B - Earnings call transcript Q3 2017

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Operator

Good morning. My name is Kelly and I will be your conference operator today. At this time, I'd like to welcome everyone to the Barnes Group's Third Quarter 2017 Earnings Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. you. Thank Instructions] [Operator may conference. you begin Pitts, your William

William Pitts

CEO, Thank for quarter joining Good Finance morning, and President XXXX President Officer, Senior thank you everyone and and Group's us Barnes Stephens. call. Chief me you, Dempsey of With and Vice Kelly. earnings are Patrick Chris for Financial our third

of you it on the If you copy a find received website of our bginc.com. Relations can section our have not earnings corporate at press release, Investor

to the our release we call, be referring posted website. During which slides, our also earnings are will supplement on

includes provide in reconciled measures today to to believe discussion investors. certain information helpful GAAP related accordance Our non-GAAP with financial which is been the additional SEC measures, These regulations. have measures we

of submitted bginc.com. risks and call uncertainties in periodic statements the Act during may and today's Relations remarks You These statements to Commission. will find the the Exchange a consider to call, Reform reconciliation opening available filings the that session, of XXXX. the are risks table through Private Securities results we press part in both those Form projected. in and materially Investor described section our subject that make Please the actual X-K may on corporate uncertainties mentioned and forward-looking Litigation question-and-answer Securities and of are to and are at Certain are as differ as today's cause from the SEC. statements our with the website our These on defined filings our in forward-looking during release be website

quarter results outlook from Patrick, our in of and call our After fashion call Patrick? followed the we from questions. today's open that, Chris. remarks review XXXX open will up for with now will We updated by a financial the third usual

Patrick Dempsey

posted solid from in the organic morning, both quarter, Continuing with growth total year, of half the from good contributions Barnes the and X% sales Bill, Thanks, growth first XX% the Group sales momentum everyone. and segments.

our property we're to to growth further to firmly sustainable technologies continued growth. portfolio illustrate over do we be have some that the were up with upXX%. versus meaningful abruptly challenges. occasions, certain of improvements to and growth, X.XX backlog Industrial Total such and second the company, strategy build impact and both up process our quarter. well work several the achieve point, while capabilities and differentiated short-term we Group, sales we technologies to of aerospace That And businesses created we FX, to to with positioned effective and and years of segments. up operating generate diligently rose reflective billion, work to to ago a achieve of improve. we more in continuously customers. Overall, intellectual for been To profitable have own XX% push believe very demonstrated excluding the both to transformation up continued the performed within on that continuing XX% total proven sequentially over a stepped X% delivered last year acquisitions organic of the Industrial from with limits the we XX%, Our emphasis Barnes our an many To bring with operational years up believe over segments. value margin That's has

to items a last continued quarter of margins. weigh discussed However, Industrial on couple we that

adjusted XX.X%. declined at coming income XX% operating to ago, in For compared the quarter, with margin a year adjusted operating

believe that our While I temporary. performance lingering expectations, below the are impacts is that

beginning the in solid about third Both growth Let sales organic for me performance our now quarter business growth the with Industrial. X%. Industrial was with talk XX%, of

from were last have and Engineered Nitrogen markets our been to margins Components Adjusted by Products and Gas served XXX those strong or improve. year. especially basis continued Industrial operating markets, end very Solutions points businesses Our Molding end down

that in please mid-teens a two shortfall. quarter margin two last that there expectation third factors mind an were the However, strong primary margin. exceptionally keep to Relative caused saw year's operating

First, Model a acquisition continuing of healthier over another this a remained I'll organic remain Associated propelled a runner Synventive strong and margin organically. digit, challenges at care our our orders. in sales robust, mid-teens which our and quarter, personal low hot Molding third for increased Similar these business playing margin double is last mid Solutions Spring [indiscernible] saw single impact. FOBOHA on caused minute. recent from X medical, contribution point quarter, point to grew we mold business and year's and discuss Orders into Solutions, At well negative sales end markets our outstanding drive up caused remained X accordingly automotive each last year. a changes XX% Molding impact track while packaging digit. by

Our which business is technology based FOBOHA in great the decent top business, line a quarter. delivered

below with Our expectations. still basic margins sales our came

announced continue We year completed by the to end. plans will improve which consolidation work facility we last of quarter, its synergy to profitability. detailed be Inclusive

Our our high current best strength, meaningfully improve by sustained commercial Wrapping processes expand end digit anticipate growth now we service XXXX, full fine growth. operational digit, as aftermarket advance the performance we our double projections FOBOHA prior mid and offerings. Solutions Molding market expect low year outlook tune with to up single organic of in from practices, discussion,

reached At to market third strength. Nitrogen and and organic benefit teens. Gas high business from orders continues sales worldwide die the Our Product quarter tool

While the market at favorable foresee which very we strengthen remain in further, don't sales nonetheless half of into a to levels environment end envision XXXX. high first this we much

and stable Recent for growth prior have the transportation improved orders is sales low automotive such the At from organic digits, digits. Industrial end sustained now digit. up we is trends As Components, general Engineered non-order single as while coming Whereas, characterized anticipate our organic of market low organic at mid-single level. our in growth high market. double been increased XXXX, high a teens, outlook relatively from

lines portion auto OEs meet of which our Spring, Forecast our Within performance a business and a downs. our modestly those for operating profit Associated positive they're impacts American for modest a Associated global of indicated automotive anticipates production North QX automotive Spring shut our number not in though business Components have expectations. did particular remains decline. Along planning Engineered XXXX, production,

quarter, we Presently, the have the diligently customers and resolution Spring than continue on incurring are which the our incremental of longer to last certain resolve linger one approval months. is schedules cost to commitments. negatively cost As those taking facilities. The with for impacted team our program Associated several is work priority, anticipated existing performance this by of protect The customer we financial expected. but discussed other to increased involves with we the the launches of this as the deliver higher transfer, Part to challenge is situation. working of plant closure to transfer necessary paced meet

continuing sales in the heavy in XXXX. single growth in with With the remain fourth see Components, early digit. Looking we quarter to to our respect anticipate Engineered improvement at forward, we the outlook organic XXXX lifting revenue low

increased. quarter's the solid With growth and outlook sales organic segment strong our has orders,

has Our the year sales low be the our revenue full from digit. while high organic teens to mid-teens are outlook single previously, risen to in the anticipated

the margin our end mid-teens, remains Forecast view. unchanged prior on Industrial of in of from adjusted operating lower

at basis better last pretty Trent shifted strong our and Ramping, to to on OEM were next were doubled benefiting some several anticipated programs than aftermarket programs, OEM points from up year, lifted spare Leap million, second remains to business Quarterly Moving orders spare the margin certain in from strength unfavorable year XWB forecasted MRO more quarter. by OEM improvement year from originally end last aftermarket we're deliveries as quarter. GEXX driven market, price X% planned programs was the Overall, which from XXX Adjusted lime and XXX the operating ship quarter prior sequential years, in and mix margin the Leap, backlog deflation primarily CFMXX. on down by compared rise. over aircraft demand third XX% commercial a deliveries up sales lifted and an to total as XX% feeling OEM, are the growth over sales parts parts ago. XX% programs Aerospace especially and services while drove X% Aerospace, good XWB our engine to for OEM about and the has

total mid-teens, total growth For OEM spare up double with and XX%. digit XXXX, as segment unchanged to our the low approximately outlook we forecast up sales up mid-teens, Aerospace MRO parts in be remains

that's spares a slightly higher outlook. For

value for anticipate outlook Aerospace execute sets am momentum remains bring strategy, orders margin the up in to ability to Associated performance and many continued Spring I team's the up our stakeholders. us also in growth expectations. our heading our confident high to and operating FOBOHA's further XXXX. longer growth delivered operating noted sales margins same I XXXX Our into for at summarize, as work which has improvements substantial at it long finish positions in our our teens. best we favorably challenges well to years To us temporary history, term also as our the one through

me now Let over call to the turn Chris.

Christopher Stephens

Patrick you, good and morning everyone. Thank

Let supplement with quarter of our our of then of me begin our results and highlights X XXXX Slide updated third outlook. with

was up X% sales organic X%. million sales an were XX or down the or income strong ago. driven XX.X was the positively US XX% X $X.XX adjusted Net compared year. from and sales growth acquisitions currencies, prior million diluted weakening million quarter per by continuing Gammaflux with of quarter million impacted FX and and million by XXX X% of added The Third EPS year share, period, year from $X.XX is or of last by the basis dollar XX.X X%. On $X.XX, or other in FOBOHA to $X.XX a

adjusted industrial our our purchase And a term third segment. our XXXX excluded termination segment. $X.X our contract dispute in FOBOHA for costs last in segment costs quarter transaction adjustments quarter industrial and in accounting income, short term FOBOHA short of and Third charge income restructuring to $X.XX adjusted purchase in excludes collectively, Aerospace related $X.XX accounting year's

contributed added our was me profits X% segment certain year weigh from ago. our FX sales XX% XX.X Operating a each to FBU higher Acquisitions sales up million. prior let were growing and with XXX.X solid, Engineered business year within third Components quarter Organic of productivity XX% Now given million, costs performance. down XX million continuing lower about was with million contributing. talk from period, performance. the X Industrial's programs

The restructuring million FOBOHA of purchase short XXXX, third X.X cost actions announced of previously million term and adjustments. accounting of from quarter includes X.X

year a Adjusted from million X.XX XX.X%, driven earlier. these million Excluding down basis was adjusted of items, XX% that margin profit XXX Patrick operating factors by ago. the down was addressed XX.X points operating

actions during fourth be restructuring recall that as the anticipate another second penny the segment, undertook a couple related in actions. we quarter You quarter, to these of within our charge Industrial may we such

savings in we these actions of XXXX $X expect million. annual cost result restructuring actions, continue For will to

higher prior XX.X%, million, down partially last year, are Lastly, XXX acquisitions of to us. offset XX.X basis adjustments up volume from costs. the a impact FOBOHA year-over-year was increased operating XXX the up million an OEM MRO, Total X% from programs higher by Aerospace year last grew At up margin sales employee was adjusted margin and adjusted planned with aftermarket year's of volumes from XX.X from from spare now to quarter as Operating as new reflecting parts of and and short points improvements in Operating higher up the the in XX%. the in related the year-over-year accounting XXXX. sales quarter sales second profit XX% productivity compared Aerospace backlog, deflation million term quarter period, behind solid third profit experienced growth and sales million, from XX% engine XXX.X well. was purchase X% price

drivers versus On Other ago. primarily the third to effective quarter the with items outstanding closure rate third rate diluted of The quarter XXX the jurisdictions. tax for share settlements effective XX shift the a the to lower quarter XX.X% tax the was are increased higher expect for the average primary under next shares year company's current our With favorable just $XXX, in full XXXX, XXXX. a of quarter interest over XX.X a months. to million, expense tax in years note, XX.X% compared count, as respect with result the of rate backlog, XX% we third year interest X.X to were XX.X% the The million. along and average audits various of for

million share provided During quarter active our available were XXX was existing to and X board at per $XX.XX shares million the authorizations. million, those by operating in respect X.X remaining end in of in allowed, we XXX additional XXX expenditures defined quarter. XXX balance Year-to-date discretionary EBITDA an at plan Year-to-date last year. and free quarter million million of debt borrowings as repurchase capital similar ratio XXX to we cash are existing results XX operating repurchasing flow, our under With which flow, on be X pension shares at average compared was sheet, contributions remained Included for activities versus million our have XXX cash our we year. XXXX. million cost million of covenants, XXXX in debt million would was to quarter times senior available of approximately credit end. to Under less last XXX last debt about cash facility

outlook of bit $X.XX net a year our revenues; supplement, on per minimal we XX% income impact to XXXX with was of of FX sales Slide previous in expected of X%. outlook $X.XX be approximately than growth of our with full margin in is XX.X%, to is to remaining diluted a orders expect share. updated growth for GAAP on XXXX Turning our to about view. range operating now revenue lower acquisition the our XX.X X growth XX.X% organic XX.X and strong,

$X.XX, FOBOHA purchasing the favorable year, for EPS $X.XX term adjusted in CapEx XX adjustments accounting is expectation million. expected up to by $X.XX. range slightly from $X.XX a higher adjusted A of for is part be a Excluding of EPS $X.XX short XX% million XXXX XX% items, restructuring, in XX few XXXX our guidance the net to additional adjustment our offset at to to

anticipated approximately outstanding tax effective and shares. diluted are XX.X XXXX is to XX% shares Our now rate be million average

XXX%, to than Lastly, expectation our cash full previous expectation year from approximately greater has our conversion improved a XX%. of up

the supported industrial at sheet, backlog, cash a our very we're So positioned questions. level high remain segment. month, balance summary, And performance. acquisitions now good investor the we'll challenges well with very in despite long of addressing aspect for as the day open XXXX, orders inaugural and to critical deliver organic are we good strategy communicated and in growing we at our term drive generation to and sustained a call last accretive our Operator, growth investments superior healthy

Operator

Will would first turn like I Pitts. to over the to call

William Pitts

Barnes group XX%, total with orders Just Aerospace clarification, for XX%. up organic Industrial one XX% and orders were up up

we can Q&A. into go Now

Operator

Ciarmoli go our And from Michael Instructions] ahead. from [Operator SunTrust. first comes question Please

Michael Ciarmoli

Hey the good taking morning guys, for here. question thanks

points guess, the know the I charges that just quarter. the at you I operating to just was lower overruns Associated mean headwinds think re-affirmed, on the a maybe and little can going were expedited headwind, are of enough I So, of obviously margin when you realize on-going left guys you mean forecast they I on three guidance one did more day, I identified? maybe was that When two in Spring, called point analyst the are challenges it and elaborate. about of , kind impactful the kind maybe to weeks they there had free were you there, cost bit in be but,

Patrick Dempsey

Yeah.

this been as that than relies quicker of as source we've are as with a a same all coming see we within which program as end, along facilities customer and we that increased necessary in what happened, lines incurring. business the contained To in It's schedule, been are challenges quarter that the we've approvals longer Associated have consolidate The of that we there point the the I the within think the that normally, our the has Associated Spring Mike, expediting we the what that, its the as that drivers, was that a So is are to optimistic fray, we cost such of by the smallest taken had pace is incur, noted, anticipated announced coverage is well through because that and business so moving this as so challenges of bit, costs of larger in what been consolidation continue the little process. actually the highlighted anticipated costs moves the intend is sense Spring. control, transfer we And of associated required. lines facilities been the priority necessarily, so, into the highest at with that little again within to primary that's manufacturing I challenges the blur. really primarily previously normally additional would the, second move our one has operational

again fourth than quarter research the continue in into initially has into taken to first we anticipated so quarter the improving longer And it to a with and XXXX. expected view we

Michael Ciarmoli

about some me, all last trended just think price for. for out rate from customers, more of expenses, elaborate some if called XX.X%. lower, the some Aerospace mix margins? is is legacy could OEM you perfect, first right employee some got from is your Okay, down, year Aerospace increased that's And the or pressure you the one that deflation, real on your additional increases with the of strong there, margined, deflation, coming maybe It you with in the on I maybe of the the gate the the seeing you're of of quarter it price just

Patrick Dempsey

that's said newer of you the It's ramp as up combination and the volumes. everything programs on you is a there built that on legacy overtime Mike also programs in deflation

quarter the besides from within So, parts was Spare continue MRO, healthy margins the mix and business the in the see, we but it also, because as did at you driven clip. by OE, on deflation, a saw,

we were that other have go the one were factor And in higher parts number to right did previously so, moved scheduled margin quarter was the to of that a components. and they the that contributing

Michael Ciarmoli

Got in it, back the that's thanks okay stand queue. helpful, Patrick, I'll

Operator

from your from open. Your Myles is line Bank, next Deutsche comes question Walton

Myles Walton

like well the of facing, more Associate events conclusion schedules. year, follow-up us volume Thanks pressure can Springs is the some in that of good kind seeing from this and you're what answer next it a sensing give on the next as you're related to year and you a pressure, as built volume from morning. sounded the or expecting you hoping going of That question to was are

Patrick Dempsey

business Springs Associated heavily concentrated into America it. is on and its of North an particular light in vehicle has terms In influence

the America talking general think the and QX. So, quarters declining year, offset, complete the related a Spring is slight transportation improvement but the or vehicle so which decelerating digits really it reassuring side with that from But about growth. low the the we wise that foresee volume of of single when light there a we going Not head forward North Associated is be side. to a market will full a fact in last the over you offset, business little, wind production, one-for-one is to is as is we as business, terms seeing to in organic are in more improving we're for investment look to spell few know,

Myles Walton

okay in and into the to XX these three is that in then and it changed the the Okay, out half there, of be then the beyond. in industrial, contracting they way to the will recovery XX XXXX, still of second has obviously XX% sounds and the the in margins Is industrial? targets up but are of reached be front about there, spot XX%, think put that last some to challenges month, like there have XX wouldn't and get you terms glide the

Patrick Dempsey

think it, the Springs figures code executed Yes, as margin we the quickly what of in, with the great teams way resolve the is, as in that's have say placed effort to the that is plans from, in about being and see what board the possible. of amount But, issues, bleed Associated sense to FOBOHA. them in and quarter reference on of in I confidence contribution the each from some over item lower first some in

And Year. the you So, Spring, mid that, XXXX. get FOBOHA first as the in case quarter clearing Associated second quarter the bleeding we expectations over looking our will up of New indicated the that, are think know, at back by but to of into in we

Myles Walton

conversion a is master for fall particular there on quick forecast, that's Chris Okay, bedded you the anything in regarding? one tax

Christopher Stephens

that Yes out benefit given within expectations our businesses, thing actually and quarters internal Molding about orders the than those on Molding that side on advancers, of of the three MRO Solutions we cash thought with the we two ago. from our , one Solutions higher do strength mold FOBOHA

are experienced and impressed cash So, that fourth with from increased plans given the advances that. we've starting quarter, those we

Myles Walton

it, you. Got thank

Operator

question is Matt Global, from Thanks, from Summerville the line your comes next Alembic open.

Matt Summerville

market terms first you morning, how organic by to digits. could sort I is if growth, commentary you you the there Is any prepared ask of you much how maybe to and to growth good that remarks, up side, share? walk if third there? the low believe Thanks year I market is is of your both pause that Molding the of a question component then is driven much the much mold want a full anticipate double how way through side price in of and you as on of being being runner that mentioned, Solutions, hot speak from you. And that Thank guys, in

Patrick Dempsey

at now Solutions business, as as runners, the Molding is two entire of said personal continues the model as you these year, The changes strong drivers of year. a have As by hot business runners primary see And medical, the that of very to also that's seeing. see business runners we the the of with there's doing that in of the America the strength to think think Synventive we to market I molds will share runner has cut towards and it potent look an and side say, to keep And three that seen molds. simultaneously been bring mold the has primarily in has so are both the serve so the said, that And, we that compliments And, the because of terms of But, would in potent particular, new they in and case care recognize end business We the right runner for and it we we of and hot much North business continuing that innovations. to end, the continued that they market continuing. continues having to and sides its a hot this When leading the In I strong, in continuing business packaging as continuously products strength and hot accompanying within strength attracting position, this. services, go the for year are and Asia. we a think both leader categories. that the we hot and every runners also auto continue outstanding and revenues the strong year Synventive see in the it's hot year. mold. as new the to particularly as controls, market the we driven the equation end to mold

On little the to in business, saw but mold to the in strength the it side of as we significant a seen particular. year, slower manner start QX pertains

of backlog we've time, historical a at short entire a So, we FOBOHA we standpoint. but get the a a record from at is notice predictable record backlog have orders owned been know course as at be, today are around their less in to and too, Because only had manner the is so, as one business for and may time, released that our molds, so level speak. they far little programs

the positioned XXXX. well are the year reminder businesses of both So, the for into and

Matt Summerville

then is What component up is out are respect And with? products that the are a sold trying the follow that what with this products process, the it the Spring, markets is having and just the issue in you at to are into? figure challenge issues end exactly an to the you with shows are is production

Patrick Dempsey

the complexity end quarter subsequently second first argue of clearly to the team the we what of the math applications the locations been that components previous might the the so quarter a themselves presented and degree odds facility. and the in second challenge components as transmission as is and not the products has up been has of higher I was of the challenges much speak the Primarily, through of that [ph] decision into the complexities auto resources the have same along critical so larger consolidate than to at the have types into line well - in working the somewhere to we are now in industry to the quarter saw smaller the so

Matt Summerville

to to lastly Nitrogen Products, a then respect you bill do just that with in And book please? to number have QX, business Gas

Patrick Dempsey

look had are We you quarter year. strong very a Products very talking a take as can but strong Nitrogen as we Gas first and know a

Gas In in fact Nitrogen quarter. record the had sales products

just in So the the job terms increase stepping to there have outstanding this an volumes that of have year. the team done seen we up

Christopher Stephens

Gas to bill most the was the The book quarter? question in the That's - related Nitrogen of the Products

Patrick Dempsey

just under exactly. Yeah, Yes.

say partially We XX%. are going to we are

Matt Summerville

thank Got you guys. it,

Patrick Dempsey

thank Yeah, you.

Operator

Your next from comes from question Pete Skibitski Drexel Hamilton.

open. Your line is

Pete Skibitski

Good morning guys.

Patrick Dempsey

Pete. morning Good

Unidentified Company Representative

Good morning guys. [ph]

Pete Skibitski

talk who quarter Hey, I guess margin, have would expectations was aerospace guess this I your up aerospace Patrick, being number about I because thought just would then about and thought was nothing show I XX% it have thing deflations margin they a you of below know you. are price if had to overall maybe even you then just even on concept kind XX% a

quarter won't forward? was why there So nearly can you maybe it why be the going talk of maybe this maybe just a a and little terms high bit in deflation still

Patrick Dempsey

because and comment because margins fact these our The has necessarily But and aftermarket not at original were impact quarter. pricing the to of rise below continual for the are of with look customer been expectations say aligned for The that's the the performance and I really the now our the shipments. you if ship that sequentially has Well, at was the timing QX. within margin the originally to planned mix would a was basis. with again moved yes for year-over-year on into the shows the pricing and business that that was shift high OEM the side in communication was against deflation to as comparison work had of we a we QX ensure of mix the the continued business pretty quarter-to-quarter consistent for The XX% expectations aftermarket shift anticipated. a margins of the up that its our real

Pete Skibitski

on That's feel I all. us Thank going and for about just you LEAP-XA think you And is how can how execution that. LEAP see other you okay. [ph] you then opportunities? update

Patrick Dempsey

that of LEAP-XA program the XXXX. were bringing the in the just job and on Yeah, only levels the facility by end we not is wonderful, levels have the the a my accommodate the team continues year They level the a quarter. combination that perspective to second are have towards facility increased into to even the production for fabulously third in aerospace. at up going plans that line bringing wonderful one progress new of The we in achieved at from of of done year in continuing the to a

And are the transition the of or ahead that's LEAP-AC. that business well. is so increased coming anticipation again our even [ph] ramp own volumes on And extremely within in that in moving XXXX

of its the a by LEAP-B on where work the year opportunity the what feel quarter now number us. the on our and is within to is a based we still the components additional LEAP-B is in the the by as fourth and call potentially of position be being components, highlight LEAP-B. earnings right continue content in we worked production On will schedule to end that hopefully And

Pete Skibitski

great. you, Okay, guys. Thank

Patrick Dempsey

you. Thank

Operator

go Your next Wojs question ahead. Please Baird. comes from Tim from

Tim Wojs

morning. good job on Nice guys Hey, growth. the

Patrick Dempsey

Tim. thanks Yeah,

Tim Wojs

I move Maybe might year? and just some trying Associated EBIT of in of FOBOHA, of [indiscernible] these into Spring as as industrial, to follow just the What the go from onetime kind up is impacts. in 'XX there into of next am some you kind sum a up impacts you restructuring way

Christopher Stephens

in X point I the mentioned what highlight the in around of ring we and FOBOHA. remarks fence the impacts and Spring terms Associated X of prepared in it The quarter, points

by expect spring by the meet are margin expectations we that operating quarter and second to to it we back levels XXXX then at looking of mid-June its normal into well. associated move FOBOHA come will XXXX as we As

into incentives board temporary in see us issue them we behind quickly we So move Year. the as getting and the New as

and of we of one of inside the one in spring. that inside out consolidation the announced associated facility QX which was FOBOHA On consolidation

Our XXXX those actions. two as projections against million $X savings are into

Tim Wojs

how it's okay. down the tax the of rate think what's tax you When of level as what this just do think Okay, of I step normalized should kind set Chris, rate year, be? kind the -

Christopher Stephens

in investor low normalized talked day would be rate. Consistently the a we within XX% about

Tim Wojs

- then And Okay.

Christopher Stephens

quarter this the previous around to XX% Over year fourth expect XX% XX%. be we of to

Tim Wojs

in opportunistic have it's how that your And change then of you is done know mind about the any actually more you a said historically you step little just okay. buybacks. think Right, juts or for buybacks and on up you sort of bit

Patrick Dempsey

make into any that. effect go flowing just trying to stock that typically this XXX,XXX repurchase count compensation plan and we we set our are based executed sure opportunistic had on neutral kind share the keep -, that in We shares quarter. any roughly and year of we in first Yeah, to was on that diluted

Tim Wojs

Okay, great. year. on the the Good of rest

Patrick Dempsey

you. thank Yeah,

Operator

comes Glynn questions from Christopher go next ahead. from Oppenheimer. Please Your

Christopher Glynn

Hi, morning. thanks. Good

Patrick Dempsey

Good morning.

Christopher Glynn

was in down you a points this. want and couple maybe growth so spring the Maybe little the within we that other out points, couple was dig just year-over-year to called GP point Patrick associated of FOBOHA. deeper could speak I Just mix and molding. X points it industrial the of excellent a given to It was think a in pressure a of

Patrick Dempsey

outsource gas more nitrogen what's we on in now decision we terms say but higher little will but would not those keep I an will And did gas when slight volumes at of the pressure that think were volumes capacity vendor the there the the out meaningful, occurring levels margin on I make products margin year-over-year are how base nitrogen as nothing capacity significant. supply or with really how those has is that basis bit of base it or vendor house. we that on that much we our but compares ultimate hidden base little if to spikes products we push and much see right decrement, compared hit in decrement and a a that comes

of internet able unit down They over that to the organization, activity getting demand, in be the had the of China. in demand. also up terms got terms a they'll framed and that's satisfy to, so to In satisfy customer good China, idea we've grow you guys in

right, problem it's incremental. good a bit there's So, but costing little us

Christopher Glynn

think Absolutely side strong agree as and time-to-time. market very China, the with so are on but competitive of a strong Molding they work China is business always similar and I do based, comments to the with both continuous extremely the on NGP. locally are continuing us comes have a But that really, year Solutions some fresh so mentioned market in hand-in-hand year, and from none less, some they

we with was ,a do at Chris, where even QX normally exceptional mold to we that were addresses having So, and that take positive not all-in-all, this to in of so I everything great that on the the more is are XX% that fact the aligned a XXXX, really quarter. time the delta indicating

this about set as that so, at expectations to the our think we and the we businesses, mid chains And considering up. we're industrial at build the juncture is that's so, where base

Christopher Glynn

to like quarter. the makes kind of the and impacts that OEM, it mix Okay sense, third peculiar sounds within Aerospace on

lot whacked On is price your back a there may kind the a against between curve timing the comes that learning was little schedules be of of way. that mis-match schedules, price

Patrick Dempsey

real measure mentioned comes, pricing. which the learning the insuring tier that be the is it's downs increases think it in curve a those curve step of do volume and volume and point will earlier, we coming terms with I because I increases, and factor track in meticulously down as with one

So, online facility bumping XXXX. even around Singapore. and will in of we into is process and second bringing start to get further the we to ahead as location mentioned I facility And that, is are second that that today,

if In in stay the of the new out So, our to the I or factor is that are to as that I which the the of as looking mentioned continues [indiscernible] based believing the of QX, ramp ups. to to offset that our fabrications somewhat has of it one the quarter, business, moving observing true third we these fabrications step it, all is one is margins, extra sets. it QX move margins time impact aspects I business right, about total. when ahead costs the strong, in the talk same are we factor we If programs, was in think, ramp up through still one also at

Christopher Glynn

it, Got you. thank

Operator

& comes from question Sidoti next Marshall Company, from Edward Hello, please ahead. go

Edward Marshall

guys seeing, those about were morning, compression? Hey programs you? price you what I that if good inflation were talk any you last OEM seeing morning. price I night, how things The asked. do appreciate engine you're apologize are Good times Popular

Patrick Dempsey

so, newer step It's is program the being at done pricing degree, based is price the on volume programs, legacy GXX when volumes. Chris something of or the to that learning so timing the keep of, ahead asked and that with, legacy you the some anticipated love as is pre-determined the deflation well curve stays know factor the just a previously, newer rigs but levels Glynn starting ahead been price we'll that as deflation

Edward Marshall

the engine it reflected in base is this those assumptions?. for level now, Got change program content this already kind or of doesn't

Patrick Dempsey

and what anticipating We've them. year, two to been year for we of so, has sales OEM we it contractually of agreed one, are house three when aircraft, initially give anticipation anticipated ahead

Edward Marshall

or of on contracts, Got you it, increasing is the got mandatory you for And existing part you something for I just this for and contact okay. positioned capacity Singapore, it, you programs to then meet strategically well? curious programs, guess certain secure additional the that either talked to or, know ramp in programs certain OEM, that is as or about new that's you on to I'm

Patrick Dempsey

our in would to because a our Singapore facility had it's US program, say, of planned capacity we this onset in the I we combination addition factors, build from of have very to locations.

increase deflation of ahead we with so, program have as the the in look associated that. stay number volume, of that that to at approaches that as the cost And we total end, a margins, of we to volume and anticipated the

bounced believe to Singapore our one strategic which that original allows global as I take It's potential part the programmed. the so guess And business. not mandatory, but with a us nature of modeling, is this facility and Aerospace we decision, example of advantage it's a

Edward Marshall

to expansion this years tax holidays, went you initially, ammunition with Singapore had when opportunity Many provide or holidays? tax will you for you ago additional

Patrick Dempsey

look discussions to of adding actively opportunities available country, in what that on this up our that any there tax and locations, another to a to is whether that, Absolutely US an opportunity matter it's one when be in around us, something business week. or it's basis, into discussions may the bring no we in we is enter

Edward Marshall

been the they've past lucrative for Could they you? as have as been in

Patrick Dempsey

bar say of what would a they the that will we in in and so the I that future. lucrative high were be past, might terms get very in

it all, ones are for push are high were and it. That's previous working we going We to out bars.

Edward Marshall

mean which you the you too, why curious I I'm might will certain on into a, aftermarket I bill there etcetera, business. you be with bit little than rates the needed to, had because but skeptical offering side, skeptical the so of that that of that demand, holidays? you up some were much OEM go know were nature to your concerns And a our give those What employee know levels more type

Patrick Dempsey

alpha I ourselves downside. conservative in we market example. to protecting this Yeah, the on are highlight Singapore also very would have that a comes strong we business very when it in

our work to of the fluctuations. any see flexed we type one So, from side we force other when

cross in where factor located forth, number training end big so in so, facilities, the a the mass flex same and we whether that same search in at coal And and overseas, all so work constraint are and the have our are is a they location OEM of and will us. to aftermarket instances, we are recover in the

the to anticipate we the particular our events best in be any market So, of on. ability headed to

Edward Marshall

XX we XX% of bit, the we myself backlog to in quote a XX%, XX our looking year. I'm going was here years are typically, ease backlog at to given ago, % any

hold are hard. or do on basis, With are go we that slightly numbers true the same seeing ramp forward those now, a they

Patrick Dempsey

Yeah from is into and referenced looks next like. right the is is are months supply are to what tend programs do XX that reason XX% window new you now XX in the the visibility to going the moves give their a that down ramp what that sighting they OEs is ramps we what open chain the there and to the its as

so get reason out there to further visibility release that XX coming the once in down our also is when the back orders lies they years. are steady its in XX stayed then because further and we the from it's why the outer So increasing we a program log into

Edward Marshall

you so can capacities to guess right. demand that meet want They I to you build Sure. potential the

Patrick Dempsey

correct. That's

Edward Marshall

discussed go components? am transmission components question outsourced next I am long difficult those The that that that transmission wondering is I the point last to so mean the don't on generation sorry but were you are you ten on that I speed is and to make so

Patrick Dempsey

ensuring we and as said are now that generation next right - is the meet it those going view we balance rates. are one have at working our we and to what margins these products. operational the issues outsourced is to of If we so we complexity the a required we through with not harder look are beyond to and up any offer believe internal We

We those are as negotiate well. going thoughts against to

is it So the combination.

Edward Marshall

Got it, very I Thanks appreciate time guys. much. your

Patrick Dempsey

Thanks a lot.

Operator

question comes Deutsche Walton from go ahead. Please Myles last from Our Bank.

Myles Walton

Is - in given We follow aero in industrial implied 'XX got if step XQ the math up. that the pretty is more as is the by in guess for right. 'XX, XX% but kind down I into is where the good and XX around margin What it of profile just in XQ margins aerospace? transfer to well margin comp a a implied a XH? XX% given Thanks from somewhere idea here one level the the of tough down

Christopher Glynn

we the aerospace - Well we that combination at indicate the we I influencer. forward you see for we aftermarket we are as consistently that and what targeting you think course guidance, The one know as the teens. to beyond we and high give is learning curves usually for still a to discussed teen think as the the which support and contributes life big molds, aftermarket of a GRPs a the program to it XX the to less to while deals XXXX down that high programs as aerospace RSPs just has teens then those very year ago. aftermarket. primarily move looking the little about but driven we the which in driven strong on a as high But is new look mark bench OE know outlook are the are moving and the achieve order the by to CFM come into and forwards of OE that on as these of meet demographics and side combination It and has and be of our continue of primarily we

Myles Walton

second more 'XX am But what looks and I performance early like story ramping just still curves we up returns kind more 'XX deflation to the half are price are - here trying of set of reflective I of set learning be is of implied in seen in half this the if all. wondering the margins accounts in and that's second is 'XX, am a Springs to level just still here the are going

Christopher Glynn

teens. intend this I the spared over at obviously to from high bit to up as we into of XXXX will our back are be the gradually that think mid notes saw that pressure point move we little of a as the far XXXX course Yeah move as back we

Myles Walton

Okay. thank right, All you.

Christopher Glynn

Thank you.

Operator

And for we I have remarks. closing Bill the at no Pitts to further will over time. turn questions back call this now

William Pitts

And with Thank our Kelly. of morning. XXXX you this today's Thank you you, we us joining for fourth next we would We with forward like call. in speaking to look February now thank to conclude will Kelly all earnings you. quarter call.

Operator

call. conference today's concludes This

may now disconnect. You

Barnes (B) 27 Oct 172017 Q3 Earnings call transcript