Donaldson (DCI) 29 Nov 232024 Q1 Earnings call transcript

Good morning, and welcome to the Donaldson Fiscal First Quarter 2024 Earnings Call. Please note that this call is being recorded. [Operator Instructions]. I will now turn the call over to Sarika Dhadwal, Head of Investor Relations. Please go ahead.

morning. Good joining Fiscal for Call. Earnings First Donaldson's you XXXX Quarter Conference Thank me Chairman, Financial Robinson, Carpenter, are Officer. and With Tod Scott CEO today President; and Chief This for fiscal summary provide performance morning, details XXXX. Scott first and outlook our quarter a our on Tod and of will

year provided exclude A call, prior is restraint non-GAAP the charges $X.X will million. and of to press In we fiscal GAAP this metrics quarter today's release. non-GAAP or other first During results. schedules attached XXXX reconciliation to adjusted within discuss the period, non-GAAP results morning's of

forward-looking Additionally, to please Carpenter. keep call statements are release in made uncertainties, that, and filings. this mind described subject the that I'll are SEC to our turn press any and over call Tod which in during risks With now

am despite morning, deliver ability macro continued pleased report Good demonstrate results, shareholders our to earnings Sarika. everyone. and first overhanging which customers to quarter Thanks, our uncertainty. to our I

and driven a reported we input consolidated quarter, and high, productivity. in benefits deflation strategic costs our This team's We at mix select executing of and three gross nearly efforts growing on in pricing, plant on decade by laid focused volume margin plant we margins XXXX. each our record for groundwork Mobile Solutions, strong performance. strategic pricing, market In by driven deflation, despite operating a benefits delivered cost and weakness segments mixed end the softer profit from fiscal conditions, strong input select

a continues from perspective. to top business Our outperform bottom Solutions and Industrial line

addition first-fit connected Our has us and solutions create, allowed high-quality, first through to replace innovation of connect, create the model service features. business

industrial and model sales growth and controllers. that we gateways launched Thailand fiscal from of China. in through and India, aftermarket outpaced connected Solutions XXXX, Connect next-generation Second, the connected customers customers non-connected In

in innings, While as first growth year. we the as we're early have new connections compared seen prior strong of the to quarter, in the

geographically. are servicing of our gaining approach Solutions businesses. equipment are one-stop full we range and Overall, key Lastly, in we end industrial Industrial across as capabilities through and the and penetrate shop market expand we share replacing service markets

business we we've outlook urban For this in major the and later Middle as recent Aerospace strong positively power OEM a wins as impact including quarter, our results including year, had filtration, large which the Asia customer East. results. and also example, increased a generation and quarter projects Scott will our win defense from for cabin drove benefited in wins, air discuss

performance. In as operating we saw in Sciences, Life sequential expected, improvement our

is reach our foundation attractive, to continue and strengths to these global build the competitive in share We invest and gain by markets pipeline needed our of and leveraging highly high-margin opportunities growing.

offset Now I'll by volume our for and gross strategically favorability were by inflationary value strategically business. off-road Volumes as were we cover benefits. flat areas, year $X.XX, and were pricing investments EPS in weakness customers in end costs. highlights. some offset quarter as prior Life Conversely, as margin negatively to was of remained our OEM a pricing were labor Sales million aftermarket also pressures a declines other in rates slight year-over-year was growth pressure disk market added by continued consolidated energy such as Currency drive. important Science destocking, tailwind. and and gain $XXX impacted the flat in offset benefit including income ongoing

competitive our was operations, best-in-class of of advantages. One strength resiliency this of the quarter highlights and key one the Donaldson's

backlog on-time and fill working improving and As delivery rates focus our remains down always, rates. our our on

operational company's management. conditions able we effective supply have focus to return cost on and been excellence long-standing improved, to As chain have the

further be cost to we our the investments profitable for we commercialization investments. we While on future and also Life growth, invest continue the as R&D for to CapEx portion respect are capacity we the CapEx, to Sciences focused today, future largest continue prepare execute our of and through while acquisitions. reduction With initiatives

cash and sheet balance long-term exciting towards allows strong to us strategic combined our with continue investments flow these our Our drive of strength objectives. the generation

prior Now X% million, million, In sales I'll was provide to $XXX some X% X%. an Pricing detail pricing a on first total year. benefit. versus quarter sales Mobile company Solutions, sales. approximate were added XXXX, flat essentially Total $XXX decline were

to were year-over-year, conditions, the and channel. the Off-Road entirely segment, be end X% the by million driven Americas markets $XXX the China Within weakening mobile performance sales and India. $XX sales to continued of of agriculture down mixed. in down X% within due million market OEM were Aftermarket including

now us. in That from destocking is business conditions. to of anticipated, patterns continued channel, first-fit particularly global stabilization we largely equipment in see believe customers are levels starting a OEM driven Sales X%, our destocking On-Road China. aftermarket and of increased independent sales response said, $XX year-over-year. order on-highway our in supply chain As to normalizing production, elevated In behind grew in by million X% the

to Now touch market be an currency. the remains country and versus I Off-Road. market important as with given XX% continues given China XX% within weak Despite declined Sales for continue positive within a declined in will to conditions broader particularly market the this, constant Solutions on and our size challenging share. to us. to Conditions it XXXX Mobile as be our the gain opportunities respect very long-term view whole

sales and had million, X%. sales to X% increased another grew collection IFS, Pricing Filtration Industrial sales. Industrial strength. and Solutions robust best to segment defense defense by to Industrial quarter power rose quarter added driven segment. X% generation or Solutions, sales $XXX due Aerospace strong million. the to sales as X% Turning of another The $XXX

X% drive year-over-year weakness. primarily $XX On driven ongoing market the Life Sciences million, Sciences disk were segment, by anticipated decrease Life a sales

beverage, to our acquisitions Life our are forward how quarters are legacy look recovery recovers. food the to businesses, come. our early demand center drive data growth we disk improvement these on through contributing focused of XXXX a Sciences and and fiscal including demand growing are detailing as scaling expect in slow sales seeing cloud and with a and to computing We signs sequential Along in

the first the year, As around our hard-working we close proud of employees Donaldson am of I globe. the quarter

I'm cleaner well ongoing a world. advancing with customers fiscal our their poised in we XXXX. fellow to to our continually are and their mission to all value deliver to filtration Through impressed for stakeholders dedication our employees our of of efforts,

for total we and the sales, operating our full such, high as As unchanged at forecast margin is year, all-time earnings outlook levels.

Now it fiscal the provide I'll turn over outlook who Scott? our Scott, more on for details will to and financials 'XX.

Thanks, Tod. everyone. morning, Good

results. ongoing and versus will and the outlook quarter. additional the results year-over-year XXXX Our teams. of details like on and operating the right a Sciences foundation once place as I our provide ] outstanding results first sales give has I drive people build I us impressed decreased for would the solid flat serve gain way XXXX color strategic EPS fiscal fiscal they X% in a fiscal first In $X.XX from [ segment for delivered driven quarter strategy the to in by beyond. together, was we'll financial basis. thank and XXXX, of targets. throughout investments income first largely the proud few again for solid But towards upon were global our to to our flat executed in on so the year, and Life company by summary, prior and on Donaldson am a XXXX comparable minutes.

and costs by expenses Pricing margin the was hire mix. as related increase sales related prior material of to continues benefits due increased the the a deleveraging acquisitions. Gross deleveraging basis point operating half expense than XX margin a XX.X% of of as expenses the followed was Operating Life was freight gross the ago. in deflation XXXX to compared XX.X%, XXX largest year XX.X%, were improvement improvement down more quarter expense scaling driver of select offset deleveraging expenses of was notably, from percent a XX.X% versus nearly versus year. operating be of our points and margin. of The incremental the Sciences year-over-year in with and basis Operating to

Now as of I'll XX.X%, Tod part mix driven basis up gross year-over-year, profitability. margin deflation profit and expansion, pricing strong earlier, segment was points Solutions plant and in productivity select Mobile XXX input resulting mentioned by by contributed. large costs. Also, discuss pretax margin

versus points loss Life higher pretax Solutions headwind up million, ago. including Incremental a as year million. $XX margin result was in XX.X% XX.X%, leverage Industrial pretax to profit acquisitions investments $X compared of XXX a Pretax sales. margin X%, basis the negatively minus minus in continue approximately results. fourth roughly on XX.X% acquisitions a profit was our Sciences from was quarter to and of impact

and we investing are through to future businesses the these forward for long-term scale. However, to look seeing profitable commitment growth, our

and balance highlights. Turning sheet flow cash to a statement few

management. average, performance quarter driven First in approximately was million. and quarter $XX expenditures capital was XXXX. XXX% conversion Conversion Cash operating by above working the focused versus capital XX% in were

dividends returned repurchases. $XX we deployment, in inclusive capital in $XX and million to share million form other the $XX of terms shareholders In of approximately of million

a replaces to million repurchase share Importantly, XX% earlier outstanding. of of this program, for The shares plan. month, up Donaldson's Board shares Directors authorized new common the repurchase of which plan or XX approximately the new allows stock previous of

to flow Our capital a generation cash deployment strong sheet. healthy and disciplined maintain us allows balance

was quarter. Our debt-to-EBITDA the ratio net X.Xx the at of end

Now fiscal outlook. moving 'XX to our

on First sales.

expect X% and X% of full about translation year to which currency and includes sales to between increase total approximately pricing We X%. of continue benefit X%,

versus off-road particularly within expectations. we and increase sales X% our now be conditions market to have we agriculture X%, Mobile mid-single the in Americas the of and India Within of end digits consistent sales softened. between single low our China previous are up digits expectation previous For forecasting a expect with down to Solutions, mobile, as markets

due on-highway vehicle be to previously forecast are sales versus On-Road weaker-than-expected up single production. to low digits flat

is share pricing and expected Our gains outlook prior drive benefits growth to year. aftermarket for mid-single-digit over are the unchanged. market Strategic

with single-digit strong For dust sales drive and digits, improvement projected and in forecasted digits the ] collection previous the in expectation demand to previous increase to increase market expected conditions are results. market gains. X%, gains IFS generation power end overall line between an grow low defense X% [ to are mid-single mid-single Industrial and as sales to guidance. and from negative are robust market Solutions, share sales our share due Aerospace

expectations sales profitability are and the for our year Sciences, Life unchanged. In

businesses forecasting growth drive and of growth in by in the scaling the to and beverage, XX%, return disk consumables sales expansion of We are maturation a and food approximately driven bioprocessing business. our equipment geographic and

the range improvement. between are Investor at Sciences committed of which We Year-over-year Life our is be be to from XX.X% XXXX. adjusted fiscal our is expect be driver operating the to and expected to the gross a targets. longer-term of positive to Sciences profit and expected company XXXX Day in Consistent operating fiscal XX.X% total point previous is Life guidance, full within a of margin with XX expansion basis XX.X%, midpoint improvement margin year margin year-over-year margin pretax

gross on for balance the of Touching margin cadence year. the

strong. very was performance quarter first Our

As the year. slight to pricing we year-over-year in benefits however, a sequential quarter likely the versus in to prior due will margin moderation we expect down, remaining action, and see second look step typical quarters, particularly gross a the seasonality

For represents the operating margin Donaldson, partially future, year, record particularly operating full It's rate our as the offset and our that worth this Life including sales again highlighting our we proud higher to ongoing are once strength. gross Sciences margin forecast expenses commitment given are to of for a for segment. of in guidance a investing

XXXX between to terms fiscal we up levels profitability of to are guidance of range of XXXX. committed sales reaffirming our we levels from of In $X.XX higher fiscal summary, higher $X.XX and In in our and EPS, on $X.XX, shareholders are in beyond. delivering a

balance our be Cash to cash is sheet XX% historical in expected Now to flow above averages. on range to our of XXX% the and conversion outlook.

expenditures in initiatives growth three weighted capital forecast segments. all million Our heavily of $XXX to million is towards $XX

strategy not In terms of other our priorities, has changed. capital deployment

on back repurchases. to the to are to We acquisitions value our focus shareholders dividends continue strategic and reinvesting through returning and through company into committed share

Now to turn the call I'll Tod. back

Thanks, Scott.

and to in focused the look we as to year technology-led on are all we the the upon building aimed at continuing execute on As invest beyond, filtration. leader strategic remainder and initiatives our long-term position of our

growth financial we balanced out the in at fiscal Investor are our strategy in Day. laid XXXX We confident and targets

additional acquisitions R&D our flexibility M&A to our respect to by our to than fueled year. healthy which With sheet increase be pursuing integrating are and we expect to working growth, services this afford XX% we in balance scale areas. significant us our continues and continues investments, growth and in those organic inorganic Our to strategic life more sciences

filtration for at the our is advancing cleaner of and purpose world of we Our do. forefront growth a everything

safely. foundation operate to the part help to change; as aim and one, we We work These through healthy global climate our employees; serves purpose and this company from engage our for Importantly, XXXX working strategy empower sustainably. delivering our mitigate principles, three, towards to sustainability operate employees. do every continue impacts and ESG workplaces for to day on two, safe principles our We're ambitions. include: provide our

four to opportunity equity our are We enrich advancing dedicated Donaldson; and communities. and at

positively and Donaldson team agility, to Donaldson ability through Foundation. We with impacting giving In the to like continue prioritize our I the commitments entire closing, communities would to through operate our to thank to now all any demonstrated their have stakeholders. charitable the in operator environment the turn the will and our call we continue dedication I return that, to value back line for questions. we'll With to open to

[Operator Instructions].

question from comes first Oppenheimer. Your Blair Bryan with

I through hoping how more the year. little a was you everyone. offer morning aftermarket Good phasing color you'd you. mobile on Thank see

but noted was pressure stabilization channel some there. you So OE the to start dynamics, expected given

is aftermarket solid inflection of Or it return So contemplated? that's that's positive. in half back Comps XQ? going certainly more see ease Should a we fiscal growth to obviously forward.

Yes.

this on the the before, aftermarket, destocking that customer-by-customer we've going it's through relative to as going an that go channel overall OEM So and time. of we driven a of point. over now are talked as gains through to we forward it piece prolonged by sequentially, driven about independent we period really would We basis, channel look on the which on the we share at largely believe been suggest up that extended stabilization OE channel. the And

simplistically little we you should will more from Gross be be the margin offer And half excellent volume the looking was would the obviously back your expect more said moderation detail levels. be quarter. there I Could certainly and very reason seasonality, in forward, mix. stronger, typical ask into you Scott, there? just I that a these going assume that for there some favorable should

for looking offer if -- quantification that. a Some little you're more willing to

I to out help a can Yes, try you bit. sure.

good in good quarter, really kind XX.X% mix. Donaldson. heading good had a picture, all really is the is of a direction We performance. cost good right obviously, had a for great. had So We things this which number We plant

So things our a for you're opportunities we're to something very and work think that. continue on Longer don't this seeing to obviously and quarter. of that's it, we've going to company's some necessarily time, in about short the really and -- us I long XX.X% see we all talking sustainable came up, for shoots is green term. together we term, gross margin that been mix

have sequentially down, So we step said we expect margin year-over-year it improvement to year. throughout still but the we'll a

just a about where the margin good step for we're have the margin feel bit quarter. going improvement quarter. down We'll we gross So landed from year-over-year this sequentially, little this year. to And

specify for Okay. sticking Life to expected the segments. what positive points how Understood. strong And You anticipating out shakes guess you're did level, the out Can started I segment some on offer for curious to finer you with just that is get year? you? by rather a Science I'm outlook segment margin. legacy

business breakeven this to Yes. Life Sciences you I we is we to thing get year. the the mean, expect first like said said, abroad

the we margin that lot on. scale. team to continued opportunities gross sequentially improved it'd as two a a quarter, sequential We great is improving. good to our very solid had And working some other going continue XX.X% to there. about sequentially good We and a strong performance. want businesses we're from be And forward. really and expect They headed improvement hard they feel QX, expect they're to QX So where invest

investor expect point company point us So factors after a targets the that. That by said, and will we our year. like But to of a those X. XX about don't year way expect towards year for I driven all improvement the we our basis good X/X through do get

and Solutions continue want in contribute we I would say to Keeping invest will Industrial improvement. mind, that to growth. Mobile future to in So both

comes Your from next with question Nathan Jones Stifel.

for I I'm going price realizing not on on know some obviously, them. now some little that unusual with is OEM had margin business. initial to guys more piece with seeing which gross trouble push mobile And the the a pricing deflation. side, you some of the of your customers

some part that been on you to there deflation. saw pricing think to of if I the has strategy hold

a up on go Life ability as I tailwind year, the through be of bit in for also a looking environment. I'm that to So a would we imagine that hold to commentary would as deflationary little ramps your pricing mix. Sciences

color seasonality for just the year? are I'm the of gross looking little in margin So sustainable a not outside second bit on for quarter, XX.X% that make full what more maybe to headwinds the the that

Yes.

in our So covered relatively mix improvement question. I it of well We mean, expect I certainly kind margin. in think a you've and gross slow your steady

hard some you to a to increase we've where while continue in that very be. a on it want taken to this we included to said, only price execute us in on pricing. our X% pricing Like plan. We've it's worked year. guidance, And get cases, So needs

increases reasonable discussion So back some And really want of on customers any suppliers certainly, with see of leveling our have and comes We still kind And of taken to both to we've good off pricing. situation we at our are our as We certainly, commercial prices push with to our want rate. have a price reasonable of are the world a commercial all pricing. pretty customers customers. their advantage increasing larger never relationships into balance.

just if the to we're like things trend upside, going manage on so down. And it

noted, you Some commodities up up. media other and are still costs is but down, as still are

and going as adjust we we've consider quarter that a equation we manner. obviously, well. can continue and basis. have done we going go be each price or recently. crazy on it things equitable If as to fair and deliver. to up updates that what expect on manage to we're fair fairness want have side to to consistent other We to manage So our certainly And impact we're price And on to we continue down, a the in manage the be to crazy

relationships think Maybe through the really badly Yes. And of we The degree more much with we we're customers, the we and down. Scott get work is of have we're pattern really allow relationships I past looking experienced just and hurt so us of change experienced, to larger with hoping march to forward, which than type the that. appropriately said, that range quick to have a on And just have customers, good, add. fair this as so a swings commercial now overall up a we our that would what we've the do as the what don't will be smaller that continue we'll change cycle. to normal

On to of growth, get obviously as year Sciences, revenue sequential Life through you're in about $XX how a actual XX% stable we ramp the quarters have ramp ramp million the to to you starting Can revenue. up Last think about piece, assume X ramp-up getting of at driven year. pretty we go through there. the been cadence Life talk up the that volume. of and the up the adds capacity should finishing I most Sciences is by significant about

just to you can talk goes think we XX% that about through the should get that year it to about So as how growth number?

venting if of our business stepping of side, also of ship Sure. half that drive and broad-based have forward, within the half goes the well programs. as the in the a be of stabilization more looking on base of particularly more bioprocessing and disk applications back world, It's as will will, we'll crawling in larger It bioprocessing year. of within we some projects very notably in forward a traditional in step clearly, type the approach, our But up, a of you the Nathan. sequential the year back that from our some forward -- wins

us backlogs guide. in improvement life So looking it's sequential And and sciences. the current say the I you'll a see do would that support broad-based have forward very

a you good. And heard been it's something last that's or those wasn't turbine since me while been while It's projects about? talk profile just whether we've something that projects. one about for these things. a the you've been deemphasizing margin you make guys margin solid about large to about It's how or for talk that business you've on winning of know since projects. Can I because I've talked not any turbine managed been the these came

We really that changing were talked projects. that were strategy very about that relative projects a we and felt for approach the some entering we not disciplined and getting to those overall larger our we those years profitability ago

we And obviously. back so down,

disciplined said be turbine win in would large should will I regard. on our tell terms. I we also that projects, can you, we you, However, tell And very we that it remain

the what neighborhood or is on give profit frankly, happy we consequently, customer in and so of large would this wins point with this in bit. of year about the with And fair to of take they're $XX-ish And we're relationships they're expect because our turbine It project the at terms. a very little million, that type time business. with

And where so we're with happy are. we really

question from Baird. Mason with Rob Next comes

the of aftermarket there? you by driven neutral kind that share Tod, growth, down? mid-single-digit year infer this mobile gains. described volume for is Or the business will growth be we Should volumes and market price

gain be that the by share channel. No, volumes up have will clearly the across independent we driven

we'll high would the now year-over-year gain channel forward, low OEM independent you of gives we because And OEM digits. that will stabilization single what single the first the is the continue lap is up OEM outlook, down what activity we then year-over-year. share the and The look up, on was kind the digits. and then destocking happened channel just really obviously, momentum channel independent will. But quarter, So if of we at destocking channel the up have. that channel, if the you be that independent an us lapping that And expect driving looking

Okay.

was better So the quarter share independent, aftermarket quarter. because typical to that you're -- than seeing first gain already fourth in impact seasonality, seasonally frankly, is that

curious. just I'm So

gain, all share It's gain. all Rob. It's share

just question maybe is fiscal I'll margin? 'XX mean good. I margin Maybe Very more XX as Okay. is handle pointedly, Possibility? a get gross gross that on my well, likelihood?

XX.X. XX.X or

pretty going we we and sequentially have to X, XX.X X step year-over-year did right So quarter. we said But the going much have margin are should growth. in X, we're down. to we gross We Qs said

and you triangulate let calculus from your I'll there. So it work

Sure.

Okay. Very good.

question. Just last

as Just suggest out you balance guidance given just well It did the I go rev X of in a what dollars hearing. maybe that -- comps from and the here. the revenue level if think trending if we're But producers. think, I if and off-road just seems year. But hearing curious the up lower on-road the as about from little just I know the that tweak what to about dollars. visibility for off-road as that's we're think understandably, I ease of counter of think of some you quarters? around I'm bit the remaining for the that

up Yes. digits on Yes, If just the talk But of want nuanced. we I'll I about with off, the start kind it's did flat. point the from On-Road. that to to I out go and low-single

So flat. plus we we're like now up were and X,

the so overall $X is like dollar of to And value that $X million.

a So on on-road the sector. of it's not the lot models movement across

will. then really really to expected. of as a just commented the by did the would the see. are we that we behaving And off-road kind is you -- or in sector on-road if so the sector ag by pressures that bring we It's within you as remarks down highlighted And our nuance, tell starting sector, off-road

However, is in than within the second higher half. the the model, half Off-Road first

question, way be basis. upon dollar but your So model I'm based the it's a that not you on to have important that sure

they production -- just in improve? Yes. Yes, that seeing now, pressures but you're but off-road rates those inference. was so was was the -- I case, That the

of it of we're cut it. XX-XX second we upon to company. how first kind a that have you in type seeing, built what realize us. But And out that's half projected And a we're that Yes. model we have based built half, ahead and of of type

with Brian Blair. Your William from next question comes Drab

a had you've on stronger aerospace share Cabana gains just that for the and aerospace some obviously niche sounds or that? in long the more and performance Was a on in market where the side? wins elaborate presence side on aerospace It the on like of there. and defense Can had segment win defense a You you and time.

just happening can on you elaborate So what's there?

rotorcraft. it's Yes,

So it's board with. programs new come on

based a very Now project, program. we're rotorcraft is delivering that and long-term

to would to for we deliver new expect So come. that many program years

a Okay. defense is that within Is commercial? program that or

Yes,HXXXK helicopter.

Great.

technical able could about and of you to bioprocessing in a customers, you the million shared of would be past XX And you've that past? having stats an then the And approvals. metrics? pipeline You How you provide talked Okay. on and recently is over the update of customers, pipeline prospective that guess, I update going? any XX% those $XXX revenue, mentioned of pipeline in some

Yes.

generally, you that We quarter it really I'd have Brian, did the Just in grow for to pipeline last The robust still us. tell a pipeline. continues grow.

our out touching more add customers. to staff, more those continue and We sales customers at more laboratories than touching that, far important

have that we're so momentum -- -- really really we great And progress So now. pleased with have. the we and

you the numbers are We point with those are not just tell prepared to update numbers at higher. this in time. would I certainty

revenue in such first that's starting down influencing year 'XX in then in a the for meaningful XX% to bioprocessing for Life forecast Sciences way X% your the of some fiscal that the hit after being Is up quarter.

Technologies the into example, and revenue to There in baked have, Soliris, within is the guide is I the cetera, bioprocessing Universal bioprocessing So what we particularly have acquisitions in the for guide. that deliverables. et for we sure. mean, current side, related

comes next Your Alexander question from Jefferies. Laurence with

Dan It's on Rizzo for Laurence.

So to was or so ongoing to reviews how just just Is about How reviews. like the your go the and you it an state world, monthly do we of discussion talk discuss customers speak. quarterly wondering pricing, this works. if I often

the buckets. two to company parcel out really have you into So

on the pricing annual So action bucket first businesses. an is basis. That to our well aftermarket and the we industrial-based as as independent take is change, more quick

larger longer-term have the normalized OEM price first-fit of in action or We a that company, activity. portion, On annual that that contracts. corporation. based XX% returned have back like is would to which more Those of portion project the the smaller

quarterly last so models And the but there's now that over challenge the pretty particular so to that continue that new involved basis, we cycle -- we customers and on typically complex to forward. work cetera, challenged those it there's because Because time. a ranges looking is through it's there's built, perfect continue discussed models with and be is been involved perfect to and and on a tremendous et really commodities

discussion they're So would as point, pretty tell you -- talked about, relationship but it's but this in frequent. at quarterly ongoing discussion. it's They're at -- they're you, least I

and in you China of can in Year? things. the then things Is Chinese in okay Europe, seasonality generally any outside least U.S. then A that and slowdown attributed the world, the we're that of are for One, here? of New in mentioned thinking And or the be of here how And say really improving of front ag, about of to outside fair Okay. couple the at China. slowness to or is that from it rest China growing?

and the sectors. It it tell I troubled. you, be to Year. I I look I I'll continue the If to would maybe develops view would see look China that at I in and Chinese would understand tighter more troubled. the little a as a we just shoots has Americas, -- markets. troubled very tell we're we generally that's get world we view I rest across to forward. of not across I mining, have you, to look eye United a very China economy, cautious going end of seen solid. you at green is States the your looking we second. It's obviously the Europe geographically there, New we'll question give suggest anything would don't whole how remains a so tell But Europe, you, would with would But we continue bit Europe, world, start Europe, Yes. would to on-road at for construction and signs. ag I of have you, a tell very if macro our the think to you how just the on and LatAm tell do

are further for at now back There time. the Carpenter I remarks. Tod no call closing will questions this turn to

fiscal to in call Goodbye. I great forward results our to moves everyone. Thanks quarter holiday, participated, who That the Have reporting and a look everyone today. XXXX February. second

conference today's call. concludes This

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