I but year. feel of starting think changed, the And back to opportunity forward were hasn’t better. the half would if be we’re arise, strategy right to we the Our willing

Scott Sproule

in we’re we’re be I’ll going just encouraged, it. is though about to prudent And -- just, there even more jump feeling

our acquisitions. have size looking like we lever being do capacity such to going low start position we’re moderate going to not in of up that at a to be significantly the strategic end we company, we’re at do course, a range Of feel where but

Operator

question next Linzey Research. Brett from with comes Vertical Our

Brett Linzey

the over all And to Appreciate congrats Scott. first, the years. help

Scott Sproule

Thank you.

Brett Linzey

and first, And transformers. couple a of HVAC then

preseason heating, orders did season? in First, June then you we inventories reminder, strong And head a like orders. and track the just July? just look How year-over-year what as in channel into indicated look and

Scott Sproule

talk demand, a the a warmer quarter, year-over-year. of we always when QX you the preseason, there’s about one So decline naturally off into coming when come

So a we good then And what anticipated from than it little that. -- say sign is kind our of the the going stronger When be well the would anticipated, that in both I was very of about strength liquidity to as position to us the concerned about bit we channel, level so. came channel I’ll of a the the channel inventory -- as say, of strength an we’re partners.

improvement some ‘XX, drove also that season about put prior the demand to coming talked really ‘XX, where we off a winter and very we saw end demand. so were going the QX periods similar level And we warm that of to of back the that of

of through healthy and the a that, to about here channel, channel. order confidence in the just and us which QX early continuing strength gives of see part about further inventory levels good pipeline felt that we’re the we So again,

Brett Linzey

cooling Okay. And about how And pipeline you declines. XXXX as year-over-year? into is What thinking guess, look the a and it I picture tracking then And nonres just shifting the put that side. like? to the bidding does

the lags? business your in trough there? to what peak cooling as are of Or that -- said you as Is think see down XX%. was drawdown you that type the this ‘XX expectations might I

Gene Lowe

is typically of on and look you When is it replacement-type half of is of in you know, I look There’s of reduces as the all neighborhood activity about in refurbishments if be what Gene. the now, if right bidding, in in which as work, you down Yes, and cooling do that you half which purchase some us back of year, which is activity our right The see for I usually or at think is the -- around at would new and typically, impact at I turns seeing quoting orders it, Brett, terms cooling, at impact. of XX%. would the range But reminder, And of pretty say new more contractors levels revenue the go front we’re the in a typically is half do activity which that say good there it, into a for level business, proxy projects. replacement. some least that projects, slower for quote XX%. to this

Brett Linzey

just And one one appreciate that. I on transformers. last then

I’ve words favorable for The the industry to of you peers on time. that in Any first price a time heard seeing there? the SPX? Is period price? specific Are color move

Gene Lowe

team very the not to nice think it’s advantage, design, put really it’s I an terms to combination an When good is of you advantaged very second have Yes, that favorable you’ve is for QX would would mix my things, last already very the you business we’re as QX I in job, ‘XX. have We really this an do say guys tougher strategic really, lead actually time, last on the improvement been price. has expect type a pricing I done engineering last something and good a of process you pricing pricing advantaged advantage that like view has an improvement has this technology, then value. be And then have year, in mix, line when really and QX the of a on. pricing very, well we a The the trajectory an quarter. the that has is you quarter team both, made really QX of this believe driving believe half. execution. Brett, the done a saw and -- out would high. been -- expect the And really with together guy through not the every market do I improvement. fantastic bid And impact an year, impressive. a question, that, And low to say, comp. market the be would is able back team somewhere really there year it’s nice, been to the to of that, We I over that and first year-over-year on then a actually extremely fundamental And your seeing margins. improvement this process, this really strategic margins the execution be of price. And year. over progress is is good really as these guys discipline. will the think that’s of the these up And And But first just in I in some be initiatives, benefit business to have really it. But not there. pricing have I the in these there’s initiatives

Operator

question with next & comes Sidoti Joe Mondillo Our Company. from

Joe Mondillo

So you maybe businesses, the the just at segment? of business, curious your maybe what’s that specifically within outside any seeing But on on any guess, boiler going of D&M, guess, I transformer in business? growth are I

Scott Sproule

the within D&M. Yes. I other are to say businesses growth In seeing we’re mean clear, not growth just boiler the I there. would modest business, to stable be some

because a As of year. in expect of XXXX, QX higher-than-average QX. have demand the was We we off to comp said, profile. represented have decline we a do came it a as a tough we And a well tough QX do in higher-than-average

really late. colder it a of profile, winter kind tailed even So though off demand

our kind So set we an -- expectations towards of season. more average and we’ve

But So talked radio is be overall growth the down going seeing the in is -- back we Detection clearly. when a decline. about are anticipated businesses. We Measurement, heating to to you &

communication side. technology in We’re in the seeing projects the the delays

other of the growth. of communications And you are business, side businesses of which side seeing there. transportation then the have is the The in holding kind technologies

Joe Mondillo

on that visibility regarding I And lot but is a of business, going is right construction limited, radio now. know

little probably to but leading is I terms is guess, is different a indicator, projects how related these in radio And maybe. so I know of construction that of are more happening that maybe a anything benefiting,

‘XX business So for would trajectory you down year anticipate, really see cycle? to actually okay if, could say, as nonres, just of a wondering relative is radio performing the nonres that effects. XXXX the you I’m sees how the be

Gene Lowe

of very lines. there’s And is lines. is It And nonresi. the ultimate in of in think many from It view, nicely. gas different mean, Any my position types It we to quickly construction. very coming the do drives It time which need demand. required market-leading as in putting Yes. that in lot in back short-cycle saw But have I is scan. we Joe, reacts that business you I crisis. dig, activity countries, is also you it’s radio to radio, It obviously putting you’re on the residential fiber. a been in putting It cable. It is have is is to electrical putting business. globally.

So the economic does situation. reflect overall it really

we’re we’re generally back is large to are Asia down, has back are So has that very China But countries would quickly. after U.S. activity. impact really being it improvement, of if be end there pretty the or at sequential -- strong. and after seeing what down that nice and a reflection QX, Europe beginning overall shut economic come very come an seeing of QX of us. strongly is but swaths

do that where the improvement would are for to And think much I there’s so improvement in would digging, we’d XXXX, we on now, back But XXXX. expect normal And look that have environment, but less less growth or much as think in world normal to expect activity, XXXX, and a business. if a be an -- you right would building normal I I economic effect we path. that, in our for

Scott Sproule

Yes.

is on nothing of inspection in first QX. in And QX. but was about the very is in half locate like to upwards the still We in that the quarter Gene second A is we in mean of what business saw continuing sequential locating a rate, grow elaborated so that talked than steady a seeing It lower I but just a and what much we’ve the modest growth, nice reminder, year rate is inspectors. here We side, a So steep we seen volatility the rate business more saw growth. exit decline have half, seen down the the and of that. still as ago. part on. radio a The stable better recovery, XX% still but we’re we’ve --

Joe Mondillo

And Did terms that for down the I that right? of did mid-teens? say XQ sales you D&M, in hear guide

Scott Sproule

yes. Organically,

Joe Mondillo

right? Organically,

Scott Sproule

it’s of represents It also, anticipating business. inspection which then few those still business, communication a for decline -- orders very we’re technologies located continued side of radio. in sorry, of -- the or And -- year-over-year project again, the executing reflection a

Joe Mondillo

to I basis it management? just gross shifting at I the Organic purely And cost you HVAC. able that points -- X% I Okay. margin -- you of think of was think Is saw was in declines quarter, XXX are but looking how improvement. see Or to those?

Scott Sproule

seeing cost of strong in nice business. the it’s in we’d in our a also We’ve very -- combination. a domestic Saw system then in going -- some a haven’t benefits. some And move but operational side benefits programs of particularly recovery in as CI to QX we particular, are do everything, given There we execution, business. like, that able there. in we China, have some that is about been on. But talked we obviously, combination far and It’s as management, do business

on there chain So we supply quarter based what some in were are coming get there is that with able on some through traction benefits to the those initiatives.

Gene Lowe

cooling execution particularly the U.S., cooling nice teams, very really a Europe the really globally, job and by A and doing side, the there. nice Asia, on

Joe Mondillo

sounds throughout like things the in far And have HVAC the drastic And there’s have back worse gotten lot a bit pretty Is year. dynamic maybe has improvement the of and the Or of little improved it seemingly, HVAC, part in quarter business, it that of seeing? second as nonres half the as the throughout? quarter. you’re of seen your guess, I Okay. a declines peers the the

Scott Sproule

No.

a not of restrictions on we up Strong we backlog. resilient anticipated saw the all what with was piece QX, the with of in saw the the we I it. anticipated, then site other think nonres, come and did saw, But start why that the is -- this of we it level we and I’ll what than you we is electric shutdowns see piece We largely the actually business. was the customer and lockdowns. part the the have better executed is pretty cooling and execution or could heating delays of larger

kind of about, our and the this about to X Dodge to really we being stat. particularly we start business, So linkage ABI executed where in through on those seeing quarter, X kind of come a late and normalcy. But trailing order months we talk talked down, is Gene the and rates in as cooling did

some So business. there decline we’re anticipating second the in that we’re over to that half have going

Joe Mondillo

significant and the you XQ? just any out? maybe other cost you like And structural of that as play at how that general, think management don’t anything cuts that execution took I Okay. cuts temporary But did companies. of just in comes any translate or anything of downturn. did you into there’s that some And sort worst sort far huge that if sort did wondering How anything back the as does cost cost out. or or permanently temporary of

Scott Sproule

I’ll structural, hiring a roles minimal, filling year. talked incentive been restrictions, kind the would strong It’s the open structural we really, range. performances, kind say, been year-over-year and $XX of obviously, with we in in, that been the give areas. kind and or and clamp real I would where very type not towards say outlined that time, million said, programs I on. we’ve discretionary $XX to of of of has what together for top about roles, put put perspective. really obviously, from of real end a QX, benefit impact That’s There million say, realized that, you how we’re travel of, not anything comp things are I Those said last delays those the spend

the our you discrete of just if have spend. up and But quarters. loosened that some normalize travel particularly restrictions, some over X So around we

when per $X you you kind quarter QX, of or to run at that and QX -- look QX $X want So of off million million back sorry, and rate.

of costs. -- be basis we’re in a temporary year full -- probably million we’re So going on to cost the $XX-plus

time, over get So increase brought you’ll as the back those come be the revenues earnings in will -- with in the aligned well. kind right, back so of but will associated with the get revenues, the those you time,

Joe Mondillo

And The that out Okay. wanted revenue sort that last just of organic to XQ question. there, back low to put correct? single-digit growth. I guess, Is HVAC. it guide come was I just you

Scott Sproule

low single-digit... Correct. Decline line actually,

Joe Mondillo

have at that And business assuming Decline, side? if is you so on most you growth are the right? nonres exposure weakening or decline, heating which at -- the of you’re there, least assume anticipating I the it cooling

Gene Lowe

have So Yes. the But heating is -- came would benefit little in, that heating that there’s from orders will the in side a of will to bit similar nonresi impact some right. that piece a of XQ. still have a cooling. That’s

have international decline to we to saw there’s organic margin -- cooling, you we around be organic going late -- a will domestic in a based a reminder, at down be it look it’s to mix QX. of we the a And cooling. just say the in similar talked really in mix acquisition here when some markets QX. some about, heating kind of to particularly of Patterson-Kelley going have reported do was what -- on that as results, is just when the -- little was both you declines, the be ultimately and We benefit pressure. I And organic bit So going the then

the benefit year of -- get obviously, acquisition bit the in side full and and that to revenue a going still little from the a profits, you’re So for XXXX.

Joe Mondillo

Right.

Okay.

visibility on and were that you’ve to you guess orders. your I’m sort cooling relative the to of of And addressing does I sort digits down the so tougher. about a the that sort maybe visibility given just nonres nonres, you’re low XQ comments potentially say I little the guess, made and hitting talking that referring single of that and trough the fact that the of XX%.

you little than XQ And now? backlog, can a orders tell the of right be the signal with could XQ so as visibility maybe that worse your that and as far sort the what does

Gene Lowe

EMEA we’re a been having lot crack, we a negatively than and should take And APAC. things in Americas, stating me of comments bit let the have. more Joe, most and around improvement a actually little may have and of our we

of you And Americas seeing at slowdown in see will look be the there, and flat not manifest you anticipate you’d seeing that actually we’re to APAC. growth we at QX, the organic bookings see is EMEA some the if some that impact look and in decline, Americas. if where relatively cooling So are we of itself, decline starting being of the business. would in in would in And organic we’re particularly then you offset it in teens, decline but by a QX, lot

Joe Mondillo

everything. with good congratulations, Scott, luck, Good luck

Scott Sproule

you. Thank

Operator

Our from next Walter Liptak with question comes Seaport. [Operator Instructions]

Walter Liptak

And I a about delayed, orders? color projects. that happen needs to we that to I the to government have or could if wondered Scott. just around budgets flush, then those kind some already closer Congratulations, budget be could as those? the been happen some wanted there tied get to where close year-ends, And to these And of government what are get what of you projects are just ask maybe D&M set?

Scott Sproule

and I’ll add Sure. Gene start in. can

projects and So -- reminder, the have the side as me let we both transportation a communication in first, technology side.

is And talking we’re what the still really, about seen delay. transportation where activity So the side. we’re the communication on technology seeing on healthy we’ve side,

money the also funding has that yes, are year. could end been budgets, budgets, we some But We that of So extended extended the of government year, the you these we of naturally budgets some come -- the projects there’s see some budget for have towards do know get set. as been beyond the these the -- through. some

approval we that’s process So just we funded say timing -- projects. the exact timing more It’s slow has about feel the status of good -- is given the been. we out to feel challenging these why good figure how

Walter Liptak

into a up? some do the see Okay. meet a out you released, projects to up to built -- that is these demand for you something? of these some point the gets the projects starts or And Or as the backlog your there XXXX crisis possibility maybe funnel? where used the capacity in going have capacity it maybe is you’ve and get at abate things, And

Scott Sproule

that. I you I’m kind have but if I you’re don’t up, we do think catch year, in about capacity. the of a I to see the will, mean, the huge going we not think concerned have capacity.

we have take we’ll on, those start single-sourced capacity of that that. we’re that kind For we when investment and items do working the on the know to

kind So meet they do the about once concerned process. orders of I’m through administrative our from get not to capacity their it

Walter Liptak

wonder you more that then on their more provide The Okay. local. thought supplier a pulling Great. if ones. chains just detail supply heard you I I or transformer utilities that. quick couple say And U.S. can some they’re business, more a I want

Gene Lowe

countries trends Yes. look you’re X exactly one a And result I the probably the seeing: market in on the U.S. we’re more that you have what American saying, edicts the some would office and that to would I’d Walt, to transformer some going of of of as of that this bias. is be at the out the and is say not some buy of what’s the President’s be market, of positive general if side is targeting friendly, say, come friendly on a are perceived

the as reminder, there. the medium power you most import EHV which transformers, percentage large transformers, bulk you of So a that’s really a to of of activity business see the is do get market, our the predominantly if is And higher domestic.

that see would as a the positive or actually the transformers. So EHV trend we in large

is are in that the we I’d that marketplace. trend So seeing a say

do. biggest Most seen business, a side, or have accounts with say, other seeing is bit of little do we large we the we utilities. a that activity. moderation of what in XX% public is what is a the would of which of we percentage power about our of But for That’s which municipalities, the the segment, On order on activity are municipal of headwind, bit not of market, a there. slowing order little I small

So of I’d a bit that trend, modest And for I’d it’s little some a headwind say say then there’s X us. are positive. been trends

Walter Liptak

if you come Great. of Okay. the kind ballpark where think gave you the just know will rate the in half? don’t then back rate. for in, a And one, I tax tax the last

Scott Sproule

range Yes. XQ, will. the call the model as tried for XX% deck. to something few we folks in to out on it we call what’s point a just of But the in That kind things. Well, did XXs, the deck, give other we low help the of the in we’d here, that back out XX%, to is I’ll well. said

Operator

Damian Our question UBS. with next from comes Karas

Damian Karas

follow-up quick a question here. Just

maybe was I little out America. international think cooling. You mostly the segment given international, a the just XX%, last North I I called the was but checked, surprised HVAC by that XX%

how I in the needle move curious, international? Did was the just that strong quarter? really So mean, it

Scott Sproule

QX, For Damian? specifically

Damian Karas

number Yes. of you around the Yes. maybe Can a put kind rate? growth

Scott Sproule

in It’s year impact decent been coming business, QX, small it mix. that our had China a year, got saw of we’re EMEA lot did backlog right? And a have the it the pretty off that very you a good of and has having a a into the of is it’s a you tough of Part has nice really said, back total. lot in actually quarter, base, in but stable. of so which we for As coming -- kind really then bounce

positive the of that it’s talking So you’re backlog growth. you’re more quarter, talking for But we’re probably seeing. on of that X% execution the

Damian Karas

Okay.

just later that that’s ask you And I cost? you portion. input then a portion about this just hedge So material about anticipate want but do margin costs. you steel materials I year international for thinking seeing next, of wondering Great. know supply, your or lower if to metal maybe some and tailwinds

Scott Sproule

what And to commodity. of we’re a lot. tailwinds what from sourcing we’re specifically seen seeing supply bit little benefit to commodities. Most from to a is us doing a we’ve we’re around have for of more more agreements Not So significant commodities, not tailwind and activities. expecting from

Gene Lowe

HVAC the about cooling the really X% just not there that overall, One Scott’s follow-up was comment about side.

that. to clarify want Just

Scott Sproule

Yes. Yes. Sorry.

Gene Lowe

Yes. The X% growth from the international.

Operator

like further further questions this any turn now remarks. not Paul Thank call over would showing Clegg at for the you. I I’m any to back And to time.

Paul Clegg

for Okay. We next again us. quarter. look This talking all to you forward please Thank to stay concludes and the you call, joining safe.

Operator

conference and for Ladies participating. call. you. you gentlemen, Thank this concludes Thank today’s

disconnect. may You now

SPX (SPXC) 1 Aug 202020 Q2 Earnings call transcript