Altra Industrial Motion (AIMC) 1 May 212021 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Altra Industrial Motion Q1 2021 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker for today, David Calusdian. Please go ahead.

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

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

expectations levels. and economic strong highly We please that is Thank you And like X. positive for the to near This us our Slide results turn you, thank joining a portfolio first a general electronics today and equipment, delivered diverse underway. review QX position Altra clear in term is tailwinds pre-pandemic our XXXX and to approached exceeded our recovery and incredible quarter operations, in David, that results. and to broad-based capitalize an is automation assembly robotics. strong factory secular business markets in With on indicator competitive,

remotely more and and a across continues culture. provide recover, service later-cycle to deliver exceptional our to into one continue industrial our name in economic further and economy proud validates and more run such safety, strong be will sold our and of confidence for another’s mid- of from in machinery, strategic as that benefit to ensure the advance results, orders As a markets. Incoming to to is recovery and The across mining, ag to has ability team’s gives metals, that early-cycle top-notch will few. XXXX and beyond. our continuing while raise our work priorities Altra world the belief in guidance later-cycle segments Altra momentum our This business. products are the to orders Altra I’m receive customer to continued heavy and bookings markets today us and effectively for markets, have XXXX begun extremely very we accelerate strengthen spreading

$XXX.X Slide QX factory highlights. across performance to an turn of year most Led QX heavy-duty revenue end up of X and strong capitalized please markets by of X.X% overview was as our automation specialty from trucks, million demand we machinery. Now on for the prior

Our performance demand can to our enable share and exceeds a performance. leverage to maintain able We’ve competitive in difficult reasonable be line strong outperform differentiator proven particularly and management lead top chain minimize in competitive disruptions our gains, supply. and these in the like availability this, manage strong supply performance very the reflects competition. production also delivery time when chain times Maintaining on-time and to our product leverage times supply excellence been ability strengths to

We to impact support continue as Altra competitive constraints will share strength further select for supply expect this markets. gains

power We inflation. that the applying and also to focus world-class performance. to our continue quarter and in carefully managing our performance pricing to excellent will essential wage further expect material it operating through Altra’s first by to costs system offset leverage drove We business be on drive

historic flow of to down in generated pay nearly balance flow. quarter up non-GAAP sheet. to to cash our free Xx points, of EBITDA grew year. $X.XX levels of by allowed million we us QX, continue with achieved non-GAAP Xx, QX of leverage the $XX XXX was or us from We XXXX result, strong cash delivered $X.XX, adjusted which a leverage first quarter EBITDA exited earnings quarter expectations the We basis excellent from QX this specifically, million quarter per diluted make share. income adjusted XX% net to XXXX. Xx of our debt delevering net EPS million non-GAAP our exceeded More $XX.X advancing progress that debt of growth XXXX As $XX another margin up the X.X% of and in non-GAAP reaching and first goal and diluted was towards

the I value system premier sustainable turning to business. to when prioritized shareholder promise realize pandemic, were to includes fully X strategic Now the sustainable forward competitive This an aspects leveraging our am advantages our business of looking industry-leading business world-class on teams and initiatives all engage committed can developing teams industrial our improving face-to-face our our we during Slide as eliminating activities. create flow business that value across update to driving drive for improvement and in have a company. by to customers. the improvements, again Even waste of to practices our

As improve demonstrated margin have our results, and by we delevering made drive third with balance progress and managing expediently tremendous to of sheet enhancement. priorities second costs our and the

via to remain address cross-selling, to also line emerging committed innovation sharing growth We drive infusing technology capital directing and top accelerate to opportunities. growth resources to

are technologies market. success There new traction gain our position were to ability the stories add to quarter the were expand that and As motors that share, generation leverage Servo an introduced customers in during take invested example, several and in drives geographically. to of a new year we market and and innovative last demonstrate our beginning

orders example, new turbine For of included customer competitor. wind industry, a based large for from share our the secured we upon leading in took both and engineered we business This offshore number position wins turbines. onshore where a for brakes and repeat both

our also serial customer We order turbine in first wind closed production India brakes. with new for a

have and design an have upon And ensuring the blood gained another of because Business system order our and we performance. while that and capabilities reducing expanded a custom-engineered help call, and inherent compass This conduct Altra best-in-class System proven our priorities shareholders’ we same; continue this solutions the at stimulates the do application. to our and and Business been our we and to Altra our long with ESG safe, diverse the our and with we last linear in waste governance journey. environment business. in committed to customers footprint as emissions includes for as As forward The share our aligned product the System And robust innovative we as earnings on we identifying ingrained advance win, length inclusive develops fully also advancing for across fully we agitation of providing to set fostering on of a way people; processes medical our are remain example, are ensuring serve tools work interests. we the won our eliminating that systematically ESG

Now that market and believe most this our relevant X we simplifying prospects. to growth performance the Altra’s focus to for quarter, on review. a we turning market discussions are core trends and to Slide Starting are markets

markets As are providing exhaustive of end an all in review longer have we the a as no result, we past.

For additional supplier, and sales global with machinery in and and Altra’s and business, we and emission up well of initiatives of combined global end in strong approximately as the we by XXXX anticipated. continue garden, truck providing Longer to expect an trends North and which had expect a trailing global to also in benefited in single balance, approximation a in to and benefit growth X Factory from as normal and class in percentage our of context, up as term, represents our represents performance factory safety which supporting up levels by food on double quarter, with our construction, general China machinery, business, we sustainable single improved Transportation, slightly and Overall, specialty returns high particular than like future more continue up basis. approximately macro to industrial new markets quarter, China stronger in mandates. XX% higher beverage automation. demand high XX% digits digits digits. to flat On AGV Turf IoT robots. represents expect technology represented which XXXX each technology the demand market are an improves. be strength XX-month was about and supported transportation in Altra’s low America in the X% digitalization from rates ag to categories as automation market business, was strong #X tailwinds packaging, demand we of as collaborative business specialty robotics, the we of

in remain turf ag construction We on growth comps, and will in sales, and tough improve. double our AGVs, surgeries. the by was demographics rebound market secular by aging digits and year-over-year growth digits Medical in decline supported was low position exciting systems equipment, strong and to due infrastructure about secular elective of continue up surgeries trends and continue supported to in sales, of market that as single expect X% up sales but long-term part tailwinds will like represents to X% us, was about with handling, prospects the improvements. a and spending. remains capital is forklifts XXXX offset positive an COVID-related down market We vertical for noninvasive long-term by partially hospital slow such garden nice as which all robotic Altra’s increased realizing population only sequentially expenditures. and This growth lifting on which and Material

there growth as in warehousing as growth cyclical strong us, market, Although by advanced several this efficiency. is well improve are technology driven to including e-commerce that excite a warehousing tailwinds in

IoT with large in crane X% projects represents traction of early some strong about due year-over-year around had have installation in was we energy, the which digits energy addition, up In sales, to industry. investment globe. Renewable the single low renewable continued

to was flat, exciting administration usage single higher-growth sales, comps in We with A&D our project competitive about Altra’s attractive demand this term, renewable high of continue barring strong offshore be a a for barriers large to we’re due reasons. growth as aerospace profile to of finally, down and favors any XXXX margin and an in strong and expect X% Altra headwinds, very has and play energy part, both increased a near-term And challenging market for is business defense, policies. timing. to, onshore for which entry. renewables global excited position digits few is Despite about new Longer position wind. our combined

supports and this We XXXX guidance. commercial out provide Christian in resurges of turn point in the to a continue aero that, business investment the the market land-based to pandemic call I also environment to and the will review quarter of continued some coming geopolitical and defense at With aero. the detailed rebound expect as XXXX will our

you, and X. everyone. to turn morning, Carl, Please good Thank Slide

balance cash Our management, Altra’s strong were once flow in by delevering and cost results quarter careful sheet. progress the generation again first highlighted strong significant

economic to our us of we balanced of a our businesses. resilience opcos on once demonstrated addition, emerging the of position and many across recovery that market has again strong capitalize portfolio allowed the In

by review price XX a to strong now driven top points. grew Organic period the in very X.X% line with March. Sales a prior were up sales Turning with X.X% in first basis of our performance contributing performance compared quarter. the year

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

across support move foreign exchange, will PTT segment which X.X%. the of sales effects further with our momentum we year. the for down we been Excluding improvements strong through were Bookings businesses, the net PTT PTT has as believe

driven compared end XX.X% medical, were impact automation the markets, and and last exchange, the by sales across machinery. same Excluding specialty several year, foreign quarter up of strong top for with performance factory A&S transportation including net the segment line

XX%, primarily lagged due In both exchange, in down rest were channel. by In China. impact demand benefited closer and by likely X.X%, up of Taking In tough truck these X U.S. the to as sales the Europe’s the geography. segment comps. the behind sales in some improvement China. addition, at in we vaccination impact a saw In markets, the performance and were without of than in of our world, America rebuild Asia North Europe, foreign driven strong less growth part class this in efforts strong inventory without from the Sales X% grew revenues in exchange large look foreign market the

non-GAAP the quarter. XX.X% closer reflecting the lowered and tax reform Non-GAAP in of before on came first by and constraints. of as changes was liquidity. first grow look $XXX.X compared modest strategic that year. net operating balance XX related of cash was up provision tax approximately this, a other in expected, team’s for our saw increase As for efforts sheet, quarter sequentially EBITDA XXXX of million The improvements, and Slide the taxes and flow in a basis and points, that we a sheet related changes sales turn million to purchases were cash XXX basis approximately quarter control our last income items, reg our basis for exceeded anticipation manage to to million pandemic-related reflecting stronger normalized incredible capital to to million Working $XX.X $XXX balance XX.X% at this sales, cost at supply environment. chain of made margin adjusted points a up with our discrete Please rate. in in or $X.X result returned XXX able Despite we savings we cost

the of capital. model million, free cash from $XX.X Non-GAAP the financial business essentially despite flat the flow increase continues quarter serve to working and cash-generative the Our business for resilience well. very in our us year prior was

our the to track opportunities, an to bringing million we since continued and the reminder, of typically another $XX ago first direct and technology loan, paydown revolving quarter. our remain A&S additional to we totaled automation In a total under We Capital cash from ended our the achieve Xx the million $XXX.X and by is the during We net facility. up a As available $XXX quarter credit acquisition quarter growth investments Xx, expenditures the debt quarter, paid enhancements. down $X.X $XXX.X leverage on year cash in flow-generating quarter decreased as million, million including below our lowest to with term midyear. $X.X million million. leverage to net we

our align quarterly growth leverage target, to reduce further leverage top our outlook our opportunities our which growth to trends. an strong in Slide segments Please secular align our Altra and visibility with XXXX. We with with business. update for Altra for that both ended across dividend, for continue shift achieve $X.XX Our be per support priorities raised capital toward back allocation to better on expect we share. manage XX optionality our tailwinds allocation balance, spreading investing in into was debt and investing to future to recovery capital in economic attractive Once turn of continuing QX our preserve to to while we --

for result, full year As increasing XXXX. we a our today, are guidance

through general Our to revised year. continue guidance economy assumes we that as recover the will the go

back back therefore, second of will SG&A effect the expenses We full gradually throughout by throughout cost approximately the of coming year half with million XXXX, the sequentially the increase of $XX the of XXXX year. realized continue and, to to savings in remainder cost expect phase the

tax and of to non-GAAP up the a revised demand our class the EBITDA $X.XX, to million the $XXX in of the $X.XX continue $XXX of sales to as as million million; adjusted $XX that of million range million, from expenditures million; $X.XX non-GAAP in $XXX the from of to EPS $X.XX; from will up discussion second GAAP also to Carl. before a I range full range is non-GAAP will range China’s XXXX. of the in up we for to of $XXX of $X.XX half million X XX% We rate back approximately in $XXX to expect in assume billion, diluted discrete of with capital truck million $XX up billion million $XXX amortization $X.XX markets background, from in billion; of the EPS that for to range and and $X.XX to $XXX to normalized XXXX in guidance the range $X.XX, free the the depreciation the wind to $XXX that, million. $X.XX $X.XX; XX.X% flow tax year normalize cash $X.XX follows: in turn in range $X.XX to And items; to previous our range With diluted of billion to

All Thank you, right. Christian.

extremely start the year. with to our We’re pleased strong

growing of is are increasingly as move secular market to beginning improving we a on Altra a we capitalize the are and position confident broad-based We that at the tailwinds through that recovery great year. in

focus line a This our the opportunities. ensure our business efficient Our to margins priorities Business accelerate industrial cash-generative and our expand on System we executing top balance sheet, sales model optimizing Altra and remains includes to leveraging opportunities synergies, our strategic delever the growth maximize company. as and our cost premier across are

now our on progress. thank keeping for performance. call for And shareholders hard recovery look and with once We and an XXXX would guidance the in to team the continue to deliver excellent up their incredible work world the we’ll I that, are as industrial new updated open like questions. thrive our accelerates our XXXX economic Altra beyond. again position to and We to on in forward

Bryan have the of Oppenheimer. a question with Blair You line from Instructions] [Operator

a If second is unique margin the either you’re variables better willing at suggest guide, to progression, to annualized year-on-year? order the should basis, on you think how we given book quarter guess, of provide growth? directional some play momentum about what similarly, even I for And a have sequential or,

Yes.

that margins second coming be at of first we quarter, the between EPS then China the market we to pandemic. to and look going to of think the the in million. profit look will significant will we we the full we think we will take from that sequentially if hold -- compare prior and price And So first as the increases revenues into XXXX, XX%, the We that see the $X as year decline, to North up increasing be while challenges XXXX. like demand take chain. we consideration the compare truck somewhere last we at while when despite see to and from continue we in is XXXX pressures are from second will the a increase. offset year, that XXXX, think go class quarter to XXXX through And to year. year, and think we supply that American supply continue able that have need to to half quarter chain $X truck million We XX% will probably SG&A, this somewhere taken we gross range, cost through that to European

sort million, in back something And $XXX somewhere second million, of seasonality the where $XXX revenues. half will like be, that, to around I some don’t we’ll so know, go

CapEx. last the pocket detail dynamic an that missed class mentioned Helpful makes updated been shipments. sense. demand electric least ago? X the air shipments the apologize improved it of at trend quarter outlook expecting medical for elective Is quarter, in with out a Okay. medical I We’ve you if called -- pause the of and half reopening that wind-down I early-stage you the back reset And your from of the somewhat outlook on in there. in headwind of respirator what procedure procedure-related was with

The Yes. in a little I elective it is improved expected. think are we and than better investments what It surgical part than incoming business be, the we bit has, of somewhat. the the rate Bryan. would It’s better thought had order

be continued strategy. progress range you with outlook into pretty hear. analysis your near to are targets bolt-ons been to over to guess Looks lever comfortably term. your are and target are simple balance portfolio when team back your to great We comfortable I the growth has get right ability the as you on inorganic If And X sheet. flow for is, and ready half? Good within back along, see a deal my cash prioritizing your came go the question like you or Okay. of focused move to now? leverage know ready on you’ll on the we the very

think by would the end smaller good that well of a a big Yes. bolt-on, that we’ve runway and to sight we’re I But within flow a industrial got world in we’ve think you us the get see anything on comfortable our very don’t do significant, of I cash here acquisition. year. got us range the line pretty the

-- if big, was you So right be us something. too deal and we’ll came see not it so I would along do the think

line of Sidoti. question You a the from John Franzreb have with

Curious your [indiscernible] you in limited handling? later Is the order recovery. business? [indiscernible] material to a are the gas and that and seeing oil cycle mining Or recovery about

think oil and So gas, yet. not I

the we the and aero it are still gas. pleasure market of I at, -- and because markets, at I look mean, that oil quarter commercial the for myriad gas, I -- analysis the during and look green aero the is oil except to at think almost of now, and was X end everything red when real first end great really, look the markets a

So lithium declining. demand up in going way to So be to related actually improvement, this with In of a those see CapEx still starting few mining, and right? acceleration the seen we’re I to is And projects. copper that’s we’ve think electrification, X and some electrification. some are

XXth time mining calling about in I’m the That’s optimistic I’m now. bottom mining. So the

million remind next the $XX question, going wasn’t to I regarding expected come cost you. back. The of to

the of balance the for that the that you comes is? said first Could for you what what’s think repeat year? balance, cadence of missed the I And what the I how question.

Yes.

good news in that. embedded some So

quarter fourth That $XX First million that then into -- $X.X heavy and But and margins back. the came first SG&A to been still be show in meaningful our we’ve through was to QX through portion go. But It demonstrate the that. mitigate in will cost the increase up able quarter. to, and the as sequentially able will as a decline we’ve to SG&A, quarter will we that million management, in QX of been it leaves go start year.

we be I think will increase the as when initially see it initiated we significant not as guidance for year. the

I specialty in. Okay. QX. guess QX question, and in I drove that if And one improvement sequential A just squeeze Any in could factory Was significant improvement? the that versus anything it machinery that? automation color there

You’re space? factory a bit. breaking the In up little automation

There was sequential improvement.

improvement. Sequential

Was that out? sticks there anything

Yes. There a few things. are

I equipment well. well. was did I the think, did but assembly AGV to that Electronic was Semicon business primarily Robotics think due did to, well. off, really comps.

too. then had processing, So of And beverage in and factory segments were food food automation the in in really and space. yes, we packaging the solid, some some nice growth equipment

some it’s So -- in with in nice trends broad space that of of business. part the really the that part

the You with Halloran question Baird. line Mike of have from a

of couple a here. So clarification questions

where First, doing market maybe well plus confidence perspective optimism? looks particularly you you from from makes does to as XXXX a what you’re that are what the seeing your And growth as come perspective that both market to whatever excited add just, Carl, the like? on in

is those big for are to well there’s projects now, typically run And in activity doing right Well, and I a industries CapEx markets CapEx big early accelerate. -- cycle -- later-cycle years. not we’re believe and that starting the those markets few the seeing

of good So getting that the just business. we’re I mid- feel late-cycle really the into part and

through momentum was time. of action And I to good realized mean, couple was pandemic, pent-up of ramp-up demand. any that to and the slow barring and into last like recovery period some pent-up on think government we for get prior the of So felt the I fits pandemic, a where to back there’s there a look and how starting demand and were starts to it that is carry some or satisfied. and the get with it monotonous a phase going XXXX, of I

that I pushed year. think So out a got

we’re there’s it’s the a And you I we’re look some and I look in think and of some mining the for been at the acceleration longer-cycle mind, cycles, really there where we demand, when -- nice -- pent-up at my phase. they’re back markets, that at there’s recovery. -- and and due ag good

from you least when a a equal. chain, doing And you’re versus through thoughts supply the managing is everything. how maybe in price/cost, all pricing through your the how you that at on some environment, obviously, it’s managing you P&L well, you think -- the prepared competitors think is about So how and differentiator you’re how rolls supply else maybe backdrop But the inflation very that said year? chain hitting and this you comments, intimated

been back. cost trying we as QX, suppliers see can’t chain prices, increases supply anymore. in The got pushing in We’ll that some back Yes. We’ve to we’ve successful is increase really pretty tough right? and now, right push are probably

they to area them the we’ve to ships, to seen one of and region shipping situation freight, times awful lead a that’s X, backlog The issues. up. have concern. got relative And COVID, Right where an the container you and game, or And like so that’s as logistics X pop container as with push whack-a-mole of now, just and a the weeks, down result out the commodity, one just start challenge. the it’s work issues you with,

for a So quarter be worse little we to second just probably I And bit us. the to is going working. have think keep

fairly And a reflects we environment are bit little guidance -- cost/price. price our the through receptive. for pushing the but think I that then And is price increases.

going business, some the industries whole and a pricing to is we power have through better the the world get other and And other bit price do I pushed spaces. I increases some little price of have maybe think after increases. think we than because our chance nature

a price get really, make probably material the QX the chain supply that I the impact it. to confident a expect said but it wages from we’ll to hard I’ve and worst offset the get I’m cost do minimal. both we’ll increases, is really be And So working maybe Q costs, we’re And sure before, that lag, will standpoint. as little

I can can price high we profit margin that range, expansion Mike, increases. if at end even as the side, price it that we said, offset the margins, through And as hold And year. Carl increases add, guide we through can assumes the the a the of commodity modest gross assumes go side, component on

[Operator question Instructions] line have of Markets. from KeyBanc Jeff Capital You Hammond a the with

late. I jumped on

been we So if addressed, follow up. can I already ask something that’s

you’re a are companies what of in about more talk is of buying price just recovery been lagging of A&S side? had think terms And couple do versus you seeing these the kind Just why ahead robust I’ve of terms what’s follow-on in PT on then in maybe more distribution. say, of broadly, restocking increases. people

Okay.

my think that, really sure that’s increase, because and I -- I don’t strong though, of do opinion. in Underlying lead impact the We they that the predominant strong the strong people they -- are that we bookings to is is times and some that had, extended in know certainly the mean, So that, demand that some chains the know we’ve with but what not it’s there’s demand make that’s that. buying ahead supply have of demand. exact need. at of have least not factor

little were business. a comments have the OEM think part distribution in both Those the we seen and I of restocking our of bit the channel. across

We of been the get distribution the but seen book-to-bill. restocking, it’s I sell-through we’ve some think data. in side, most

And not build seen, a desire least so on restock inventories. products, to up significant at and our we have

has I pretty they to also ability don’t to restock. think the our so been have need good, far deliver and

few increase. that ramp increase. will increase, to people when Now happens give price orders to we that XX announce ahead orders price of we happens the been days, their increase. a your comment price and to Typically, And about XX the always a to price beat of some -- trying try can that you you get that sort seen have out. that up But have

-- the the underlying that than is there PTT solid. So and higher feel on very really in business lagging, businesses businesses. in later demand is I Jeff, then the comfortable, PTT the dependence think mid- markets later-cycle A&S I And

see that still And orders runway as that big and are I also one some to they’re bigger, see PTT of into this would to we’re good the those shipments that starting later got some things for some little businesses some that in just And lag some turn lead work on. recovery we some time starting products. that natural projects just There are actually it’s businesses that’s later-cycle get come a of reason that’ll So that the now through. the longer PTT pretty we’ve of feel heavier-duty of in bit.

seeing order that the some some mid-, are in? leak of markets What activity are where you of late-cycle

Yes.

order So think was where port some activity. the one and other lifting is cranes That’s we’re seeing the Marine equipment, I things. good. mining of pretty heavy

in see some to orders there. starting We’re

said So as -- I a it’s earlier, it’s broad-based. very

with business, and up, markets the Even and and and business. nice I and and think commodity going of improvements oil those metals other gas But we’re maybe activity lagging, than up we’re couple then a in later-cycle power steel there’s prices there. markets. aerospace seeing some building activity gen some the demand mid- seeing that, of

-- Carl? mining you you again, I the turn hear Are calling in do

was my That XXth time. Yes.

Okay.

XQ. have where these issues -- the supply kind worse it better? getting seeing you Just worse, supply put kind on expect guide say starting any look on it relief you half? in these you supply back see understand, of into chain growing of get areas you as second you’re into the But and gets to And how help like me chain Just Like issues. to are and you it’s

Yes.

us biggest for right So I think now India. the concern is

and number concern. in We a suppliers India. running, And they’re have up that is a but all now, of right

now in side, at managing impact And would the those are we, Logistics think biggest through so to then automotive that. I cross-sourcing or the domestically how of some to on continues a Daimler And side challenge here be Cummins, price. going automotive pockets are and probably the components like on a concerns. our it’s shortage higher cases, chip the

has one surprising impacted But. another bad in Texas resins. a how result is long Resins Yes. the as the of weather -- the

of And regards the creating the to at customer level are a get are still our so production taking the and, And in therefore, in outlook. some that components can getting that other uncertainty challenges down. is us actually combination cases, just in lot in for but, components not is

don’t it’s the to managed it’s So through at or signs well. disruption, We But much start minimal near we that, in then that probably little going very at customer going we’ll far, a in get we’ve very get the hopefully, see it’s whether worse Actually, better had And little this level smooth out level. to term. our after a QX. seeing things bit.

and of XX anchored backlog up L.A. I significantly. off capacity XX now. think Their the port, down ramped has ships was in to peak container they’re Port the

of it containers. So up free -- logistics them, they the they some issues looks load as like

stuff So get onto put containers to in on to somewhere. to stuff one issue they’re ship because all trying was put

bit. So starting a to little ease that’s

management back time. additional are There for will at remarks. no I closing to it this turn over questions

you, engaging to ahead. the the And on operator, -- joining you with thank I want for Thank you in time. thank in call we forward next us and to everyone Okay. And today. months for the your look

conclude today’s conference Ladies call. and does gentlemen, this

You may now disconnect.