ITT (ITT) 4 May 232023 Q1 Earnings call transcript

Welcome to the ITT's 2023 First Quarter Conference Call. Today is Thursday, May 4, 2023. Today's call is being recorded and will be available for a replay beginning at 12 p.m. ET. [Operator Instructions] It's now my pleasure to turn the floor over to Mark Macaluso, Vice President, Investor Relations and Global Communications.

begin. may You

and Elliot, Thank good you, morning.

here ITT's Savi, me Officer. are Caprais, Luca Executive Officer morning Chief and Financial Joining Chief this President; Emmanuel and

call morning. the results X, Today's which ITT's ending XXXX, this period April for announced we cover will X-month financial

annual non-GAAP please based Slide X begin, differ those expectations. results of appendix will most The on due now the we otherwise our available is to which of presentation financial of Form report forward-looking website. It over in include such measures materially morning release Luca, to to GAAP our comparable results XXXX comments risks in several our of call may measures. SEC quarter noted, to presentation, today's be or this quarter will on to X. current that on will refer include our statements including the we and the reconciliation today's Except the described where on compared are recent uncertainties, Slide Before first other to and we pleasure note XX-K present are our first my press both and detailed figures that turn filings. in and are Actual of begin who the XXXX

good Thank and you, Mark, morning.

highest QX quarter. If recognize and we always, thing would a $XX in were improvement solid to of XX% And around investment accounts, our to employees remember, cash performance is more leading orders than deliver support customers points ITT. such We begin first that and and flow. both EPS to want like their quarterly ITT's revenue by in to growth, on for thanking XX% segment I million all the As to able revenue would continued I ever, ITT's is your our about thanks one our margin our organic XXXX strong basis growth, shareholders growth, execution. to X% a on I world. results, and XXX again, you start growth efforts free It to organic is like there also delivered expansion,

a million and aftermarket acquisition partner million the our with in of $XX $XX shares deployed of Micro-Mode We agreement in strategic towards ITT Continental, also signed Friction repurchased May.

and with [ XX% already investments entering North market XX%. grew get momentum and this backlog Now continued orders and XX% in with OEMs, growth, let's pumps with awards with orders cycle, EV in on Industrial large in and significant details. electrification and XX QX. In added of most our generated electrified China importantly, the awards leading as XX%, won vehicle Chrysler growth as ] commercial sales large gains The grew energy connector grew quarter revenue business green into grew gains. America. while over On platforms in Motion BYD Process short and including eclipsing XX% profitable share the Ford an result to we Continuing growth momentum We Technologies, share above and Project project a the valves drove orders baseline decarbonization. aftermarket for related outstanding in IP's to IP electrification, continue. an orders orders space XX%

margin quarter. Once way XXX consecutive third led Industrial XX% again, with basis end of execution. to Process above Moving the the points to for expansion

and completed using Seneca throughput, improve the will the pump movements, short ITT QX, team, manufacturing the lead lean spent strategic process. in on When size, to will reduce out we pricing Falls new campus, accelerate backlog. Together layout. pump reviewed built leadership single and with projects be I delivery. excess By continuing across our on cycle lean the flow of time increased is shop one-piece accelerating actions IP's progress eliminating at our every floor on-time our push profitability portfolio time in driving and are We on and improvements it

finish have We quarter, We the reviewed I and the that improvement, were floor we the continuous investments and finally future. line. Also team. this and returned with of made a are spent journey time on Wuxi on plans our shaft no to for China

may employees amazing while December, and operating throughout remember infection feats by through pandemic in last maintaining You new year that isolation delivery. wave Wuxi our capacity on-time in the mass working XX% and all achieved a adding

production such for lines to achievable. It how what a initially Wuxi EVs, capacity plant share, market support beyond region. will EV vision adding wonderful X discuss gain continues to team plant in in was new high-performance to in we the the the person thought and As and with it we're was especially increasing new growth be layout

similar Saudi investments why a making growth region. And saw IP, a their gaining We impressive expanding center. last market is performance perfect is which growth the in growth the India, which expansion its with Germany, projects, testing of firsthand. delivery capabilities. In design driving on-time in I decarbonization opportunity, great had Bornemann This testing we're Arabia expanding support we further in and center share orders are are is in our to also year.

right All of investment. these sites have for earned the

as the subside generation and will also is last to Free quarter. up prior disruptions positive in free cash trend flow we We the cash versus we and working increase capital chain rebounding This begin ramp. a year. $XX million supply expect coming is deployment. continuation capital, And we continue to on with quarters, executed a of saw cash

of $XX million paper. $XX million paid outstanding and of shares repurchased down commercial ITT roughly also We

more platform. Each space sustainability with and quarter, brings the North like I our defense announced for connectors America the approximately connectors manufacturer, technology position ITT profitable we of progress Micro-Mode highlight for investments. connectors $XX to specialty held complementary portfolio has to making years a yesterday, Finally, XX Micro-Mode in million. leading than is acquisition and a our

emissions annually announced including more efficiency energy As COX green completed. and projects, panel by ITT's installations you month, X,XXX sustainable last these will reduce a tons $XX initiatives. installations investment other we million hopefully and saw solar than in energy Together, once

outlook. XXXX our to Moving

by of quarter. range first EPS midpoint We $X.XX adjusted are strong a after raising the our

We billion and to $X margin free segment backlog a have EPS our revenue range midpoint energy in flow. organic aero, an and exposure delivered markets. In of growth, deliver auto updated renewed the due guidance growth we QX, more points over million basis of and expansion, in XXX and ability double-digit than to confidence our execution, cash and to growing increase $XX

So now $X brake supply quarter in let this our to me share commercial XX-year pads signed Continental a In wins March, agreement aftermarket Europe. Slide some we with of X. billion on

to this pads premium for consistently partnership. Under will team brake brand. and quality us copper-free ATE, secure Friction service customers, our of the the provide important pad provides brake Our Continental's auto level Motion Technologies and continue helped this highest for contract,

will another Nigeria. twin on their X are in were on Bornemann ITT aftermarket. In $X Continental we brake improved pads incredible the Continental market business our we reduce avoid X QX, customer Friction The XXX won expand system's in from emissions fines. In in year of per win the tons want the roughly Industrial this and Congratulations decarbonization the large-scale chapter. capture project field next at XXX,XXX to the the the LNG sites and good to largest and developing help over by COX to pumps largest multiphase the role delighted is and establishing exciting million aftermarket tons that will customer Decarbonization ] Vincenzo entire also in of thank Additionally, early car anti-flaring our world. the awarded to presence environmental XX-year Galfer, ITT's and to China. and Thanks hard serving team in our incentives our over carbon pump, eliminate expected volume plays lifetime. team play the our project, pumps April, to The opportunities, of Bornemann thanks for agreement green continue preserves This Bornemann to way an decarbonization industry. ability will Process, We're I to at contains for the of value elevate is to Bornemann the oil and with the our COX over gas largest agreement in a to them term. world, energy our Europe. Australia [ pumps It Yaron ITT. and likely the projects the the projects, of technology. screw will in aftermarket billion sell these value intimacy trusted highly help our in expand technology boosting share of total working Bornemann customers. brand, leading sites In and continue to pivotal an

from their growing entry acquisition, their $X connectors announced Mike, detail. welcome the now XXx entire smart recent Gerald, to and defense part it been Products customers been high-bandwidth I a we needs, of manufacturer and radar, attention creation has space Micro-Mode Let's of EBITDA, X for the will strong, of the are the like accelerates. of its a has company responsiveness performance, acquisition, forward was this to into with of Micro-Mode in potential Micro-Mode to our long-term results $XX designer here multiple and purchase applications ITT that, over million, and approximately quarter is success, of CCT. for connectors Micro-Mode ITT. significant team, discuss more discuss With and the our business Yesterday, The our great years. market they've love as choice improve on is Emmanuel is first systems. Micro-Mode's niche gains the to to harsh effective for together. With the further satellite billion. Micro-Mode addressable with valve applications, acquisition mission-critical in customers. approximately leading to a expect look than long-lasting to programs turn as I turn and product total acquisition. which markets call we XX this their space intimacy Slide frequency approximately Brian Habonim, Micro-Mode and and value radio qualified more defense

Thank morning. you, Luca, and good

this growth. by organic Let's In at organic We growth, XX% a book-to-bill our impressive, X.XX on double-digit sales more IP, the by led X. and strong given XX% performance XX% generated quarter, begin all revenue our was CCT. Slide IP

were are continuing we growth projects drive aero top aftermarket continue this quarter recovery. awards line outgrowth April, to with XX%. In significant We the the CCT, in commercial into our strength on and and seeing of orders up

discuss result of deceleration in grew a the the market. As on we XXXX Connectors X% this when outlook. grew position platforms, strong this on despite our XX%, Controls key More our industrial and

gains share lower and pricing Finally, the Friction actions in in in OE volumes aftermarket. MT, offset

As the car a is correction aftermarket, they times lead future see a rail to last its automated Russia as headwind war European ahead More there due related digital the believed from to impacts Nevertheless, in indirect quarter, We improved a initially continued will and this share. for in development partially And This XX% occurring delivered Axtone of in we Axtone inventory quarters. deployment continue businesses it overcome result, the headwind, fully we year-over-year to is we highlighted XXXX. European in revenue the now will in the of a into continue in the gain growth with saw quarter the in also KONI and we growth second to execute Ukraine. year. In of of but orders expect invest and half mid-single-digit last would quarter rail, business. growth upcoming come X in the the be the continue Ukraine. coupler war to its Axtone QX in to technology freight loss as

For contributed of quarter. this points all growth the pricing of XX sales half ITT, of roughly organic

IP. XXX pricing XX XX% strengthening Notably, in Overall, segment's over a margin Its in expansion driven by also margins pricing model was points. a of We solid deployment organization. On profitability, outstanding across an to are margins XX.X%. CCT QX. expanded margin expanded impressive by points an the basis basis was value-based actions performance incremental through

discuss the in want outperformance to a bit I in more Process a to Industrial detail. take minute

demand strong we're First, spare service across volume and growth projects, parts generating and businesses. the

cost with making increasing progress initial line actions points and partially the XXX of our relief drove In inflation drove efficiency team improvement, mentioned, Luca we're basis of despite gains. Back basis creating will commodities. productivity XX% to which QX, support volume growth top And of improvements pricing. share ITT. nearly some nearly IP's the in QX, Seneca throughput best-in-class margin Second, that Falls XXX processes offset pricing approximately good growth. In are from is in points

driven operations driven QX, mainly pricing. Growth Foreign of currency this hedge our XX% by EPS the exceeded instruments. was XX approximately in cost quarter, basis points and mainly headwind in by

capital impact. a Finally, year, on income a to versus thanks higher strong weak improvement flow, a and QX working cash drove net last lower we

We will improve the unwinding generate inventory higher our cash flow of capital. teams working from as

in in particularly our capital. challenges supply However, weigh the on to chain, with aerospace, suppliers working continued

expense over strong our million which paper reduce will given We also paid time. $XX outstanding down cash commercial of interest generation,

continue confidence We energy of $XX invest that EPS quarter. All the start which green collectively through updated IP for Friction, million of renewed a us the in, to strong delivering in lean organically investments, in in capacity expansions CapEx drove outlook. in business XXXX XXXX and our gives our to midpoint improvements

turn now have to Let's at to look the a drivers. Slide X earnings QX

our in strong we're the acquisition each to in QX you higher capital driving are currency, offsetting We impact business. although actions The seeing million repurchases repurchases $X.XX contributed here, from roughly in of Russia of interest overcame given point persistent of $X.XX price rates we of $X.XX. volume growth negative pullback. I and see amount we're productivity. from and share want As deployed out share $XX that cost $X.XX the earnings foreign also lost from and still energy. labor and Habonim inflation to share inflation, Pricing

end Slide EPS the is of up thanks the as a the start the And As you on year. see the we're by range our midpoint. result, increasing strong $X.XX $X.XX, can low of X, to at guidance

We Friction projects. in gain to and in are as on as continuing ICEs pump well share EVs both

backlog despite a QX. revenue billion ending XX% at in grew this over $XX quarter nearly million and $X Our remains increase

of for dynamics. different we to continues On the valves one or we hand, On last this X quarter the and see be short-cycle next service demand and for our expect portion two. to business, in strong, parts, IP

the for demand actions with industrial pads into mitigating the half. On the in the and likely connectors We're monitoring connectors closely aftermarket deceleration other the will cost slowdown of and pricing second hand, reductions. brake persist patterns demand and

demand. our we by or of flow. and tempered see Revenue the impact margin do driven combination be earnings negligible not the but gains will this that changes incremental by year. free share notable will growth Regarding of acquisition, Micro-Mode's for outlook slowing expect other We a sales, of conversion be short-cycle any cash segment backlog, for

in aftermarket. quarter, OE and sales are revenue aftermarket. CCT's expected across partially grow sales demand in For in car high expected growth range, to growth operating XXX connectors strong in with in MT and projected Both expected margin defense. Segment the will led projects by in the to the single-digit In aerospace to be slightly up MT should expect IP we down XXX Friction is slowdown the by basis and continued outpacing commercial see thanks expansion is to year-over-year Industrial industrial organic and margin second strong with both growth QX. Process year-over-year. between mid-single-digit QX sequentially be and the points rail, and decline improve MT, offset

revenue margin CCT anticipated approximately given be that expect will We flat year-over-year the decline.

a adjusted will roughly first the quarter. in As be XX% grow and QX essentially with line result, EPS in

rate XX%, remain tax will level. at and an interest at remains Our expense elevated

back now turn me on X. call Luca the to Let Slide

Thanks, Emmanuel.

points. the part move Q&A, best to a of we call, few the Before the just

capital and cash execution and large deployment quarter, awards Through performance, on in This and focused The strong growth project execution the delivered delivered we and deliver XX% free growth and confidence everything we X% performance, we're target, on flow growth. us share gains wins did, home plus growth, our on and our give delivered XX% we margin, EPS execution. improvements, awards we top increased green cash we bringing our margin. and orders, line a long-term energy XX% segment through operational to on

proud are satisfied. this and of quarter We our performance never

ITT. continued my Elliot, continues. I It questions. morning. speaking for journey the would our you open stakeholders pleasure all with this like has our of for all their to line support thank So been please

today from [Operator Our Capital KeyBanc Instructions] from Jeff question first comes Markets. Hammond

you maybe differently growth there year? unchanged about I thinking in seems this around some in IP organic just of CCT. how to coming to pieces organic Can moving destock of within growth an some better, you're your speak and the guess from Just softness the Friction segments start, be guidance, standpoint kind to for

got I think it, Jeff. you

in I the that out the strength think projects strength also we in stronger IP has cycle the and see QX. and come in short QX, in

year. the better probably will be So for IP

business, in the destocking outperformance But connector really to in probably year it be Motion in Technologies comes plays. the will slower XXXX. it the of when probably what We of I how connectors -- last than for The continue the then is we for to the OE the see will of year. And automotive, full aftermarket entire destocking is will expected. Friction. side the say last the the also This

usually, the are Okay. what And then destocks just kind think -- on year? then these destock, settled. sharper destocks the What and carry of makes kind through these of you you're that

really When connectors, the decline orders, bookings longer. we think to still our level, customers the we automotive, getting that to at the the the that talking to high. but really and we're inventory how the look and we see and is on distributors, distribution comes last got feedback this it This little we from we look the do see for the our simulation, a talk When When it their still them. in we you our sales, point level going example, of the bit we at to is that. inventory is

on And CCT?

on was connector That talking -- side, about was CCT, that on I distributors the Jeff. the

comes Research. Davis Our from Scott next Melius from question

is pretty really clear. Presentation

guys if really those a I there's I that. bit guys address understand would help wanted anti-flaring you technology. of And it take talk So us let out little are types little but differentiated is means. just I'll and you about or lot step whatever, What is that that a maybe to a doing your perhaps bit a imagine there, or what of technology back different? projects this interesting

Yes.

but anti-flaring, you the capture. decarbonization a the flaring, also carbon couple the Let me stop the give because is of it's examples

Basin. when wells flaring, the in for the have example, you normal Permian in So also

happens, water oil and from you oil, out there then, and and and comes it you the and water usually oil, separate gas. flare gas. separate the what extract you You And

twin-screw mixes. What offshore down multiphase that pumps, your XX, the can Bornemann so is the in all pump you can where are actually in by gas do, the the is XX have, sense site this field what our is major line, COX -- are pumps, we that is pumps, the similar gas different take, what boosting we have produces multiphase use pump in gas twin-screw mix, in instance, with that separate then that That you the and that decarbonization we at distribution. This something you flaring. The kilometers push it the the COX, pumps in our and gas put that practically gas you with that for where pump separated Australia, and the plant pump that you containing X liquids together COX. take will you the the down -- technology, you ground, that then below -- stop for take it and and the water, is which gas you all carbon Now capture. mixed water the kilometers

the Pretty could both same you at actually gas know cool. and the the I didn't liquid time. pump

do for you're because I why the of little of works. that both and that. you Is thanks So market, it but that, a channel you dynamics bit, under then perhaps the going Continental kind need -- question to me brand? need Why you just guess, question. help And do those access how yourself a The cannibalize do deal. is them? brands, understand different of how

we we marketing deliver of do is because The focus branding, on and we high-quality parts on know And really material know, our producing they we And is partnership science. key at that is have Continental for with us market we time. know don't do. how why and Friction, this distribute excel to great products aftermarket. Continental we crucial you deliver our for Friction distribution, business. so in is aspect and Yes, and At What what that as Scott. also how to the

playing perfect respective really it's between to our and to our combination strength with so this strengths And -- the -- agreement.

strategic really So key partnership. a

in We have that and renewed, for we partnership a XX-year much more future. we look the

only you have about thousands And distributor, offer with think pad. there you of Scott, them brake with go products can if are that also, Continental where you going we the it,

So proposition. have value good a they

Our Citigroup. from Vlad next question comes from Bystricky

in or on business to IP from of of continuing and about can and your the just the you sort visibility there distributors what channel pumps potential here business, in in of inventory business? baseline confidence to any destocking talk the hearing concerns about that well sort emerge about perform So you're level your

Yes, sure.

that but by expecting. business. positively much with excess price the report actually So we by inventory I volume. it QX, even was baseline order though our any than situation. driven don't And check to was Volume little we our business baseline surprised rate more a in was have say what than a bit distributors, of The were up, down, little better they we when were bit

like in pumps that really for times So the the easily good and looks for is providing is reliable differentiating that distributors lead know I say our differentiation, moment, our what's their would which competition, and customers our compared customers. it to swappable that are

the baseline. So a pretty for of good year start

-- one a cycle, point at what also another is you which look And short is sign. if as add sequentially our that well QX QX, Emmanuel over to up positive orders to said were

really color. Motion then That's to Okay. just maybe all And helpful Tech. shifting

the foreign the to OEMs again drive in specifically, gains your Can highlighted and China quarter about, in over talk OEMs? you wins China You share just versus with share wins OE time.

was don't China tell new it OEMs ago. reading different to everybody shares. until really highway. from when I there you on They All drive Wuxi. from Vlad is the that were the touch couldn't in the asked X I these get years and can that OEMs many you And of actually, glad smell Pudong any don't electric. of QX. completely that Yes. recognize them that I cars was you But were this because you Chinese on you And I'm it, in I are question, you gaining newspaper the there

of the market really importance in XX% XX%. data, XXXX in of you Chinese our for the OEMs. When of China OEMs. pads XXXX, produce the touch we brake that the the the you is were market at Chinese the share So look above in OEM Chinese And

it's them, it's them. with if XPENG, with of many is if or BYD, if positioned all of NIO, well Auto Li if very them, it it's are we So

So China and the I Western X, XX Western went team team several and credit this with customer the the to went Chinese, want X we we -- is paying X, differentiated years with give off. when to risk we ago, China customer. because decided the to to all We reduced years X ago, go

Our comes next Baird. with Halloran Mike from question

Let's stick you you on the that's Luca, how auto give you auto context market think as the going think last really Certainly side. appreciate destock happening, the holistically quarter, is I said but good on always to perform.

If thoughts you by and what be could region some great. that give would you're seeing,

Sure.

say I So really, QX, market that forecasted. way performed the would IHS the in

America look was up So the very you the XX% XX%. that down plus China when market, at North Europe quarter. you almost have X% and performed in well, was

Now overall. points the in basis we market by QX outperformed than more roughly XXX

mid-single will forecast vehicles. for America, They still way are worldwide. that the grow Europe are, the low Now our probably Europe flattish North China, single is Mike, XX.X growth million market assumptions America and for is forecasting IHS the mid-single-digit is What around China. digits, positive flattish. digits and North

Now are with conservative. we assumptions, more always those

We be because little the expect level we start a The XXX more XXX inventory bit. we conservative going little reason the outgrow points. roughly and why always by is also of basis market tend bit seeing a to up to

a expecting Motion. just talk way, you by how to the just and guidance? That year holistic in embedded that strong. not about backlog, obviously, really you're tied That's Maybe the work to question, makes the as -- through sense. still how normalize And not is that's

record businesses backlog that even versus XX% and that above One X a CCT, you stable is book-to-bill grew backlog X sure. at were businesses no, grew up prior in -- year, above this then We of largely a where but able we really sequentially QX backlog for versus quarter. another XX% in we pretty grew both had. No, fact, the $XX metric. backlog backlog thinking had turn. when terms IP thing if we sequentially, year. did. grow we we our main million We're our that key And to entered look prior by XX% further even no, weren't And

growing in as of a backlog Luca also projects and that the a in backlog, getting more have really projects, is So profitable. our news lot a good And you especially where from standpoint. of IP mentioned, more presence backlog

Our with comes Damian UBS. question Karas next from

first what ask on other margin, there. I especially you when guys, manufacturers we out wanted and quite to the you of valve impressive, see pump IP compare from performance to the remains that some

thoughts this So like profitability And how to pushback sustainable I'd pricing as you any hear actions? about how Have on of share a you the Luca, potential your impacts gotten on is. result? thinking some market any customer are

first. the let pricing Sure. -- me comes the to When it address action

We are pricing thing. -- a when are we markets. we pricing are first This win is But the project, we very diligent. in

changes, of is business. et is improved you execution obviously which profitability of top from the the IP point what cost the So terms in are of we notch. this view, of competitiveness cetera, that finding really And are managing project an well very

delivering at company. And value the delivering what we of the pay. I when we that the really to is value-based, the So approach is are customers pushback that many willing that having customer, are to value it say, are today the to are no all And comes the would this pricing. to we

continuously product is there systems. the third first comes so this VA/VE, investments it business. the lot sites So more that that's Seneca The point. When The side, investment a is a is need to performing to improve, on on in but listen, sustainability, more Falls, are opportunities well. make quarter to Obviously, of in also the are re-layout the performing this well. the There row. business in of we

need is to So something bear we in those And for. investments need paid mind. will be this to

the agreement. Understood. question Conti have I a follow-up on

China. assuming market. in with that? mean, little a pretty I about Could partnering bit I'm mentioned us what's a it's them opportunity there? the more aftermarket maybe You you tell competitive

there? So what thinking angle playing are about you

are us is Continental. what flexibility the gives is is saying not and Actually, China really -- China Sure, Damian. we that is with

a So very over things, try to the and for flexibility European agreement different and go we in the with different things we very market, the Continental is And entrepreneurial, to have market. test need different it's also mainly Continental, a there. ourselves European because to agreement

with from question Stifel. next comes Our Jones Nathan

This for Jones. is Matt on Nathan

guys mentioned pump just XXXX? of So if short-cycle for wanted orders expectations of you to orders. about a could funnel potential talk you the talk -- your lot I about in opportunities project and kind longer-cycle

Sure.

North you when around and mining -- But or half today, funnel. is is and pretty Obviously, path. high the on it's chemical, we And much ever-growing growth gas Europe a $X -- basis, funnel year-over-year. of So going basically so that's The increasing an at growing even seeing back really, billion oil everywhere. have it's total digits. is IP is still industry, is And growing we're by to And the look a the funnel sequential energy single so increasing half then for stuff. America and rest and it's on fastest. the other

participating of around are In terms gas, chemical, general industry, we oil growth. largest increase where mining, see that is into and but industrial the even

So been funnel. the growing. we're dynamic acquiring, seeing the keeps a very Despite that orders funnel all we've on

good a it's really sign. us, for So

in the business? And That's you then could -- different dynamics the any talk kind of the about to hear. good price-cost of pieces

Sure.

in is standpoint. this from by from a And we quarter, start So from continued what neutral were seeing let standpoint that a good saying standpoint, price-cost performance pricing we're me dollar a that IP.

the pricing. but of difficult, we're over that's that we progressing what then we're But CCT, in points percentage especially get than of did with small cost XXX% MT, matter our it's starting year. And in our a very covers inflation we really don't That the more So progressing. In Friction -- -- where last inflation. still value-based total covered. is situation

change little on a next we're So to are value-based expect seeing able to equation pricing plan. we in but the tilted negative, quarters really that's few this bit our towards as we the price/cost execute

from question Sachs. next Ritchie Joe Goldman comes Our with

having on up impact as two, So it And over questions right I an XX% greater baseline I with number think questions wanted Process we think it's about The would now to was business. know asked a in not are, Industrial few start quarter. about mix I XX% margins, one, we've your like the moving being but row. I negative, than Typically, this forward? projects already. your number clearly, this business have X this is a quarters X

managing the still that of of So maybe leverage them. some margins and on your through just kind how you're why dynamics project about talk you're getting

start please me So jump let Emmanuel, in. and

XX%. So was one, way, orders by was compare an the last yes, year And not projects the growth are the the easy QX the of because project business, up XX%.

So terms good in really it's value. of

Now the The to the backlog of disciplined highest result Not of the have very profitability ever rigorous been. it's course, of the profitability process good that cycle, is The are of been. execution. acquisition. that also we we sales a order this profitability. comparable the but the the and never is is it's of seen in projects And these projects very level very a short have ever highest

If the very your that you think this XXX% delivery, well. negotiation about customer Saudi means with Arabia are delivering going on-time

You can ask the changes.

customer price You very also facilitates on changes. have negotiation which have a you experience on and positive, any that

roughly in we XX the of terms quarter, this we will a today, short the that if the become small headwind. probably mix, backlog we is headwind, And a because do one this Now bigger projects, had XX% see points have headwind basis XX% little Joe, future, a cycle. bit in it was actually even

expect I XX-XX year short the XX% You last of year to with being do projects. by XX% XX% cycle, the was end and projects, remember, be XX-XX,

cannot be but So that manage. that not will one probably we headwind, a a

an just the But around being it. off Luca. point, that probably helpful, the right XX%, with dipping a mix was impact. going follow-up, the about but forward to think potentially in Is rate area that so not and that way Got it? And

think we're to not XX%. the about sure, going to Yes, We Joe, back -- for right it. that's way

IP also still there's more we have Luca in we're as sure of make to XX% lot said, losing a a in terms XX%. opportunities in IP, money want need of to that a after. that that work to investment needed, to vicinity, more So continuously that that after. We are is of we couple lot that sites there's And go And we in go the improve.

much think has were anticipating the IP margin really we And and faster -- a from positive than a situation expansion what that's so for from really, margin us been standpoint. standpoint very I

next Summerville question Matt comes D.A. Our Davidson. from from

a questions. couple a quick of just -- couple quick Just

teens? it what high where were like get in pathway kind firmly to Is of on MT, to and normalization? look back into we a margins XXXX Can the progression matter the how Just kind in that of of XXXX, gap about price should that you the Is about mix a more timing either talk closing walk does matter it of between margin thinking cost? through be business?

Yes.

So 'XX,'XX was XX% margin. let's around MT around say,

go. things we in right of at we're able couple say would But us to to in would being a that XX% bit say margin get I I XX% about. pretty of being to now, So of have think around still little level XXXX. a less confident quite to a than

first as cover driving as one is, much we The to our pricing can cost. obviously, we're

the slew level material are in that to a pricing, new enter that of production going been -- is have raw into that one today. that are the that we're platforms have a few seeing next with years We of priced

much is we equation. And So central And as something to and to disruptions. don't chain been is supply during has price-cost then the the expect that MT. by be the this impacted pandemic difficult productivity, productivity

firmly We are on back track.

so Motion that Tech expect Motion will I to productivity expansion. margin Tech contribute And the

the way Well, now. much is benefit respect margin With a follow-up. IP, of of performance driven just How to being and quick if so, margin incremental that there handful And quantify there Seneca that? strong is pretty be initiatives for is quarters a of by to a Falls Lean out obviously, to as realized? still

Yes.

about Falls we're contributing and that is I and Seneca what's a obviously been quite nowhere that best Seneca lean to near say has would bit, it of XXX, -- basis And outside be between points. So in XXX done. Falls

a would a large really been there. has contributor. also So more potential lot I say price

this a in -- price right, and basis that a over which inflation mix positive negative mentioned, impact from offset, we As was cost to terms had the talking of Luca quarter, of points the about. obviously, us XXX margin allows standpoint,

margin IP from in for more the a expand standpoint. lot a So to tank continuously

Blair next with Bryan Our Oppenheimer. from comes question

that We go focused back aftermarket. on much. the flexibility quickly on the quite own that circle really on your wanted opportunity to China as in I haven't the to Continental agreement in affords you

going to still pre-pandemic, at million back recall, the but little future a that rate $XX size scale a -- million it think a the for and revenue over potential point. what maybe I of while, I small in you aftermarket current that China guys. $XX looking in it's revenue forward? revenue Can there, speak was you run relatively stream may hold

Sure.

terms a our $X in revenue business So million year. for in than aftermarket China little is the of less

but than a because are it's understandable in there smaller are bit we a been relatively new also for what years. quite it's China. we Europe, in So player We've XX

Europe. also, we that have. for don't longer do been the have the maybe as we have distribution have portfolio have And in So we product there then don't people that it

about So great I go us to that want the frees thing up think in is China. it that agreement we really the the way

strength. that was been So our for really if important option would for the to and case something talking work on several the going us. for and still be the really have partners But China able the play marketing is to to us, we the business trying to have see they distribution is business build think thing to model is to do evolving. to like that the business, This to a that We're I aftermarket. to

And EBITDA expected technology valuation. sense. they that you rather offer rates. profile. little that offer trailing Luca, growth perhaps our said I believe attractive and on around please makes margin Definitely unique a And Micro-Mode, XXx Okay. background a deal implies more confirm

Yes.

So it's Bryan. XXx EBITDA. yes, That's correct,

for to that site -- I like and to frequency have. offer. integrated. that and of radio focus customized a have do but market the point simple we made the set is that Emmanuel where we application that space is that in We what products were very vertically have and investment play, is they and can where their pleased And complementary one also not manufacturing defense nice from a a of in the California, about the we're strong. we we on the they visited Now Micro-Mode They highly there very hermetic site -- view. The when see harsh they have connectors

process expand. product expertise on very well that and way we there So has the with The fit good to well. very got that as will team want

synergistic. was talking very tell very, allow yesterday to was And So and to a grow. first the night, already I day on opportunities couple of they're can Micro-Mode I that together working last will you team the

business, So platform a we for that inorganically. the organically and very want acquisition good connector to grow

Anastasiou Michael from TD comes question with last Cowen. Our

commentary of offset Any there color the quarter order be on like provide maybe specifically helpful. market some So side? CCT just you saw on weakness the it industrial but there side. from increases, year-over-year was the seems kind order industrial throughout would cadence growth end Can on

Yes, Michael.

that So you're is right. good has and has business seeing The industrial connector one side the really all Defense. our we're offset growth in of the Aero declined and

caused in industrial in as XX%. the for from by periphery declined And an such standpoint driven what's medical, also So our of order our decline industrial connector connector business the to by by which business instance. is quarter industrial XX%, and this

not that gone distributors down. monitoring inventory think I has Luca So mentioned our at we're the that that,

So inventory their and yet don't preorder what need but We're chain, data we seeing components, we're many seeing don't supply so is the in POS as reflecting stabilizing. today the declining. that they is they're of see to the improvement that some

from little an reducing terms bit us inventory. haven't in hopeful. But -- a that we standpoint, inventory that where think So we started they from reduction reduction -- haven't inventory makes an really

last checked wanted we also not share and supply and really checked I make on event, it's a so -- market that the to our we market-driven by really the driven connectors them. to And ability side, point is to it's

today's this and conclude does at time, day. have lines disconnect your This wonderful a teleconference. Please