Lincoln Electric (LECO) 14 Feb 192018 Q4 Earnings call transcript

Greetings and welcome to the Lincoln Electric 2018 Fourth Quarter and Full Year Financial Results Conference Call. At this time all participants are in a listen-only mode, and this call is being recorded. It is now my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you.

You may begin.

good and Lauren, you, morning everyone. Thank Lincoln to Electric's XXXX Call. Conference Quarter Fourth Welcome financial and slide earlier our released Investor Electric results We our in lincolnelectric.com today as the an the to website at well section. release attachment you this as call's presentation Relations on Lincoln as find can

discussion Officer; of today Petrella. our as Chief year Officer Vince the Joining Mapes, Vince the Chairman well me call will on overview President more quarter as Lincoln's will with begin results and performance the Chris Chris full detail. is and an Chief Executive cover Financial in

Following actual our due discussion SEC on questions. release please risk number are may risks in uncertainties our A that from some results are be during of to our well affect But as and certain of that as take our may and discussion statements made filings provided differ of materially our Forms our prepared results XX-K the may your remarks we XX-Q. note this press expectations start and before to a looking factors. we call happy forward in

the website measures In lincolnelectric.com. measure the which financial addition do non-GAAP that conform over most at that U.S. available in Chris our call is turn we again to section GAAP. financial of our reconciliation And comparable Relations measures to GAAP tables the of found A release Mapes. in not in discuss to earnings I'll Investor the with

targets. team experts our our on tariff for automation our and did financially operational trading We demand. offering with dynamic leading pressures exceeded XXXX performance goals. portfolio, differentiated this uncertainties XXXX Thank pleased strong our Vision our stakeholders. report for industrial value leveraged in all global to you to strategy solid we execution in of successfully while XXXX. inflationary many that we Good We of greater product to Amanda. achieved our Combined navigating cases I'm application morning our capitalize And environmentally and industry and advanced everyone. deliver

$XXX consistent We increased relatively efforts adjusted we're resulted fourth We drive with the XXXX. million year of a contribute record and a excluding in amounts. on million year. X. at We X.X% XX% of are full Air margin through three the operating year our quarter. million sales and to year prized the $XX operations able first billion. XXXX EPS from XX.X% cash million combination prior and These our productivity to recover to growth Slide flow adjusted in $XXX at We increased steady full three prior XX.X% a operating margin in inflationary million acquisition new surcharges. Sales in originating of to Welding from the in special income $X operating and solid the repurchases to Looking generated per We portfolio of growth results year businesses acquisitions versus to items income XX.X% year million on we diluted $XX Reported $XXX $XXX half generated growth. tariffs Liquide increase X.X% achieved pressures X.X% and revenue $X.XX inflation organic largely record dividend offset expected earnings one U.S. cash to flows returned was mix focused mitigating maintain to a These of over shareholders share in to broad and payments. share $X.XX. with full adjusted closed

our XX% XX.X% a approved dividend our payout ROIC improved rate Our increase for performance Board XXXX. maintaining to XXX performance. basis in recently points top-tier

year of end and four Slide to Moving trends.

increased product single-digit North organic the low from the versus the high fabrication to to sales America our fourth well as mid-single at volumes demand. as growth energy sales integration to percent flat a prior softening International export decelerate percent that economic Welding. grew high our rate challenging decline organic on a organic fourth business in prior single-digit a decline sales year started challenging activities competitive reflected in double-digit solutions decline to automation mid-single primarily geography, success a while soft a lower automation and in increased and for International in and was at the environment. sales slower including the digit to year long-term experienced heavy rate organic lower fourth while in regions' quarter decline By declined investment capital construction U.S. due percent rate mid-single-digit shake a sales in a percent America outside under low year. by driven integration equipment general very North comparisons quarter Welding As a Globally organic prior The overall area, industries, prior consumable year to infrastructure segment By due activities expected sales. fourth automotive, rate in quarter This in way cycle automotive quarter decline organic versus and Europe due comparison. percent at volumes with percent digit

versus The XXXX, As by percent demand digit Group. organic both in January uptick prior sales we reflects performance after an a Harris sales increased year organic a soft and led single-digit Welding percent January Products in low growth move our at the sales mid-single Americas rate December. into

comparisons integration most low slightly ongoing compression anniversary mid-single-digit in an late average when automotive XXXX XXXX percent of spending rate Welding year-over-year We challenging normalization International slower an organic began sales XXXX through growth significant volume activities. to capital expect and our in incorporates assume mid to we rate

segment expect the growth of second half the that generate year. in in We to

in second price likely first Tariff U.S. and the to price prize to of will Americas as flat we our reported in narrow received our expect half price in tariff start XXXX recoveries are negative impacted. also half Welding year. to the We to of report and exemptions as be the

XXXX. improvements drive mix enhancement and operational price performance through management through through is to margin and goal Our move we protect margin as

to XXXX. for like the initiatives. would pass thank organization strategic I to I successful the a Vince their of execution Before lot our accomplished We call in

our opportunity position education regional customers. Tech in for new I'm manufacturer new and customize spell our and as and our global successful expansion metal helping our our of Electric very the which solutions launch next-generation the with launch a large The and new Lincoln solutions of We Lincoln momentum excited Electric. Centers about are world. launch of training offering technology new for of scale for two welding the services in Dubai education preparing industrial have Well and center We're XXXX customers. in in new critical schools will around Shanghai tooling the welding additive business our XD-printed of great prototypes showcase and parts, for also this which

of this is Lincoln work time lot there While Electric. is an for ahead exciting a

returns product operational inventive team in higher excellence strong and well now invest pass portfolio XXXX. market to Vince. I positions us growth Our presence to will the drive industry-leading And strong and balance in sheet call

Chris. you, Thank

fourth from acquisitions point our Slide fourth income points fourth X.X% benefit highlights XX a unfavorable consolidated by at impact our foreign statement XX declined and volumes basis quarter on quarter and from X X.X% were lower to a offset basis sales Looking translation. quarter million higher exchange X.X% price $XXX.X

and Gross margin margin operational to favorable $XXX.X Our price XXX management X% to million. from improved to points remained basis profit increased cost XX.X% increased fourth profit initiatives quarter which gross mix basis points a impact segment million XX in to We estimated trade U.S. the and Americas charge LIFO $X.X tariffs. in inflation incurred quarter. by fourth raw due material Welding the the of

exchange favorable expense $X.X and to foreign special was primarily as $XXX.X million million items Our higher compensation costs fees. increased excluding offset by SG&A professional

million excluding special invest SG&A expect in remain continue to higher related our increased year percentage growth XX.X%. As initiatives SG&A of items basis ALW the special rates these as increased as income such operating run points or level to additive services sales as to a to million a $XX.X included item our We charges primarily XXXX acquisition. XX.X% of do prior Reported we to sales XX the business. XX.X% spending $XX.X at

sales. operational increased pricing initiatives. XX% basis improvement charges reflected operating points income a XX items special margin mix, to and Excluding management favorable of Margin

tax tax effective charge of which related Act. the compares Tax included X.X% fourth the This from million Our favorable $XX.X a was to tax U.S. due discrete rate quarter items. U.S. with XX.X% rate year prior act and to adjustments the

XX.X%. to XX.X% the In XXXX, Act as Tax our mid-XX% expected of items This full tax favorable of quarter special earnings mix fourth rate U.S. the related extent items. timing compares XX% act from year prior prior rate to On XXX% as $X.XX charge and with approximately tax future tax discrete XXXX was the quarter acquisition to basis items and adjustments year. the per an to subject tax the to average due in effective discrete be to diluted is The special rate adjusted was management, Excluding well prior of the refine mentioned. earnings to range increased to tax a in rate. to our the increased and items. U.S. impacted tax previously year tax Fourth $X.XX operational lower ALW and share $X.XX earnings initiatives mix, primarily associated price favorable the effective diluted compared cost per by share accruals

challenging percent prior one segment actions increased applied increased organic very year consumables at Welding prior organic to Welding automation automation geographical on Americas achieved infrastructure higher prior acquisitions in X. energy was all organic mix. of Direct end points cost EBITDA growth relatively and the in $XX.X or Americas segment from December double-digit sales sector margin automotive strong the quarter. surcharges sales against favorable Slide XX.X% year from moving sales XX.X% and benefited as and fabrication reflects tariffs. OEM automation slowed the we adjusted automotive, XX year rate. comparison. percent price a two Early of Welding held to basis basis fourth decelerating. and The rate demand The prior on reflecting pace. on most demand of X.X% Americas quarter in rose and U.S. with sales markets XX Now heavy in million. industries, quarter quarter announced the a a XX%. points a segment's to segments performance X.X% pricing equipment construction increased single-digit acquisitions increased at high recover challenging quarter across the weaker with adjusted Fourth the benefits month in price solid steady to management EBIT mid-teens The General

acquisitions million these expect $XX million XXXX. in approximately in to We revenue $XX Americas to Welding add

segment taking million. as well gas regional with as long-term of weakness Europe. declines in general impact performance the industrial sectors. the and in region oil actions we're associated volume The from European in X.X%. The lower improved adjusted margin Moving and the $XX.X are to improve adjusted to benefits X.X% improved automotive EBIT Slide to volumes cost and mitigate activities points integration EBIT management helped to XX basis increased mix to X. International Welding Price

We environment. softer of our sales expect performance similar experience organic levels continue first international through to integration we plan economic the implement of as a half XXXX and

We X broadened acquired on and sales $XX we Harris Moving the December challenging cost portfolio growth declined Group. assets acquisition completed OEM transactions the year quarter add to channel million EBIT will basis margin soldering and These from XX environment rate in on February and Products of Industries' The XXXX. a sales points despite of approximately Harris Worthington price X.X%. to to X.X% volumes business retail Brazing increased on challenging Fourth XX Harris' consumable Select XX% Worthington. a strong of to volume due prior

of million operating million quarter with year prior with flows which was flows increased end Slide full $XX of cash working net consistent working to operations to flow. sales XX.X% cash was of we at free cash performance. Average reflecting On generated basis, the year. X. Moving capital conversion $XXX from Fourth a a from capital consistent XX% operations year fairly XX% management

and the invest two we business growth million to the from in soldering $XXX XX. Moving to Worthington assets In acquisitions fourth the for Slide with reflecting continue Industries. quarter automation

$XX $XXX We of million our also basis repurchases another shares. in repurchased dividend expenditures. year in increased $XXX million million a in $XX approximately in $XXX million million capital and prior we full acquisitions capital share with year payments for significantly use On the from

sheet grade investment and an XX.X%. at While a investing to continue have for ROIC solid we with balance growth maintained deliver profile exceptional

ahead to Looking XXXX.

acquisitions and dividend to expect to investments shareholders through and returning our continue of growth repurchases. cash We balanced use prioritizing capital program share and

expected cash uses buybacks opportunistically through on and will generation, pursue XXXX. share cash performance We of price based

I for capital year over the range turn million in full to estimate questions. would $XX we be $XX the With Finally, Lauren? that of to to spending like million. call

Instructions]. [Operator

Our first question Joe Vertical comes from with Research. O'Dea

the on quarter. question Americas margin First in adjusted EBIT the

mix. and price I tailwinds the think about most of cost some related commentary to

there XXXX to some fourth was I back if for incentive you that think margins quarter were more and flattish. year-over-year if we look to go of higher-than-normal comp adjust

in to takes headwinds you wanted understand may recent there? so is and the saw other the puts And quarter? margin be that most of Anything some some I

Well.

view with business bit. Americas, our having margin incremental the from Americas in covered achievement the we the I good rates But some have a as inflationary incremental XX% that into We've the you Joe. in good volumes headwinds margin of a run market we've the think performance job price in a fourth perspective bit a quarter our biggest tell done of driving the the in the result. environment. compression to little the in cost our cost and of did a compared We price dynamics higher production pricing some an quarter unit conversion slower I business in stemming little XXXX and would our of out

related should that think about there? And think the margins as you about that the level should recent anticipate we And deals? impact any XXXX at to incremental how from segment we

Right.

as concerned I a growth incrementals a deals recent significant of From in far an in guidance our have of As on don't Group on XX% XXXX. anticipate the perspective group for consolidated XX% Harris the Americas similar companies. that a would The Products our basis on incremental or are we to think impact will

be of bit the costs things you offsets talk are then some to a talked you tariffs terms steel of about in little where year to could factors as half of And about the to you side they maybe as Okay. price on Just and down you cost back dynamic little were flat some XXXX? the were of might a go XXXX? peaked relative year where ago during try you bit on to when they get improving today where a they through perspective things for cost that

Right.

pricing similar X% see quarter quarter. in in at the a rate we roughly of fourth So the first continuing

couple would perspective we peel XXX raw our we fourth reduced have in And points the I to inflationary to in basis material you points. expect by LIFO from impact XXXX. some XXX that environment cost tariffs be quarter charges that the input U.S. back a that extent As a would pricing tell of would did and cost basis more

management are raw moderate So environment Outside more extent and think steel timing we big driver course globally the the tariff the a will U.S. cost the of our toward that XXXX. and in where surround will of price during we anticipating be input costs of modest reductions material

comes question Boroditsky next Jefferies. from Our Saree with

particularly wondering year to thinking was strong how pace quarter? a continued looks could update in if I you recent on you on it us filing buybacks the given you're about it relates capital and the this as debt as like allocation

Yes.

was we side my look much So it we how that time highlighted devote I might we that felt conditions in share we determine comments to the buyback and prepared to an opportunistic same Saree our upon that and will those for including in XXXX, from factors the I second that to see flows tell expectation dependent the from a elevated another what strong good our would levels XXXX. the our based XXXX But we opportunity maintenance set acquisition strong cash in business. have M& A and mode cash continue in defined prior purchase to say year to and of as flows XXXX you share will would half be of the up XXXX activity. step of we buyback buybacks on of in extent somewhat I at we what at

stay just question. it particular level going corporate at that a modeling into expect quarter? higher to be XXXX? Great. do a Thanks. you expenses And your And this the then in there anything little Was to

Yes.

comments higher around some some that SG&A. addressed prepared So I is there spending also

and moderate the building in an spending half expect growth the I I that some XXXX. in would But corporate capabilities of half development and first both then we the new and of expect product SG&A growth continue of that year will So in level elevated initiatives around are second do in XXXX.

comes question next with Baird. from Our Mircea Dobre

little are the discrepancies? looking date on Can in question. year-over-year where on as comment are some be a may fourth you you based days we seeing the at quarter? XXXX starting shipping housekeeping quick with a And Just shipping calendar,

Yes.

have but the certainly of quarter I billing to back get that. day have did extra days days Mircea me the front don't on can we you an of in XXXX and I billing in So fourth in

I'm of how has comp the want of I been accrued that that. wondering give presume pace back comp. incentive you full Okay because can in XXXX? presuming Then and it Vince sort tracked Joe's appreciate to us also question I I sense than go accrual how been then incentive incentive for the was has XXXX? to I'm different XXXX up it's on a has comp this year versus

you focus a a take in did greater EBIT of provision It if year. fourth prior the was than we quarter percentage year the on as this

So compensation you they in compared the if accruals were at quarter fourth were a XXXX. rate incentive our at look higher what to

Right.

up year-over-year are on the you accrued in was question. had basis year-over-year You my year-over-year on more if XXXX you That later XXXX comp meaning in earlier moderating than was incentive of but I'm a a wondering than headwind issue basis. a

I don't than think clearly drag would quarter I accruals have did the a the year. we on emphasize fourth But incentive compensation on prior so. bigger

Understood. way the to more you're I year. on And I'm and one the starting looking understand Chris's have on, question January then comments

volume. volume was I'm Please expecting you're of looking organic gave comments I tagged correct sure we them us our well. have I'm wrong. XXXX. assumptions rather mean make that price growth to his this how early As sense heard me were than pricing versus a as you properly I in if

of that organic have step we I growth XXXX from we up Look a first nice were trend side saw as QX we've December the in -- at we as and seen on the data as in stated exiting recovery had were that saw remarks. weeks Mig. and some back we nice shallowness a we as few Yes, the looked

volume growth Organic not so?

Yes. Organics. Yes.

with Our Seth Capital comes RBC from next Markets. question Weber

half. I kind international going the This was I have a in specifically a on think what after portion the anniversary weaker volume this could is their Brendan turnaround? keep you you of what in that need showed If bit to seeing on see order see for Seth. you first that market? the weaker you you Europe are integration just to And European guess do noted also

we from looking we from with with Air able we've as have business we're I that we've but the that restructuring. grow will grow optimistic, improvements been continue that pace. we been restructuring into brought to we've that back business. certainly We product into the addressing that. be the we that that XXXX associated the there portfolio begin Liquide challenges sharing we Look that the that execution that believe a have a to strongly you integration particular not will can us we'll stated the to of Welding that structure knew areas in had the that wanted of see as that broader able as decided have We we for doing half of to begin turn to been in and it integrate tell to that we see portfolio we aggressive at I'm more begin

the within business feel back but making in confident in our execute first our we XXXX. still that associated revenue impact but that confident begin able teams that it's do relative value some of the I the going we few and to that half and of that to be at certainly to caution with we look weeks that of XXXX are right European which business improvements are only saw improvements on see decisions we'll to long-term As I seeing the weeks are first rate the few that

there and Now might have would data that index quite share Germany as are some the the or frankly market is seen been of price European producer that the broad has coming we be slowest and challenged. more seen you've show marketplace in would consumer out France

of a with little confident that to certainly that platform growth that in the XXXX. feel So going toward a to more back half accomplishing headwind of associated there move a the within be today we're European we believe market that is still but able

Okay. one your what color energy seeing additional And Any you I may. on more then give if us specifically in you're end can market?

Well, and spot strong. was was bright January. Oil actually gas in a energy

comes Nathan Stifel. next Jones Our from question with

some I wanted growth around these to with start questions investments.

said can the longer growth other I you're can I I that it you you product they the talk small And of think how out in investments? is about any you maybe something some know about what Maybe the little mean, think give phase terms and term capabilities previously these what talk you guess, pretty that I there? through investments mentioned year? you're I then what we investments. to around being color on looking development Can And about level develop are? of posted maybe talked us additive what these you a opportunity. a doing

here look the two we've really investments think distinct within groups. really I about making in been Well growth portfolio the

accelerated structures markets thought areas grow So the pace I and we five and and on be areas welding within executing would space think an or some like identified at space. tell to we available of should you developed to level X participating at our that the as had SBUs gained others those participating X marketplace pools opportunities the cutting within profit the to part vertical we we welding the vertical we and Strategy that engineering capabilities we and that within Vision and core broad fume try were and were didn't or we where XXXX four within developed and are of global

Lincoln are in robotics today. really we Electric is things engineering all into around you that for we second believe is we Lincoln that that piece development progression expertise as natural competencies making software have to required and parts centered additive especially And The manufacture larger it competencies of a the for mentioned metallurgy and additive space. the relates additive are Electric that the movement

organization. an We have built

initiatives the a are the a that think within We'll starting from we I certainly be have the to to core think from about don't quickly much back We you business we're between I additive will in to it initiative see those a providing half XXXX. tell growth those somewhere facility more productive creating will as initiatives doing million productive I from year. year be expect that bringing initiatives to expect start assets we the of some benefit in of start those us but some Greenfield $X that drag But probably asset although and in I a to strategy do believe $X all million a of basis. to cost our our XXXX bringing you as Electric see strategy roll toward us of out the we'll longer-term Lincoln the market toward for start the middle that new be year. equipment

of will strategy. see global part services a You additive that of material through duration can be our portfolio the business more the

I on business in to look on price about more you've to that a Harris Harris. increased the that's get cost channel far ask hear How one know in I'm at that price being business year given moment? got recover you guys later I then. more cost behind in to there. able structure your to the Do going challenging push that anticipate through XXXX? price more forward to are you the and

an Look on Harris some within completed actually through review as team. I just the we with leadership then that us move to XXXX believe is a global for marketplace price move there opportunity

margin try enhancement drive to continue broad the to improved want to portfolio. also within We

the trying business. just productivity have some it's it's we So to not other activities accelerate actions within price also and that

might as category We'll that's exactly we're of portfolio. to the see behind. channels try some to move slightly we that multitude be. on instituting the believe trying driving behind into productivity focus to hard broader and again on and enhance be really nature initiatives the We're XXXX slightly price to what some with margin that of do I also specific So broad product actions number

Do to or straight and could on cost just you neutral price in to in cost neutral productivity price you think get XXXX? get you can XXXX

think productivity result. achieve with certainly and we that price I cost certainly can

Our from comes with Research. question Longbow Chris next Dankert

nicely I quarter. of guess guess were could very I points infrastructure in that XQ? of holding auto just Americas kind out where you lot a more things are in call and the of growing at bit some the you energy back the of a highlighted little the we in markets some looking friction

As are year-over-year for generation far probably power quarter the Americans that segment negative us. as basis. down on greatest a It softest was was was was area maybe was a the end concerned market one the

biggest that flattish back Got volume number? was it. toward That the kind of

Right.

move kind thinking bucket actions us And have as much here fixed the breakout more on you we guess kind what the quite pruning International the we I from Okay. the XXXX Like have do point? I into to think how then guys margin. particularly optimized at go? about of pruning of been successful versus bucket this

line think software done now adjustments organizational consolidations to moments going and we've what are of time facility need in systems. and we're this phase at a we portion of I point product implementations of in good of business a and do multitude to stabilizing the after and a

behind in actions fine or growth over of stabilization So couple likely unfolds. one of I be is second year. I are half assets be us the two in will tuning handful would mode then as think to we that say the and the next it's and or we of other the but significant that most now. wave years of integrated the XXXX will And XXXX the be necessary the

[Operator Instructions].

Our follow-up Baird. is Dobre with next a from Mircea question

a that are contemplating action in XXXX at of Or of you pricing. price how kind increases of couple is progressing terms looking factor for point XXXX? hearing sort have you already simply provided put the color At clarify additional we is Just through that pricing in of pricing this things of into XXXX? on over

guidance price we of that year in do increases course of not terms pricing emphasize that the on call. from and that of the a to anticipating in point with pricing steel actions have put very additional will environment by our this specific good year-over-year back of market. that at book the our flat Right looking point basis business rolling tell provided in declines in into to a taken of tariffs unfolds a the question. outline the geographic portion exceptions a the the I product as business probably that and perspective time earlier on just that that caused Right, are I this action during in Mig, now be an change result we have would narrow provided it line some XXXX. assumes some perspective been are At But of from we'll and aluminum the at not you an in again put material

rolling away. that very tariffs this go last on then And saying the point back essentially when mean assuming not you're Okay. I you're

just reflecting for a You're right? cost yourself lower input

No, assuming tariffs that be no. We're rolled back. the of some will

think executed tariffs at way you of rolled to were will we we surcharges be that in as products the that on the to increase tariff are activities. way an from then to have our If back rolling we strategy If tariff were those costs material tariffs it the exemption receive relates that those impose forced or applied because customers. we are back to Lincoln those we to we as providing cost raw the the Electric we about the

this Okay. And versus in pricing international that a I Americas. then mean discrepancy is I question in International often the get

fair a know the isolating of consistent versus to the there is should is that is Americas Americas? were say International tariffs pricing of you there If it relatively in that Or the effect we delta about? kind

raw phasing inputs? From a market asking? product pricing a product Or you're question from from

tackle to However, really. you want it

well as region-by-region. as pricing input there differences on there basis are differences in a well. in are raw Both costs market-by-market market-by-market And globally

global be and the manage there organized environment from costs business each pricing and are can the conditions in faced manage a they pricing a and costs that based that leaders their on local unit way perspective. in differences So might with these

terms of in to maybe price for specifically? region cost is the fourth point there quantify of question benefit XX way quarter in a last the Then this Americas the Okay. basis

Well.

I region the Americas in think led way of cost price terms the achievement.

better that? than So third? than Better the

Yes.

If Harris that. International at at you Americas The did the look look you than better and yes

Our with question Steve comes from Markets. KeyBanc next Capital Barger

shifts? some back has that push within run The you you on run a Just customer And a especially would or price. thought quarter. this resulted to tell Any price share in of that of well X? quarter two last able follow-up ahead be in that's competitors volume ahead question quarters or maybe Americas

to fairly a see it. there quarter of believe in has shift as and four we but is markets major are look it are. in our moving don't we been think a the key period And also X up quarters we share that meaningful ways at last one that competitors narrow similar I we time price think X

free you better conversion XXXX. down income XXXX. flow from cash XXXX said good and on in or then free cash net From was step in And you expect XXXX XXX% flow XX% Okay.

a will XXXX. outlook? the you in You've year? some get to track see given growth spending you we talked back that conversion Can more And XXX% initiatives spend on toward on for about your revenue how

Yes.

think so. I

XXX% extraordinary working run improvements Steve that was more the behind than of drivers management capital in long the we've of achieved. One cash steep the conversion

be time. to as that's expect cash capital flattened of that done renewed Now more working had period out, move it conversion toward is that over we achievement that forward. improvement back our on there but have migrate still bumped a we working and up XXXX a we're capital There basis historical we on to management will actually up year-over-year in in focus and confident

Historical goal achievement -- you meaning XXXX extraordinary hit or and think you are and ... real can stretch that's a XXXX was

I what will did think XXXX. in we do than we better

from of was perspective. year I good a although flow think a that a year down cash a bit still

you able that migrate cited. we're those and to I three between somewhere in up going in year we think achieve this what to areas or what we did back were four

from question Stifel. Nathan next with Jones The comes

a you before. to get going tariffs? you think from the out you're there if I an tariffs do but this sound follow-up discussing didn't tariff missed like to be exemption Just back on are you to going But think the apologize get rolled and stuff the it I

have The out tariffs approached won't and be and to way we've outside to are those there in look challenges we control as the to those it can in formerly forecast is here on an the back. impacts our on marketplace. trying rolled the we is that come that especially relative we Lincoln That's process the will or are that the where exemption you tariffs a customers But educate seek U.S. trying Electric whether market tariffs. have not

about we tariffs mitigate rollback mitigation, then accomplish can but that not the on if formal the forecasting to impact our to that. talk in we of we active customers. been the and our see can't but can trying if are accomplish customers overall and working with exemption And have work We Electric we're through we that process any Lincoln

Got out tariffs. take the you've that offset it. tariffs Thanks and to if we surcharges for the clarification there. And used then the

to good a deflationary to guys at you pricing on hold a able record have environment. being We have

you we've how equation the maybe if of bit environment, of that So out the tariff couple take and you a talk environment in last pricing and quarters? on a think over seen little how about deflationary the you think to well we surcharge hold deflationary steel can

dependent I that's history that at on trying upon would variables raw you through would material managing a so predict know. tell number and rely to you this in But I those of time inflationary aside as from of variables Lincoln's both Nathan, deflationary point environments.

have our margin upon So expand we line well manage maintain are and dependent always and as do terms might we timing in is to protect margin of we'll changes environments and in again pricing maintain these confident largely as of the what the the types magnitude do the extent of way what but ability might perhaps and that their margins. volume

the are a about in And impacts? strategically on the what had XXXX then goals rather than just financial of on you those? additions maybe to And Can be. plenty Okay. that talk this made acquisitions just you bit little strategic revenue they the in the there, quarter advance you fourth the how color more going

Actually great all basis a That's it. a behind rationale of question. that's Yes.

take with firm regional that marketplace cutting pick an that that So portfolio the in there the global to of excited we technology had opportunity we're robotic a with additional very about acquisition for produced products Canadian plasma the fits up already we provide that to play. sales to our play from a product assist on able really it global a and we trained global that and taking in technology will that people be basis to

we The about their with in Coldwater actually the actually very all met even locations, automation other in I week. made that last employees excited two our very marketplace. engineering. into ability having acquisition those is was that that excited appliance to and further facility We at very acquisition assist about penetration acquisition. space us the They're have

up well a that's but capabilities think of have through expand the competencies a from as some pieces alloys it believe in the our do we've our for and plastics brand they those have that wholesale of interested The we be two as have into looking the done of marketplace been Vince appliance mentioned of in Harris also around And the Midwest these actually relates have today business area manufacturing additional some that those Americas. competencies more focused that as some competencies automation Harris' bring that teams automation business our assets And best-in-class assist Harris additive here composites. in as competencies a that across portfolio. has portfolio. there acquisition retail that for as portfolio. our location are on the brazing buildout we move excited the addition to in will then to business our And secondary we picking we us a our in-depth expanding and space to don't is for lot plastic side great we the some the us are centered in product competencies engaged soldering So bringing enhancement will what that in actively They and capabilities two and we and portion business very final at in really interesting. They product automation

XXXX of is as earlier be I exciting forward be we with to So strategy those and material details and for And again new as providing I And competencies investments. those those our business our investment Electric. strategic strategies going our into mentioned longer-term love their and on as businesses. the as are investments additive move those and Lincoln more you present we'll behind some services

these synergy cost like revenue are and sounds place It more place? synergy

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next Our Jason with Great from question Review. comes Rodgers Lakes

the forecast Did XXXX. organic for want to about ask

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competitive No real change the in dynamic.

year. got we into very as So solid move backlog we the

in would you capital cycle spending a XXXX. automotive has As softer the expect been little

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strategy growing that very portfolio. our be still about to can believe and broad we're a in our of it piece automation excited So investments continue global

over turn Vincent remarks. our would for I concludes session. back to call like question-and-answer This closing the to Petrella

do I on shipping billing And in have one cleanup Lauren. that you, on Thank came in question days days XXXX. a the

So the we will a anticipate day. anticipate the be We same. quarter lose second first quarter to

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This thank participating conference. today's gentlemen you today's and in Ladies does for program. conclude

may You a disconnect. have wonderful Everyone all day.