SPXC - Earnings call transcript Q1 2021

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Operator

Thank you for standing by and welcome to the Q1 2021 SPX Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s call is being recorded. [Operator Instructions] I would now like to hand the call over to Paul Clegg, VP of Investor Relations and Communications. ahead. go Please,

Paul Clegg

Chief good after me and our Thanks joining results Harris, for and containing press Thank first closed. our the afternoon, call With quarter our Jamie and on Executive issued Lowe, Officer. today us. A Chief release today you, was Officer; everyone. Financial market are President Gene

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

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

on Our financial today focus adjusted largely will results. comments

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

operations results from structure and reporting South is Our segment in which of our our category, includes the other results. African excluded adjusted

per and costs. acquisition-related earnings pension items, certain items tax amortization exclude adjusted share Our non-service gain, also discrete expense and favorable investment

the including turn Gene. And be to will Global X. the at months, we conducting and Finally, UBS over coming Transportation investors virtual call with I'll on the Industrials meetings that, with June Conference over

Gene Lowe

us. joining you afternoon, Thanks, everyone, Paul. Good thank for and

the update quarter. and a full brief guidance. to segment I'll you also On the results on update with an call our today, our year provide provide consolidated first for we'll

to of I'll the the start We on touch some had year. a solid highlights the quarter. Now, from

Our earnings segments drove Detection and & performed growth. revenue and Measurement and strong well HVAC

is Navigation Aids that quarter execute with we or on our to acquisition value our to creation segment. attractive addition in We portfolio. & excellent our AtoN the bolsters Detection AtoN that another strategic to Measurement framework an Sealite During existing platform continue our believe

are growth QX Sealite, which We earnings X% full and acquisition our we year. for double-digit are the from completed grew mid-April drivers. to the with for on-track adjusted achieve revenue both In guidance updating and in contributions we significant organic approximately inorganic of XXXX

adjusted operating and our performance Detection the X% Measurement grew by segments. driven HVAC Our income & of

the With come. positioning am M&A the cash summary, Our was SPX and our significant spin-off improvement future. the initiatives, value several In with generation drive first ongoing years to to since is poised for availability in the pleased and for capital strongest continuous current organic our and I XXXX. and for attractive quarter transaction quarter pipeline

the pandemic As our proud for to better-position that the always, SPX will like for on continuing our I'm very team I'd they've value through on future. of execute while managed framework. to creation touch way initiatives the key

until of for in in AtoN we $XXX revenue. our manufacture the companies, diversity Sealite, improvement quarter, to approximately During total, our inclusion make continuous initiatives, the eighth and to on our We the have months. extending XX coverage, Sealite The platform reach aviation is SPX's strengthening revenue be fully continue million first to acquisition activities. we well solutions, the a years these In on as the integrated our portfolio of an annualized Sealite in and through $XX initially into than It deployed progress our segment obstruction second bit marine fronts; and our products. terrestrial as and is company in digital next Melbourne, excellent a that technologies. $XX three in design set last marine range platform. anticipate expanding will on fit is of is globally Sealite existing New lower the million leader acquisition broader geographic anticipate to and and with including several and is and operations focus adjacent actions enhancing million in and approximately AtoN over representing million. capital specific products Hampshire. average has $XXX ESG our eight annualized headquartered Australia We contribute of our the to progressing business the margins AtoN XX of a

of annualized a lighting $XX obstruction from we million was which approximately of already million to alert is customers and for portfolio into a solutions, expanded used other to as to to lighting to million by lighting the of harbors, Sealite, tall cell approximately highly the such monitoring million highly this the applications of leader FAA. engineered similar and we airfield in our the the systems canals growth obstruction engineered other this in ports, has solutions products to a our equipment years, Aids extreme towers marine Technology, for real-time a to airstrips our acquisition Flash $XXX to annualized waterways. market little These solutions our levels and These roughly of million few have has strategy engineering regulated structures enhanced over applications of platform, three grown extended In addition $XXX lighting Marine AtoN business and Navigation reliability. of environments sales. that accommodate AtoN here from location story capabilities our that in military Today $XXX Sabik, In Prior aircraft. revenue years. market XXXX, high extreme Our positioning $XX used lighthouses, the with and acquisitions in into space, require AtoN are deployments. for specialty which platform endanger of vertical in inspection revenue our require global remote and ground passing consisted portfolio with leader just grown annualized with could leader the in environments outages in business

continuous offer see our area passionate for value I and create as view and long-term. opportunity we committed the believe are discussing minutes where global ESG. to issues. long-term and are is few significant a emissions to we acquisition SPX culture to all the realized. that innovative drive develop solutions as SPX with will commitment customers. believe thrive spend SPX on value for to long-term strong on governance a our success pleased this a very efforts wanted This to journey very an in targets the We is are carbon commitment in stakeholders is sustainability further improvement environmental, social We continued and and world about. our to and for continue position We well-positioned

ESG array more it. year, evaluate Jamie our initiatives communicating usage spend our Many team where innovative stakeholders buildings, opportunities. and we the well our more that proud And underground as support employee environmental a From greenhouse time several to and I include and our and about leadership record I'm efficient the of water a includes maintenance help variety inspection pleased us sustainability accomplished data report work help initiatives over towers, past and experiences We energy data we turn call This and backgrounds, years. and future. details and our results. information usage, health which wide and businesses, have ESG Board, excellent cooling plan I'm which water to with for a brings now, and with intend reduce wide focus our with leakage as of inclusion the can equipment our our helps waste and a highly has of Every and of our disruption, risks offer positioning, remediate energy to of strong published products additional our perspectives. to and sustainable on over financial guidance to which minimal the critical and information safety, will infrastructure. products to provided and water particularly has a and gas pipes of year we And emissions diversity review

Jamie Harris

Thanks, Gene.

We for our $X.XX the quarter we results as EPS grew or $X.XX. adjusted by are to with X.X% pleased

increase & results Measurement favorable reflect to X.X% from segments modest sheet In grew to XX blended from margin margins in $X.X had our debt continuous previously EPS lower in year quarter. lower positive full impact was Revenues and our Sensors growth, of accrued review improvement offsetting later, organic a include items Segment XXXX. certain Measurement and Other I Detection a Engineered rates. funding of and points. for driven other results with average overall & These segment initiatives. million lower release performances the reduced and Solutions. Engineered acquisitions below-the-line results. believe gives organic on guarantees X.X% of revenue the basis income HVAC drivers, the and balances results interest currency and balance and ULC included which start also strong primarily and Segment three an lower will segment revenue the & Solutions. increase addition increased and X% strategic or our HVAC income corporate impact. A a the strong to due adjusted costs and Detection expense had The and income performances with our strong associated we by due quarter a us modest for higher good the investments of Software shows on net and interest income the small of that review was impact segments been the X.X%, a results

quarter, revenues segment our the in increased performances. growth. and driven XX.X% mostly In Americas. review the the our organic HVAC Asia-Pacific now XX.X%, significantly Let's sales for of Cooling segment details with increases rose about

also generally to quarter compared basis higher ongoing to strong were negatively by season $X and due historically Heating warm sales of was sales increased the product last primarily and due product seasonal significantly Asia-Pacific growth – the segment benefits while higher million the mix year, volumes, by to rose continuous impacted demand due the pricing. improvement higher COVID-XX with initiatives. XXX income prior-year pandemic. grew and Adjusted higher initiatives points heating

resulting communication in and is was platforms, Robotics of demand, technology encouraged Detection Inspection Sensors X.X% ULC rates. While project the & Measurement, partially timing end start acquisitions transportation from strong solid markets revenues are non-residential we order the particular strong year-over-year, heating in Software. to of shipments segment by with were year-over-year monitor we increase this HVAC and year from of increase showing to for In indicators this our up & & shipments. offset Location of of the driven our by organically future XX.X% continue XX.X%

projects experienced less million a We solid also basis UK full lower currency Engineered XXXX thus to had In margin due Transformers the cycle decreased lower pickup for primarily margin throughput. X.X% expected stemming addition a to while a cooling segments in of in margins to decreased to similar as from Segment to revenues favorable segment overall ULC, cooling million robust than with pound. we on income as extent, communication the margin mix $X process have reflecting We remainder in fully plant a D&M a very modestly increased and the the sales year. project and process year segment which still have lower the Adjusted very transformer associated significant related decreased large lower performance. short-term due is expect projects strong year. cooling tailwind as below XXXX are point bookings to are income result products for lesser far the than mix XXX prior as well levels. from of Other strength such compared until year-over-year well remains technology-related would to a sales locators Solutions, be prior-year process project XXXX fewer on Overall, integrated. and with seeing segment shipments. for lower a quarter sales $X as track

financial end at our the to position of the now Turning quarter.

full as milestones businesses of This favorable receipts. management, cash $XX and most of that quarter-end. to in the solid hand an strengthen which strong to timing converted addition deployment for than our year to of adjusted key debt was typical acquisition, performance several portion we notably quarter-end, and first was supplier leverage for million associated declining We in generate favorable to cash is is approximately latter quarter-end. positive purchased leverage million. increase down X.X, and free SPX Sealite the in similar XXXX. bond X.X process balance reflecting had Subsequent lowest. quarter, anticipate quarter under Our reduction Mitsubishi. to South make our Africa capital X.X cash dispute used ratio its million the the Pro cash Cash at was Net first in any to another acquisition excluding $XX of forma QX to cash our being million $XXX former cash in with capital the for continued project arbitration We shortly the the leverage of of the year working collection quarter year flow, Historically, and which million. an $XX in solid which we to below higher cash $XX resulted in was The by debt generation free strategic the operating is with and resulted low range target quarters. in was with pay cash met of sheet X.X performance resolution of end on of to our tended the after award year-end. this flow

just cash reminder, from excluded South that with a associated cash figure the is As flow free I Africa adjusted provided.

favor. African dispute projects pleased and including We recent related our ruling another are with the in progress resolutions on our South

remaining disputes counterparties. our focus to continue We with resolving

cash spending us our balance to anticipate pursuit sheet organic pursue primarily to our well of usage initiatives. the moderate due growth in claims. year, For Overall, we legal and inorganic positions full higher now strong

our Moving to guidance.

year estimate per other updated adjusted effect acquisition, full Based to XXXX no made the the anticipate earnings existing $X.XX above. to increase the approximately $X.XX. our SPX and a which This represents that the of in businesses segment an earnings months other areas Sealite total X.X per share based XX% about share year first will $X.XX of adjustments have in increase midpoint on We We quarter, $X.XX. our to we have on of full at reflect of range now we compared guidance XXXX to EPS due of discussed adjusted ownership. than to and income a EPS of add guidance our to revenue few net had on performance Sealite

will of slides details appendix. more call and and for today's to in With weighting of find included first the the will second earnings that XXXX. for Gene to the back the anticipate results comments. markets similar between our end can now to be we halves You year, cadence, closing respect the review I in turn his the

Gene Lowe

on input And see regions and mentioned, market continues remains we as by Detection trends markets solid somewhat With in our further demand to we we supply businesses and Overall, monitor early Overall, Solutions, continue impact QX. be of although Certain steady. to dynamics. the and has geographies actions the from heating In Measurement, residentially-focused positive non-residential Jamie. markets price end trending labor In are steady. for both we're certain markets and portions to order expect this Thanks, more seeing costs HVAC, and to on but cooler taking as a results. we as more and we our In to with do constraints in some rates activity always have are remains the monitoring timely cooling heating non-residential material adjustments in not trends we cooling shifts, quickly this rising progress continue are closely inputs. the impact geographically. of subject move we'll successfully Currently, more into signs to rebounded opportunities. full-year supply leading and by than our and our to rebound previously this cooling pricing to most for Overall, to chain, solid products been even demand and we across & encouraged remain equipment encouraged noted increased availability inspection appears remains businesses increases backlog customers, respect are markets XXXX. favorable risks seeing and Demand in positively. others. for encouraging de-risk overtime locator weather transformer of have we Engineered managing behavior process

believe multiple we the months, While past topic on one that the to businesses infrastructure Q&A, Before benefit and SPX's questions difficult including several is government our well-positioned for I'd received across multiple initiatives over like spending? to SPX closing we positioned potential is of which to spending it's address how have potential or comments infrastructure from areas. are many quantify,

to Our equipment that digging. activities require tends related demand experience to location increased

Clean area another take is in it other and water digging safety prominently occur markets legislative U.S. discussed mandated For proposals. frequently underground reasons, place in near that utilities. is may features the that anywhere scanning

locations Our waste as and utilities. water and American access inspecting areas and telecom water tied and is obstruction up could remediating AtoN favorably lighting on leader being sewer create with for areas. to well business. lighting step power our demand equipment Any accelerating were the XG North which spending municipal as and such the for on down opportunities from need CUES proposals pipes for its end farms, market business wind for broadband step Spending customers a rollouts rural transformers generation in remote water may as obstruction feature of prominent and to to increase current move renewables, population-dense impact

cannot that our has of responded is I better spending extends the While I'm to growth dollars our where we way very for our a day-to-day number or platform for our embraced which sustainable accurately ESG of growth. and uncertainty future successful on would acquisition approved initiatives there help the position inclusion to additional ultimately very for pleased growth. to and land SPX opportunities. of which legislatively am excited pleased future a will well-positioned SPX creates on and In I'm while and and AtoN be with continuing QX and further team also our with Sealite, proud about recent diversity progress execute infrastructure lay debate future. on we predict initiatives, allocated, where the where areas current the groundwork solid summary, encouraged our are are performance

as sheet deliver over value market improving the conditions. ahead set forward I as by back continue of for experienced looking to to call team, With signs remainder we year a the create and shareholders. for We capable now And to highly are encouraged turn the up our that balance opportunities strong of will and I'm by our well lie as Paul. the

Paul Clegg

questions. are Thanks, ready Gene. to go we Operator, to

Operator

Bryan comes Oppenheimer. [Operator question with first Instructions] Blair from Our

Your line is open.

Bryan Blair

Thanks. Good afternoon, guys.

Gene Lowe

Bryan. Hey,

Bryan Blair

in A really the and strong to HVAC certainly year above start expectations.

apologize you sales of You I in cooling digit respectively contemplating organic the revised growth? high-single missed mid- break evidencing to and heating some I this. that Did obviously what the momentum. have XXXX guidance, if you're out for

Jamie Harris

fourth long-term Bryan. forecast actually, And first we when quarter not a strong year, had does to the in forecast heating be it typically quarter. No, the obviously as know, for you we full quarter the normal temperatures. We

Bryan Blair

Understood.

Okay. there? in the and your and commercial a offer that quarter had bit player space Any strong and trends what The on was commentary months was can boiler a ago. revised few put out quite aggressive than largest provided commentary business guidance you very first a then more

Just seeing if similar curious trends. you're

Gene Lowe

and that acquisition We're that commercial minority business, the I there, with Bryan. that good remind of that Yes, very the did the with very a our of would very portion a we're We of seeing even path portion is we're smaller pleased we pleased business. trajectory products and boiler the our But have there. of you this Patterson-Kelley though a the like executing of is boiler they're boiler is quarter with larger lot on. well our business. addition very the and still that

Bryan Blair

across the Very good. contribution on to any been to guidance. follow-on ULC revised shift or Software? there organic D&M assumptions level-set & the Has And just Sensors from your and platforms underlying

Jamie Harris

modest but the for slightly moved margin revenue sort add decline raised we've though, of nothing on Sealite revenue guidance We for the We’ve material. but acquisition, material. that. D&M Nothing around guidance in a did and

Bryan Blair

can, geographic deal like and last Okay, more seems color competitive presence And one on understood. maybe will for and little and a more opportunities? what great offer position strategic geographic future growth expanded specifically your presence fit, the mean Sealite if balanced a I

Gene Lowe

we we location to with similar have have tough – to businesses, that business. Flash, you real-time have inspection see like Sure. very added a platforms have We is technologies, have built Sabik, we there. very platform, being Yes, have product, modems, and feel like we communication our really building products, this are tough to where have you into talked Bryan, scale our Similarly strong like we've out about, business you the as out here we monitoring. you these have environments started the make to the have really to we

Australia. know that well. in have. competitor With a there's of very logic They're they nice They based there. good some so very coverage and And have the don't we a being of out Sealite, products Sealite very have Asia-Pac we strong lot very region

It line us not product more much bit only in we what gives a a So in. it we give an that were strength does had. little area less than us present broader

solution, do also product which business communication your Just is the one have that engineers of this we of we've you one important a with we're the working monitoring that is areas. is called in have that Australia, we've really way monitoring addition. we monitor found also for we same we U.S. very in of And your in opportunities work which a that, and engineers of have opportunities after. And think is they They addition rest and software nice of very natural one we've portfolio. that were synergy can there's some logical how interesting identified remotely. really it the do and more Europe, other these together, some already we some been the have things our some capabilities. StarXM, done and devices and in then area their monitoring actually NPI And parts have we engineers the think a you capabilities, case duplicating good in going to in the have work, areas We've

is be applicable as has rest that to this how a we build our again, out. growing, $XXX know about portfolio. platforms But So, a business, million, $XXX think very our goes $XX to is think it's we're opportunities very this think logical and now scale well, building them really a you we global we and it we million could there to if are – million fit. we think platform They're more how and and we that have their of think they the we brand, good nice technology well-respected technology a see

of So, and very there Yes. logic among lot strategic is these a nice there. a synergy businesses

still for So, still family. it. addition nice a We're thank think a it's do. of to days, It's the lot work that. you to early But very we about excited real

Bryan Blair

there. great Thanks That's again. color

Gene Lowe

Bryan. Thanks,

Jamie Harris

Bryan. Thanks,

Operator

Damian Our Karas with UBS. question next comes from

Your is line open.

Damian Karas

good afternoon, Hey, guys.

Jamie Harris

Hi, Damian.

Gene Lowe

Hey, Damian.

Damian Karas

how just with, the sales business of that's So surprise guess, that the possibly. to So And the process you to the I with wondering it margin. quarter? portion on if the decline transformers didn’t sounds highlighted called quarter? one the mean in cooling big a could why just transformers. second it there. XX% going anything throughput like for that, start secondly productivity additional I driving expecting respect regard then that you're you Is or really on But you else color the in we upside were Solutions, really out? quarter the was issue maybe to don't a that with on that's Engineered And maybe give some I just

Jamie Harris

Yes. is Yes, off. I'll Jamie. start Damian, this

wasn't we mentioned, be. quite as we was early some cooling that on is year. So transformers, high But straightened mentioned, getting have were out side the part of had we to we throughput we process but like it to getting that it the big not some challenges we'd we for as we which rework you did – as on as through had it prior do had the execution then was system. as and many Solutions, had that projects as bigger the and Engineered in segment transformers, we're over predominantly the Therefore, project had flow, good really particular one

see the amount I through higher we think we planned voltage had pleased the extra you the and voltage bit there. year this quarters thing over on entered track for system The we've of the far We transformer of little pleased through, mentioned we've can really we're I we're bit a that and still so go rest five still we that last, year with improvement on the product medium of a business, we shaping margin, say, XXXX. voltage be high had we little have with progress what bookings mix, up initiatives with had quarter. higher made go had would a nice business the this level high to when continuous

Damian Karas

type sense. out top strong seem Okay, quarter performance line in does sounded that very makes rates perspective. and The obviously kind the positive start order a you to HVAC fairly year the guidance the the rest and the first of just on maybe you I comps the Could the a wouldn't you you bit imply of of year? year low-single-digit thinking rest outlook of there. how Jamie, the growth have about say this and little had And, HVAC from for exactly you're tough on elaborate called to strong

Gene Lowe

Yes, were quarter, the pleased as side. both well with side cooling very great question. as We heating the the from

at had very we Americas. a – look you If cooling, had well in repeat the did to little Pacific, Asia- bit, we strong in performance

we're and there. We seeing are growth continuous initiatives improvement good good seeing

had side, as we've that so winter On mentioned, good. years, strong. than a are heating the prior orders We colder was

still a said we digits. end We look that. mid-single non-resi in But about to think balance saying balance very the optimistic our level cautiously up the is if year, the we'll think of still I'd We do serve is down flattish it area. data market, I at you we – market that in look macro year. the than As the that at say the of to think better we moderately

So, comes that heating cooling. good see both with a I'd and activity very We guidance optimism. say in lot good of cautious some

line. drive and growth top bottom the line continue We to also to opportunities both see

Jamie Harris

our and data some is that in than cautious. bit the areas bookings log. third-party lot activity we're market of and a color And feel light the front But normal or Damian good I'd of little at just are see say look more of active you there more being a terms where we we little of the the just a we maybe our terms with are – industrial. in where we a see and education, in light that pretty say And would commercial. that in retail really these lot – net-net, non-resi is areas and softness I of terms We more the positive – see be semiconductors business. strength is of there of some our the are then greenfield see mix industrial of we there centers, activity in areas similar government data and office, would we But replacement.

well So, said, positive we of Jamie all little cautious a we're into we positive very feel being data. about and XXXX And going as expecting in third-party are very indicators where XXXX. good some we are as actually with there trends feel had because

Damian Karas

on, the could. guess, Could the And the D&M Got to in on the in this final it. for highlighted leader you’ve Gene, you Got question lighting margin Sealite obstruction if I deal, become just relative profile general really segment? there a global I a it you've us sense and A give market.

of kind wondering competitive that pricing you curious I'm how Just kind be might of kind in really how power position, market? as you much this of to leading able market. the fortified is exert

Gene Lowe

I mean, good think a it's point. I Yes,

R&D I Measurement probably not pricing, opportunities in high-teens an if hair exceed of integration Detection look We – have get there's might more And and have is that. sharing average opposed I there this things margins. in opportunities if typically the anything that. all always on slightly the we synergies among identified cost, AtoN below that have So a there. And there's geographies. way always & our ahead on of to you will opportunities margins It's be technology plan, you our of normal on below think, in-line, margins actually we their expect acquisitions. think & overall, to Sealite Detection margins as are at way, of Measurement fully

to in So, the markets yes, our always of for and like. regulated have most These markets. when we our be are for we're there which all part, pricing and looking to – in we're some opportunities you price markets, competitive could value

So pricing yes, And to of really fully for take feel think advantage We this, thoughts to could know have feel here. – else, any opportunities be the other on I we we're if really Jamie, Sealite? good fit tremendous. that. about started and actually anything get good there you excited and about intend don't I is

Jamie Harris

we attractiveness to have number integration put together. that some mentioned have call we I mentioned overview, you And pricing, opportunities would markets very I for and a think expand reasons. think thorough to We when add thing margins good good plan. a synergies I of of them do we One do

I collectively, opportunity to us in bump business. going a to great this be is for this think margins

Damian Karas

luck all, Best of guys. the with appreciate I it Great. color.

Gene Lowe

Thank you, Damian.

Jamie Harris

Damian. you, Thank

Operator

next Our Sidoti. with from Steve Ferazani question Instructions] [Operator comes

Your open. line is

Steve Ferazani

Thanks evening, Good questions. for taking my everyone.

Gene Lowe

Steve. Hey,

Steve Ferazani

to I lot almost of ask, just supply wanted commentary I've some earning heard case disruptions chain horror a in stories. season to about

are supply chain you as year? You some go chain equipment. through the disruptions and the into were like I of you that it on well Can into get quarter? talk of sounds the pretty components number It of issues diminished depending with walk much. the seeing know you with what and didn't the come do risks size the too global of what maneuvered might just this we And think the you the supply middle about

Gene Lowe

Steve, this is Gene.

Let me thoughts. I'll and Jamie his cost there are chain, then start offer a very let impacts real. supply the take Clearly,

you steel, PVC When and them. costs. you would at seeing at I to these today, been say you look able we is look at where everyone copper, look we've sit manage that think I

do our what negatively say remind I'd hand. where product purchase have in is positively lower is typically has really that I'll business we everyone side. meant that historically not PO low typically We you things very the make that Products. have a that on price beta we Engineered a in And do of variance One until or

and to area recruiting on So, keeping is the able we manage struggle in of have traditionally think it. unprecedented, areas there not I that certainly as of a been The struggle seen input are an area lot do a activity costs but bit is eye one going see something we and challenge is That's on we side that there. a on. had the have some is that our that little we're labor we've

So Jamie, to commentary? you'd add like more

Jamie Harris

good overview. start, good Yes,

we get a often we think calls out question other I and the real hear issue there. is on often, it

think supply lot I chain for we're a availability it, side side. proactive us, of the taking on steps of the

it's safety the while so a where we a the a is we sourcing in our put products that is a not process, the looking pretty focus an spot purchasing take we're kind amount – business go create up to a set to is and very be and down and supply pricing area piece our as of that businesses pricing to work really work which doing Back to of structure well. of and have short. actually options, Part amount good typical right trying capital capital, working the time counsel that when in hand, a to scale on Engineered mentioned, procurement again things just you of third have in as on therefore we're stock at our a lot individual as we that level of we very Gene companies environment today, able of each works Solution have when working We between of to together big quote procure fourth driving management. well can with for we’re see both be

buy. out prices, so And and hedging were through sometimes or lock to a able in we go forward then process

pass-through and good abilities really based Some protection. on it index gives of have so our contracts a commodity us

were four in four also three and those most or to or our ones terms company at the Gene one it's commodities designed boards, If closely, and or those other product. watch think our a materials as engineered that a of you of our of three things whole, at really look we who is been happened businesses be we look mentioned the as probably circuit the in probably businesses the concentrated and specifically I big

But goal. slightly our our that's this anything over in and I'd material, And cost but We pricing able quarter, so, so us. We've do strategy, to sort the previous case. said cover are believe price we this is for and and still calls both can as we two-headed be one is a other a environment, had, of I focus think. That's were we the a say in slight to our materials. calls a positive if – believe cover availability inflation we look that tailwind is really outcome, we back top the good that not in you and mentioned, on of

Steve Ferazani

color. get be there this should the thinking side. this might Great. I or run there as the of that That's quarter SG&A, on the about is in be year? what we one sort for was would non-repeatable, modeling useful rate anything

Gene Lowe

question. great a it's Yes,

drivers look was say. bit Last we On that up a year-over-year basis, big comp little sort guidance I on the we year had and in both a there's incentive additional accrual a a is the drivers, quarter there. under annual par If was up year level, is so year-over-year, as of – accruals. as should probably at it primary two you two or put well out, some

it think very investments I as called focus we some intentional we year-over-year, it And spend, improvement a very initiatives. on intentional probably continuous I'd more was that investment. out make was up did that a was it our in one,

that’s of engineering, a got improvement lot initiated a and on of build a to culture will As structural years it's as those going there we we've we throughout for number process but also as we initiatives We've benefits we that think number back in are overcome helping it's I enter CI office. headwinds in do come had of the XXXX, them. XXXX, company as us in pay in operations, to a our with. challenges, is companies, that that like on meet of And well continuous

investment on big P&L SG&A road. what so us you something And through down dividends call an that I for think pay see the is what really will in the running I

Steve Ferazani

SG&A, is already guidance? comp, some elevated, more this year So, compared strategic incentive a your your prior investments but and making I also, make that's year? to can modeling, probably in SG&A you're just trying sure characterize to your bit little commentary,

Gene Lowe

correct. yes. correct, That's That's

Steve Ferazani

great, that's Thank very much, helpful. you Okay, guys.

Gene Lowe

Thank Absolutely. you.

Operator

There at proceed this are any questions Please no closing time. remarks. further with

Paul Clegg

all throughout joining look Have the quarter. a on call. evening. and good to to us you quarter you talking you thank quarter next the Well, Okay. first forward We for updating again many of

Operator

now this the may Ladies and you program, conclude disconnect. does and gentlemen,

SPX (SPXC) 9 May 212021 Q1 Earnings call transcript