Altra Industrial Motion (AIMC) 12 Feb 212020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Altra Industrial Motion Q4 2020 Earnings 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] I would now like to hand the conference over to your first speaker today, Ryan Flaim, please begin.

Thank you. welcome call. and everyone, morning, to the Good the To they are will follow management's Presentations posted this call, discussion on in and be Events the website help Relations altramotion.com section. you to under Investor referencing slides that to turn Please X. Slide

will management forward-looking making Private call, in XXXX. statements Act Litigation Reform the of defined the be During as Securities

our Christenson; in update financial press refer of turn management Discussion me XX-K, its to a non-GAAP Chief that, statements per Slide from on call, working diluted Carl. the Financial Securities as required law, the Except turn other any margin, believes Christian Report measures QX I'll other significantly from net With whether differ as presentation are share, events organic comparable financial that could Altra's information, statements website. are and on new now Carl Chief non-GAAP reports free With management Officer, inherently Forward-looking margin, under flow quarterly the the call in Commission. reviewing Financial or debt, and on non-GAAP and income EBITDA by alter Altra's uncertainties certain expectations. of tables non-GAAP operating and otherwise. company's operations. Motion that Altra release The uncertain sales, other reconciliations cash the exclude to the will intend release capital, Please to applicable X. are non-GAAP in Industrial Form Non-GAAP recognize On Officer, XXXX result factors excluded over forward-looking press heading flow. earnings GAAP Annual U.S. non-GAAP non-GAAP available income the the non-GAAP non-GAAP adjusted slide events risks, and with Exchange should continuing gross Corp. income, EBITDA, when filings non-GAAP Storch. future described Measures and margin, Executive or investors does must to discussed items and company's of the operating today today's non-GAAP adjusted Please non-GAAP to refer to management's and XX-Q operations, in items not in adjusted net our non-GAAP free cash of These be and metrics measures Form

ensure a circumstances Since first, the to and continuity and sheet balance thanks like review supplying Ryan. to Thank and asset you am XXXX all a and maintain and the Altra people greatest the playing the you, was And demonstrated every that sincere of unprecedented for and safety to Altra all throughout customers, manage maintain the by of results, around period year delivered team. in customers agility faced. leverage equipment four COVID-XX. focus XXXX company. responsible offense while the emerge to stronger priorities, financial managing cost our have that against the exceptional business would managing critical for year to our navigating my of components putting clear we including continuity Altra joining our of results. fight strong through our this full to begin for all through I you member remained those the from expressing to of today our are as resilience incredibly pandemic, Prudently customer minimize the disciplined served the our us help to thank position we abundantly events What team our you operations in our top is I and QX supply onset proud and disruption of

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below down cash pay adjusted reaching also to exceeding net debt million leverage sheet. million flow levels historical make balance allowed year goal XXXX, exited progress $XXX our to EBITDA to the the debt our We us in X.X towards expectations three of far a with and which free generated in times. our delevering and times, leverage non-GAAP $XXX advancing We tremendous of of us two non-GAAP record

system priorities. shared and managing Slide strategic priorities to enhancement leveraging committed highlights to our balance initiatives, The X progress of margin just I making sustainable update and create demonstrate strategic delevering we that costs for business world-class our our our competitive sheet. drive turning we to these clearly terrific on an are Now remain three advantage, across

well long-term. resources directing technology for making partnership with our initiatives that as within and company, up capabilities business automation offerings. our industrial AB spectrum. targeted Industry a we premier MTEK in strive position to move us We the the as a a further also collaboration formed strategic manufacturing example, XXXX remained customer investments This and that factory AGV innovative new as software In expand organic for technologies, company on includes Altra grow to opportunities to focused

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to also innovative better customers We help place. with committed remain the make providing world that our solutions a

emissions will effort For developing reduce in to gas innovative example, greenhouse Class of that is the Systems business our technology efficiency reduce heavy-duty fuel emissions, and support help in Jacobs trucks. Vehicle X improve

move towards cost equipment products applications conduct worldwide With manufacturers our waste increase the of commitment energy our reducing people transmission of validated leadership, and feel vast we in energy of in teams. tidal and most engagement solutions and power engineered to focus alternative improvement products help expectations team. valuable drive engagement and actionable installation targeted surveys, have and the treatment and and and annual facilities from improvement employees water evaluable Our are solicit area. to that had surveys also average, power candid these part our through to the across growth, the from are of another a using clear and supports employee electromechanical by solar, has their supported wind input help a participation as On surveys and as our which efficiency, feedback We transmission the while majority our understanding is top what asset, XX% we that is We engaged continuous foundation of lean change these believe understanding organization. downtime.

ESG priorities our our to our our we and in drive involved get are In improve shareholders, interest first year, that greatest we and that We and best forward. support assessment our coming also with on their efforts activities business focusing are the to aligning ensure communities. plan to implement employees the materiality to that organizations strategy

you to we as continue forward ESG on are We looking forward journey. updating our

Before the market up balance, and in strong. improve in I low quarter. levels, strong expect subsides. finished expected the the up year. truck to demand as to flat garden after a in was Christian, with remains America customers remains builds single-digits the please XXXX China detail, purchasing to in delaying normal call the demand turn and North strong as Class Slide markets as X well returns in in year as more in to be to double-digits of that another for pandemic North the to while X strong market those and accelerate January Transportation had to more continue we review performed the On turn which Turf starting America quarter, our up demand slightly China through is earlier housing the

will year-over-year equipment due market very such was inhalators and Medical strong XXXX COVID-related medical low equipment part in up comps. respirators. double sequentially. flat for to the expect digits We in as remained tough and Demand slow

markets rebound which low-single-digits and to and line be up We surgeries to COVID-related moderate medical a XXXX to was mid-single-digits to not well quarter changes equipment The was could flat modest, distribution demand On line was capital improving hospital XXXX. by as in economy. balance, continue unless don’t Altra. demand customers. Commercial due this to OEM we XXXX down for that the and supply double-digits in in a track until tough which to up income, of is positive our and driven expect albeit to expect continue balance, industry. farm struggle remains chain many down comp implements On our levels Ag forward part industry strong airline with requirements expect to smallest net sequentially, up and policy some sequentially, as the A&D double-digits lumpy issues, of industrial are going up expectations with to new and market ongoing Aerospace, unrelated as expected see expected anticipated the piece increased Defense Renewable in the we to remain the we business was repeat impact. administration are Distribution drove performance which components year. facing market with have overall we to strong expect pre-pandemic the was low-single-digits due as the energy expenditures elective in general for spending.

this Factory market and some the quarter commodity automation continued AGV we the we was strength offset included, manufacturing headwinds the expect will and improve double-digits, for - year. We was not to facing for year technology will we for Machinery and improve. metals, in last are improve Overall, which that Specialty in see down point, particular capacity with markets as down XXXX support to XXXX. in metals. at as rebound until the will a in later in QX We and will increasingly result robotics, mining, and market, double-digits low Other prices general up which market of began mills and automotive in to utilization expect that year-over-year positive the likely and the the In but semiconductor low-single-digits flat automation. continued support demand demand softening sequentially. was of markets strength but markets. we part in factory XXXX sequentially, expect down Overall, low

for business remains starting single-digits was quarter sequentially. slightly to in flat less to expect at ore which to a X% well down double-digits be but iron small component come We the market very sales remains back, down than low XXXX are for and Oil of seeing and our coal up and we of overall the gas, XXXX. off

guidance. end the expect review of flat in of provide possible demand With XXXX if our We the continues with call to turn the improvements Christian some XXXX, be that, go quarter and market year to up. I’ll of detailed oil over towards the modest to the the to price

morning Good Carl. everyone. you, Thank

Our the flow significant sheet. cash strong careful cost results fourth quarter were balance highlighted de-levering and management, by strong progress generation

demonstrated OpCos. the we once our of balanced portfolio addition, resilience of again In

of our were up with in start fourth with prior the the a year period. performance X.X% Let’s Sales review quarter. top-line compared

sales effects, first basis price FX in Excluding at points. grew XX contributed as modestly XXXX year-over-year

Foreign rates effect had exchange basis positive XXX points. of a strong

PTT our And Excluding the segment China into the world, with North be segment. like ventilator A&S up X.X%, the X.X%, the gas, end-markets Medical performance across Europe, net sales sales sales our closer end-markets, for effects strong In revenues declined metals segments of driven X.X%. by a the as continued of Taking truck foreign and in were mining compared market. a key XX.X%, driven down performance market the very last weak. business exchange, and rest net were and Class to with in again oil several by X.X% in strong particular the for at same up top-line year primarily quarter in wind the America sales Asia by performer the look sales declined geography, while X strong and Chinese once was

$XX such result income from were $XX incredible activities to team’s able related consolidations, to is As performance that cash our cash We increase took non-GAAP we and increased by out million. up. basis despite merit and quarter where balances achieved of year-over-year the and photos, or the pushing savings cost, exceeded Non-GAAP travel, XXXX. primarily to $XX increase we’ll and We reductions reduce therefore reflecting in capital concessions quarter million very year-over-year We in of other in by repeat X.X% were million environment. margins cost savings. of efforts approximately operations other with synergies, $XX cost working temporary manage in cost XX $X.X to balance million actions medical The another we cost of fourth points. employ targets we the temporarily and operating estimate million and manage rent as approximately a suspensions, pleased expenses, our pandemic-related our this FX that took

rate year-over-year. continue We excluding terminated rates debt a lower lower the impact expense to the result, and interest benefit swap of the fourth levels outstanding interest decreased in million from LIBOR quarter as $X.X

for compared fourth was EBITDA As quarter, Non-GAAP tax changes tax we have last was quarter our or in income sales, XX%. liquidity. turn and lowered and million reform balance up flow to the other XXX last to for of closer with the know in for the points the year. Slide changes sheet Please fourth rate related rate, improvements, net our quarter provision adjusted basis a tax XX.X% XX $XX.X cash look at

the XXXX, market be million Altra adjusted the to flow with the a strength challenging XX% in a strong generative at team’s year. in $XX.X cash proven the through with $XX.X pleased million We cash compared generated financial continue our $XXX.X for ability non-GAAP prior very quarter Altra was with model, compared year to how cash a business free very million, cash record prolonged ago. increase manage We of new environment. our flow Free the has and

XXXX availability given term XXXX million, more continue facility. cash $X.X In expenditures the debt additional up balance the bringing capital testament to earlier. is Carl to manage We with as even our credit paid in in revolving effectively top-line combined, to of another sheet total and the CapEx manage we headwinds growth in under and million $XX loan totaled than investments $XXX.X to total the million, an during million as XXXX the which opportunities in our quarter, paydown and paydown expected to to $XXX.X meaningfully Since our Notably, ability $XXX sequentially spend our ended shared We million We the be automation the directed quarter technology we enhancements has as leverage with during stepped of of the by we terms below in equity XXXX. paid completing of merger, end XXXX. shared now we loan sheet. we as X.XX $XXX We leverage substantial a The at decreased the below to improved our most $XXX debt difficult Xx debt have remain the have the net X.Xx our to senior committed comfortable total in excludes XXXX. debt. room notes. the leverage to secured we A&S remain net of term deleveraging covenant We and mid times. very down balance expect covenants net million before million covenants to have with net quarter down

due no until XXXX. October and October have also We are not as debt maturities these short-term XXXX

to to growth, dividend. cash, future preserve and investing of providing in financial reflects priorities year XXXX, our of Altra’s outlook quarterly our our impact for reduce guidance of continue In of which top for balance the COVID-XX businesses of this current turn assessment debt the best for our be estimates at review continuing while in are terms optionality use a support to we to leverage practical Slide XXXX. XXfor to Today time. and manage full Please environment our

We uncertainties our outlook approach of the pandemic due recovery. of the related initial to XXXX timing for the the ongoing a to the to are taking cautious duration economic and

until to that general assume first growth, to growth guidance we the late we the While recover industrial will year-over-year assumes return begin meaningfully revenue in that in not will economy XXXX. quarter, the

the effect gradually in year. through second realized of by XXXX would half of cost coming $XX addition, back the savings phase guidance reflects the that In full million the XXXX back of the approximately cost with

sequentially As guidance year. see that result, the assumes the will throughout we expenses increase a SG&A

Class X second will We trucks in normalize the also assume demand XXXX. that China’s in of half

outlook our as currently improve conditions as that our will than visibility, gain assumes and visibility sooner hopeful appropriate. and better gain we we revisit to guidance are We we market better

and XXXX the in guidance reductions $XXX range demand of million; is tax diluted for capital decelerate. in top-line to the to depreciation implement in sales in normalized cost Additionally, With $XXXX should the the the range to we and of non-GAAP range billion $X.XX and XX% billion; to $X.XX of a to as million; million expenditures range background, that million to of full XX%. adjusted to the million; range $X.XX prepare EPS range further situation in range EPS amortization the in for of the $X.XX. and EBITDA $X.XX as follows: cost GAAP in our the measures, continue $XX of $XX to closely $X.XX million diluted $XXX Non-GAAP to the monitor of $XXX year

that $XXX of million. the cash back I adjusted discussion that, to With free turn range $XXX expect Carl. flow non-GAAP million to in We will the

Christian. Thank engaged we look you, experience and the as we discipline XXXX, employee ahead thrive priorities leave positive company, with have talented four that people, and long to relationships, we a nurture Slide critical we continue drive the and strong reasons an and premier us. strategic Please world-class turn behind financial opportunities Altra. to for market advance strength I to to grow long-term XX, as our feel build customer pandemic have will performance, complete to after industrial is about the extremely you confidence

continues several the legacy customer the our end-markets, an our resilient; generative benefit highly proposition as strategic across businesses PTT combination expect continues continued Our to and be base. has of to exceptional our resonate of with we business deeply demand value Altra’s recovers diverse cash A&S to efficient particularly economy prove to be move; from prove to model a with businesses our

customers, thank that, together again ongoing grateful would for call With an Altra support year. and of able shareholders questions. and up open the we the the once for were partners As all now accomplish extraordinary team that to for like we’ll to are during our always, we I

from Please of question [Operator KeyBanc. question. with today your the Hammond proceed first with Instructions] line Your comes Jeff

are you? Hey, good morning How guys.

Jeff, are you? Well. how

Good. Good.

bridge. of looks through want the EBITDA It kind kind go got guide. Just the nominal like in growth of you to

how are wanted underlying in? of of back? there are to that business assuming? of a guide building you in built incremental savings you what’s And Just the or kind carryover synergy much that million the get of any sense $XX coming in cost kind margins is restructuring of terms of what Are

components main think, And couple so, think. Three there are components. I I Jeff,

in the about sales those that be FX-related amount incremental on neighborhood will be our outside assumptions currently the not in have basis $XX and will of XXX back FX that incremental incremental potentially come assume offset of is that We million and $XX points top-line and the a XX%. assume we the First, FX-related full margins growth dollars of margins. million then of that to $X in we the meaningful And million. XX% able incrementals, assume of

costs term T&E are Because I half? the T&E back come don’t going much Okay. year, But guess, all you first to through through have really right? as the this

much least. assume level, that XXXX’s XX% not year the are this be XX% back We first right. half we be and expenses of will So, to traveling going – still year of about the will come at in

sure people for have majority, come to vast We I This around which the of is foreign we is So, the includes European Furloughs jurisdictions people are government retention keep $XX support When at asked the people in to received cuts. travel look components Those of will million, jurisdictions what were million. in payroll. of we back. had, some temporary $XX disappear. disappeared. That think pay outside where the that take will the cost cost. and of $XX that million on some credits

currently travel back will it’s it will those right the of like I surgeries, all There travel and Remember, rent people not $X will the assume we come $XX back come will. all our medical up, suppliers. facility we related $XX be And $X assume the some for then price That’s that that If back, therefore and year. service several back. providers have. is those medical and be, cost will cost. We or said of expired. from we come element maybe T&E leased properties. some that you and nature got the $XX come savings, have come will assumes and Those concessions go XX% million. the have back reductions concessions million of the temporary savings back. we of but million million It’s that And some will will next other now, million guidance remaining add exception will of to that of got The

Great. And talk just think outgrow your the with of assumption, overall Thanks. kind is X%. range? growth of or then, it about Okay. like meaningfully end-markets going which kind to to Can your X% you looks are you FX core outgrow

So, I’ll more off and give kick will then Carl color. you

of half One by is are between X the of the where big that, trucks a we contest end I second softening China headwinds of call what cash XXXX flow facing demand given Class in expire the program June. will

We about and is sales second that next strong that we respirator are that sales million go And headwind. that’s had respirators, in top-line component half $XX this year. meaningful doing the that that’s into a year, of – headwind a the

While of headwind of show how then, a And will the where that guidance range, we depending certain around don’t some we that’s businesses the performance that Carl on compensate. growth, color some much half a want good second make and the rest in upside. add you and we on the that other are assumptions enjoy strong headwind in can where markets,

we so that many variables are what close was guidance. more to came not to was put we the year. guidance it. Jeff, and give are think guidance darn of it’s gave. if as going last there together that we difficult, year to pretty at is difficult influence give because We This kind happen year I to I that I is the to So XXXX, way was difficult going looking a And thought predict did transition and think

that OEMs? is the variants globally are what roll are chip are The relationships have with Are going So, the work they out tariff automotive Is the there the start It’s industry. infrastructure to and to Will we we potential out start impact. to is of – Will an fully build kind now they of are really we that facing. to there will headwinds customers And are going side, and good CapEx just well. drive going industry And to to have some is and the going that demand? CapEx get are that to roll – vaccine from tailwinds. are that again. an shortages our going the other spend China. to the their see out to start some vaccine occur? are so exemptions going impacting go many we some semicon COVID Will on the

start will better. the medical We see industry do to

to a elective off delay equipment expecting procedures see to between the the back. hospitals when CapEx and COVID-related drops and the in We start come are

We expect to delay see some there.

what? know investments Material impact to and going are on a able inflation. at to But material You future. material remain and material ratio very inflation have with happen what’s pries increases. offset Interest inflation, happen low we going the good people what’s in cost make being good getting with to to

and will gas, continue if later than price up the of commodity that is up, Some cost mining markets, cycle to improve. the go now will Oil and come back quicker we oil anticipated? had

that just the like is, joke you have after kind of I back is as it other opens and that XXXX’s going real the so is you expectation again, want certainly over a one roar in XXXXs. and about, many travel won’t, but look this So possibility. out is a The really to that’s go wildcard. And they that celebrate to this up, Are people to factors. but pandemic, if not

So we predict. was really a difficult year to just think it

We’ve this that’s think year? we it good We but when down what trucks we see a to started the think to Now, bit think if relatively people for forklift was midway quarter, space like markets recovery growth. the factories start back to capital continues, to us Europe, come weak. to forklift think – could it That, things again, recovery trucks the like I next even the in in see invest order were automation We do the going to good that again, long-term there. semicon, seen well was relative have investment where things little come pandemic. in have their into that potential back. we and do If some

cautious. remaining so I So, – optimism, but there headwinds that’s potential just think is some are I we many have and

Thanks, Good color. Carl. Okay.

proceed Your of Blair next your question question. with Please comes from Oppenheimer. Bryan line the with

Thanks. Good guys. morning,

Bryan. Good morning,

the you’ve relates that Very then, and of your what should a seeing – outlook And throughout top-line basis color the to To How help relative X% start the there. parts. the us and outlook to the consolidated? order are that momentum to segments year? the how parts X% end-markets walked us lot growth second think given you good half? that guide. contemplated your on you in to moving moving sequential What about that is we through, does range gauge Obviously gauge an had

Yes.

So, up order are think at the trends, that G&A the beginning we – when probably then. the maintained of into And I they’ve and saw look starting February. quarter, the of since at in level we kind in September, I pick orders that into fourth the

think I guidance pretty order a stable at trend well. our supports reasonable So, level been and has the quite

trucks of in the government. to equipment, next comes than And half was headwinds and the in so, X that’s economy or year, that general see the declines back as the the where stimulated this is the year, and by order we back going COVID-related half back China medical offset more what to the if will up the year, uncertainty I pick think mentioned XXXX, of rates the Christian industrial are the that some Class of Chinese where

that So trend since pretty is the order stable and solid timeframe. September

comps. we order be X% the first growth Yes, would and to little so up to Carl year-over-year maybe if to add look you point second just come I to at a would Sequentially, even which the that, bit that quarter. to we have top-line if and when described, flat easy trends can you that quarter, X% I Bryan,

is we’ve where that we the to uncertainty in that half So, that one high degree guide we Class low that the in growth side And talked then the probably second X expect about China, the of in double-digit business. our medical have quarter. truck of

to certainty just that So the is a point bit two the believe And those little are there forecasting camp this and at still we am variables of wind. lot Carl is of as then time, like big noise. of there don’t turn we a financial where in I

out in Europe, the lockdowns still of and in there If you slow with a roll is an lot at look extended noise. Europe vaccination continue

Okay. inflation. material Carl, you That’s perfectly fair. mentioned

Yes.

cite specific that’s price guide? figure cost Is your current that there into baked can you a

No, that in through steel. After what is, machine that the lot or commodity of components think cost customers to in our both cases is our those of that through Carl good we job the procure And you our I the And copper, is processing. know a components input in passing done a through customers. value-add majority then, buy it’s pass past, as some that already we’ve said, goes we have we the in probably to main ways. where, surcharges

our that I we will on for while Bryan, converted can So, the assume us, that regard, price little fact we are price in to whatever think usually the react that It going cost a we material. based pretty we through see increases push suppliers that increases material to it offset to takes get quickly. is the

we So lots castings, machine of castings, parts, with buy forgings.

price it increase and And coming increase, the pass get already offset the so, that. by the along to time we see price we

wage that a well, to offset need pricing it’s of this year other big that. wage wildcard disciplines one that the have price sure that’s to it’s to push we increase increases have six to the to is And increases year Delayed offset seeing. – the the is we that the we last by wage not we through the make to months. have are wildcard, increases So

I effectively, don’t we maybe a So to year a wage have increase this in have, half offset. that know, we

we just Understood. scenario? XXXX case movement of should capital update we one base a what factor as Okay. modeling, then, for one more kind housekeeping working in And the in

have $XX in of capital that $XX million But think We working million quarter. capital be we what that. targeting. we to repeat would to I fourth don’t tremendous say, able performance is will reduction in We are the working

Got it. Thanks again guys.

Bryan. Thanks,

comes next Halloran question. of Your question your Please with from the line proceed with Mike Baird.

morning, guys. Good Hey.

Hey, Mike.

broad levels. commentary And headwinds we the but So, here there. maybe supply think here. chain side, I a channel inventory more chain was said, today? then sit wind where some maybe as stand think also, One, know just to on thoughts you some you I couple channel inventory supply it

Yes.

chain, now of all got shutdown. where, the like things Malaysia that’s supply that’s one some the So whack has game right

keep impacted, another demand. go in We’ll the particular impact some the It those. the this a And to working some place. things disease Taiwan kind is there have keep we some – think the just into I that is did just in shutdowns, see impacting supplier wherever and of OEMs up wind, not unable to in was supplier case that our was with that us. not was

the So, really control. just And under a to going think we disease bit. little that’s kind of slowed continue down things get I until

been of with has pushing keep an issue parts just India getting out we India. back. So

an you’ve are think their seen issue. I logistics

channel, right chain in care supply taking shape. are the job then, management pretty a inventory our good the teams great think the And So requires in now. that. doing of extreme And we is

in up said inventories. it see but we a a bit build didn’t I I cutback not little before have in reduction our inventories think or a tremendous. last of that year, Maybe big

there ability our to a in inventory a they and our And better think build partners to to have – don’t pop like because So big I trying think need gotten channel. back system of as the so is potential channel I result business inventory. demand our our in much excess don’t feel of implementations has that, supply supply

demand very good. and been very has consistent Our

think are exceptional been has I supply we them. for So, our –

a and be pivoting sub then net the you that start Okay. offense Maybe and are you And early and and which about like? just range guys M&A you a to cash swing? you X, from are balanced becomes Are get more what this times starting you related thinking target and preparing perspective the to X.X you is, below the an little then, guys are playing see look what’s in little more are at of to channel or too just how – I this when in for leverage, And how about middle suppose is debt uses year. point? in talk it’s as going paydown question the

us saw, we I X.X. I said a balance sheet. sub de-levering I think mean, be and think was of highlight you paydown the debt that with thought was for the the that huge it time would So I we think, last

to told X.X right customers. the do really to by want go products And a where analysis, what are I’ve huge So it I we And on that by have would everybody end-markets add inorganic a is, and good be better the but, to – our then, for real to we portfolio a have think half we to working it’s now I And to want technologies what the us do we think we very after, accomplishment sub we what is second would coming – will along. of growth. year, the and roadmap serve and And as have that like works certainly highlight.

I end a Now, sheet is always good think the by the should things some have to by We’ll that the roadmap shape that ready we and start balance mark. anything second actionable. question can whether acquisitions the are there right But some well that find have actionable move is on pretty of the half. and partners detailed certainly in we’ll year, find again we and be to provided that’s

Makes sense. Appreciate it. Thanks.

you, Thank Mike.

your line Rosenblatt. Graham the with comes Please proceed with Scott questions. next Your from of question

Yes. Hi, good morning.

Good morning, Scott.

out because COVID? characterize over questions you customers up, I conversion licensed Has orders it of for into Can concerns little demand? bit kind little a had you. because tightened of the doing? wondering And bit, was couple a shipments. what of on Has of spread of are that maybe I

say this customers’ have us asked or slower in They past. standpoint. anything not to from have faster do has Their significantly. I the demand would than the not they either changed

what think are from to areas we bit time the extension some little a suppliers. of in lead a is, starting see I

planning extension suppliers. that to areas. from and a board. the when to sure we in times And It’s lead But difficult customers’ the able we’ve we in when just get areas. plan seen is – going have can one it bit a for demand getting some some So not are the going It’s to by specific we across little assessed it more of are some get of make we demand. and got the be that’s

are? you. specialty, this do you Got said factory semi you the that – that then, was And quarter. of What it. down thoughts what side Thank also, your and automation

for think much into And read pretty I I It’s Scott. us. that, lumpy wouldn’t

have to that’s mid-single-digits I are, we the year the I expectations year think we mid-single-digits on the next look at when expected in and going and but that to growth, drive realistic. growth that’s growth look about what’s and semicon this think think in

reading So it. lot business. segments a many one so a I into of would markets In that serve not I each different that our we read or there. lumpy segments, just as got we’ve am

then crosses to a I you counter mean I by because put than If you guidance? know, all of maybe understandable. I this your that end-markets. like least like try would at of guess, mean, need which know upturn is as cost those conservatively we bigger great you a CEO maybe. are get lot decisions was starting on But be to of follow one moving off timing – know But upgrade Okay. One would assuming as two of question. want get when is also to to would a couple that. I what a I what that do that would see that, there But release, maybe could Gotcha. moving Christian’s think more to do transition in questions are about backs, your I just to an comments also this by be, I was year, that. kind are press comments a am your well, that like is the to on asking you I year your parts? that, kind that? there I trying which you that all about – and guidance that Carl. the and towards – just parts, lot mean in understand

then year With COVID, last What saw in May the I I XX% that incoming of meant think by recovered really a extraordinary our rate was like year, year. by was, the dropped right. order we end

I think lot is a of year, there uncertainty. this so, And

or go feel ask one what Well, September the way and out in feel the am make if than well to the vaccine get October. list. I to you better the am vaccine and I going March, As it better are I get going us is, starts bottom my If future. really what’s the can a I lot roll if whole at to of about in drivers

make to to Kong start then and Hong CapEx again start surgeries, start going start again whenever spending that stuff to knee elective me and surgery. we see serve, If me getting that people house general elective feel the are ramping to general and that’s of some the better. feel then that’s lot and of to and free our better. start that going customers So get the excited. going, I hospital If the to we doing economy people in the we see our to port If a start some to get economy, to from see then about things excited moving out customers If just LA make hip that see traveling thing. it, whole some up logistics to need whole drive the and am restaurant getting in getting replacements a up the drive and activity, replacements going going we things see back one that’s we and lot to going of end-markets

yet. So, those aren’t transition things certain what year, a is I mean

of the some of before year get we’ve probably through the that until think So, we I got uncertainty. half back

that So out. it’s belief more to XXXX be year is a year the industrial for a in transition blow going world. in a in my company, going internally mind. transition be us the economy I awesome for an year my to then it’s the of That’s not is And think,

We races. XXXX So really and I year, and are off terrible. has XXXX coming start I a to a where of through, to mean back just everybody this transition. to which the we XXXX to stress we level that’s the awful normal what by were tough out of life, been manage think transition is get that was

industries. of to are different from You demand going lots have pent-up

So, it’s be super going year. a to

are in think year the XXXX a we So, is right middle there. I –

to and as as Tracy, do you get you when vaccine, Well. your far as That’s then. with very Thank And, clear. you. back up Carl

going to if I to Christian, to something? to turn. I’ll take going But not want jump get wait March, did you it am my can I add am I in try the it. line.

guide. upsides to The second where potentially part is of the it your question,

China, the for that So, as equipment, medical business than the the half Wind upside. faster terms deteriorate I think, as recovers the some could we the as if market truck have think as of could earlier, in surgical, second the need surgical Oil doesn’t market so we potentially, Carl referred if mentioned, will assume $XX, of and maintenance some more Turf far have increase year. we spend. stays pretty we see a in That’s half. see all modest second It pass away we we’ve want is already cautious. just too if maybe and oil some area will price it’s to rig above upside. garden seen the early in to Maybe because and up. continue in Carl guide in currently and gas, in the spend to be CapEx comp

businesses too, if and heavier oil equipment duty leaders Ag are long of profitable so. us Scott, and for those and known gas and are back, enough, us those that that you’ve really And come some mining

it good all that you on you are those. to Sure. not Yes. is for counting But

your thanks hey, for time. lot So, a

Okay. Thanks, Scott.

proceed BMO. your question [Operator Tiss from next Please Instructions] Your the comes of Joel with with question. line

guys. Hey going? is How it

Good, you? How Joe. are

changes. your guidance through structural and end-markets XXXX, needed is not learned you more like be that’s you’ve There layers little I just if I it just is how has really the right. so kind XXXX, of about And it investments more sense some you XXXX connectivity the may any customer that, of of can all and that. lessons us a am to products? of capabilities drive And things been and maybe costs accelerate maybe lot reducing but wondered, of in All about thinking questions give a about management the and learned? and little Or and new of to some XXXX margin XXXX, XXXX, much

a be mix. I think, Joel, it’s going to

can consolidations, we time. the think can company facility those huge how some and think I have organizational will we’ve we’ve talked impact. over cost of the the simplify we that that reduce And a and we demonstrated structure as about mature,

and after growth think, what are want are that drive real profitable we the So, we technologies work really end-markets, on that to going And are the the do with more are have I opportunities exists, we then those that. the company. that the go to doing do what of will higher driver and is performance

very projects what we factors. going that the similar today, from some some profitable. great us and those the to engineered simplification having getting my to is to leverage take that It’s can mind, want top-line then leverage get niche help working in So, to more top-line the we three that products, we driving is end-markets, out. business – on get, One we and we think cost there and be do into be recover economy applications then

sort wait terms pretty not you. just are is more anymore leads thinking reloaded. that willing which little for strategic are smaller to to XXXX a tuck-ins really the you will transformational? And of trying part am the balance And well right of my wait of secret, things you I transformational? in that question, second sheet gauge how deal? Thank look and for and bigger do like long that are longer like acquisitions, your wondered, is or of whatever you maybe the bit I Are more you me like the or to thinking unspoken next is half more question And that’s

business. tuck-ins. really really in that did is And in additions deal. to nice that $XXX million There then, million million with would companies are the is range, Yes, million is Joel, $XX are not like many to be that A&S transformational nice would some we the $XX range know to our that I be would you $XX there be that enough well mean, the which space that good there

I think – years. that, ten might So

Although for that was business. a the pretty effective transaction

that terrific. was So,

the just it expect line shape we’ve think lower to I that with do sweet have but until the we much get today. And of in we big million going back be big the $XX to it’s think where $XXX we they’ve then, so the what we done, you already enough in to would at sheet million initially for nurture been is very range I and not some pipeline. huge end make probably even better a spot the balance So are risk/ on will And probably if difference, a look deals that taking us I

So, risk. too understand if overlap, it’s I big just am you know it, the understand much involved believer you don’t in that don’t markets businesses and and in know and getting and

that’s to will stick in us. be deal probably $XXX think probably to I that knitting going So, range to and million million for we – a our $XX are

Okay. much. very Thank you

Thank you.

Thanks.

the questions to I there are further turn queue presenters the And no any time. back at closing left call this in for remarks.

virtual thank would road Okay. once again I this on you joining to many quarter with today we just of like engaging the for in and months look ahead. be to everyone forward we will and the us

again time. So, your thank you for

call. this participation. your concludes conference for today's you And Thank

You disconnect. may now