Lincoln Electric (LECO) 15 Feb 242023 Q4 Earnings call transcript

Good morning, everyone, and welcome to Lincoln Electric's Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] This call is being recorded.

It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you.

You may begin.

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

Steve the Officer; Chief Bruno, Chief is Gabe President Financial and Joining me Officer. today Hedlund, on our call Executive and

our remarks, we questions. prepared are your Following happy to take

filings materially actual this discussions, our Forms differ and Before that during of some be note uncertainties press results to on our our due A number from may provided and that made please risk call XX-K we results release in forward-looking, a and start SEC statements certain may our XX-Q. the factors. in risks and are affect may of expectations of discussion our

financial which is In the measures non-GAAP that website the financial our addition, reconciliation of section conform tables measures in at do the to A GAAP. our lincolnelectric.com. to found again discussed in measures available release, we in U.S. Investor of Relations most GAAP comparable not earnings

Steve And to the I'll Steve? turn call over with that, Hedlund.

you, morning, everyone. Thank Amanda. Good

metrics. to of results of Turning I to financial pleased record demonstrate year and serve regions, X. customers. also prior results business and key to our the am capital full our power disciplined processes and to investments benefit automation products highlight end our of the different for our needs an allocation our people, report to Slide markets They These the our exposure broad and strategy. diverse build industry-leading

from organic strong our sales record We from performance solid and generated acquisitions. growth

Higher management productivity $X price of XXXX track teens target $XXX X ranges, automation low diligent achieved now profitability schedule. now automation leverage, delivering with within to initiatives. million, is and sales sales and exceed portfolio reflects are automation their operating cost a ahead margins Our on profit This and segments at record margin. Standard all We improvement target are billion our we

as We a from and performance $X.XX to cash cycle which to profile capital allocation continue we allows achievements a working at demonstrating shareholders. well maintained to to disciplined These Heading in share, achieved earnings M&A investment-grade Higher strong free sheet our our income. while net into per cash and record. delivered as our capital improved us returning strategic to strategy. initiatives from ROIC, record free the gains accelerated record XXX% efficiency conversion our flow also to flows approach also an flow, cash earnings and to through balance with the adjusted operations contributed business invest XXXX, capital

Turning X. Slide to

We on are X targets. and Standard of are completing pace Strategy to years the XXXX Higher our achieve our last

on such at growth labor trends, inflation, on reshoring, and is our financial for civil which capitalize metrics, and and on demand we Looking shortage our skilled to the track, focus inorganic to infrastructure the electrification, of as solutions. organic all create performance investments continue and secular favorable the of will sales energy welders,

the business, benefits throughout continue most automation investments have services, process and global and realize from our safety performance drive will we Operationally, environmental shared improvement the centralized we further in procurement. to made continuous recently, enhance and

margin to XXXX average our on which our by to both operating is XXXX points up margin XXXX portfolio We of our XX%, the XXX segment bring and especially International Welding target. to will automation improving are performance which XXX consolidated focused income basis

of by to the working our closer end efficiency opportunity improve working XXXX. to XX% to operating and capital more have sales We performance bring capital average

this decile strong We as area. have normalize, levels progress ourselves inventory made to top operator and we are pursuing as reposition initiatives additional in a

on $X.X capital balanced continuing billion million a have we've our in We approach growth Standard over $XXX invested committed to strategy. approximately and the intend years Higher also ahead. Under our balanced are returned We allocation to in Strategy, shareholders.

So as entering in position not could Lincoln I more confident I my year Electric's CEO, XXXX. be as initial start

a have in strong additive early fast operational new platform and charger, expanding our business. which manufacturing business phase for X and are growth attractive We DC market-leading upside and commercialization and core long-term initiatives, automation the offer innovation and options portfolio, both long-term

Before their and my Strategy their and supported like extend results, we customers, shareholders, would and turn have Higher partners trust success. quarter who gratitude to put us our work Chris all Mapes thank are exceptional would and Standard I who to to team XXXX to our our Electric strong have fourth like in also critical his XXXX. the I leadership to for Lincoln in for

equipment fourth to automation our a grew high activity. record markets that, in quarter momentum X sales to the most sales accelerating in expected the from investments move achieved projects feeling XXXX, and our based $X.X were With in quarter our We both quoting trend. and stronger than capital continued teams sales X.X% let's organically as automation, has quarter project portfolio likely timing. our X of positioned the X of Slide in Organic growth discuss acquisitions across solid across Fourth growth while in schedule end second fourth solutions. This from completed X and by X quarter on strong billion. equipment led ahead for product of demand primary categories, in growth to main

expect quarter at X South Construction Consumable automation strong slightly exposure. markets we broadened Pacific. contracted XX% up the organic America decelerating sales organic percent and revenue the in comparisons. approximately fourth continue order patterns, on with which of our of consumable led prior activity improvement year XXXX. to Europe favorable and sales on X infrastructure End America, low fourth growth Asia demand North in in were production single-digit market or industrial to portions choppy in the rate of in Our quarter

demand activity automation automation cells. in industry cobots industry in percent, strong increased Americas including generation general the gas globally. oil growth both and Welding. quarter, strong, reflects to continued midstream our standardized demand Energy from continued low-double-digit percent of mid-teens Heavy empower remained project sectors and industry Cooper up and the primarily and as strength in strength remain in General success

production challenging retail on year remain sector comparisons the prior both contract like weak to Residential-oriented continued applications activity in challenged trends. quarter. Group channel, Products and on slower Harris Automotive in residential the our HVAC in

end opportunities regional environment, While diversified us profile will our market to allowed ensure through the a and and of growth cycle dynamic successfully portion we navigate capture this ahead.

financial fourth more will I to in Gabe the quarter call assumptions now and XXXX pass our Bruno to detail. cover results

Steve. you, Thank

to X. Moving Slide

of quarter Our of increased point basis reported revenue an the $XX in a as from quarter $XX sales approximately well extra record completed the to recognized automation from approximate as an month which from Fori the both fourth billion. million ahead acquisitions, from XXX incremental schedule. projects We acquisition team XX% included of consolidated $X.XX increase a revenue million of X.X% fourth sales benefit

basis Organic and price. sales increased increase of in X.X% XX points from higher volumes a X%

versus exchange by X.X% the year. favorable was prior Foreign translation

Gross and and profit XX% operational LIFO We or versus quarter, million year improvements. benefit $XX prior lower $X.X approximately in sales, of recognized the the million price/cost inventory dollars increased a reflecting management material costs levels. progression on higher the

a modest to increased XXX basis. gross positive fourth year position XX.X%, a with points full margin profit quarter price/cost on basis Our

million. relatively and steady costs of $XX items Our The a SG&A compensation XX% well XX.X%. of Operating million. a employee-related the on or associated as acquisitions. Europe increased to Reported to income higher special $XXX several sales $XX at XX% increased activities as approximately from as benefited income from approximately with gain initiated percent property, years ago. operating rationalization in million incentive primarily sale increase was expense due SG&A is of

improvements special and Excluding increased profit operating to items, Diligent our dollar from management, contributions acquisitions drove million. adjusted growth. $XXX cost income operational XX% price

income Our adjusted a margin basis increased record points generating to operating XX.X%, incremental XX% XXX margin. a

year in Products price International Group and Welding easier operational prior reflects margin comparisons segment. Harris and incremental management, Our improvements cost the

to Moving earnings.

fourth XX% Our per diluted earnings share $X.XX. quarter to increased

included per special to adjusted $X.XX exchange from increased share foreign Excluding favorable which translation. diluted items, benefit a XX% earnings $X.XX,

Moving efficient and from to Acquisition on reportable expectations increased on volume quarter automation our X% execution. the our by acquisitions led in benefit exceeded organic sales a performance Welding Slide increase XX% X. We project Americas approximately segments growth. from XX% sales in

pleased in reinforcing mid-single-digit and as of were Consumables with in X% activities. in South reflected Americas double-digit region systems, a sales in steady low integration the are rate America, spending. continued momentum Steve We a relatively Welding percent due industrial to earlier. growth automation the in capital the activity percent equipment mentioned progression organic increase challenged

operational Welding initiatives by quarter as were fourth lower adjusted XX% and achieved offset $XXX of effective margin Americas margin They million. segment's mix. EBIT to partially EBIT an costs increased management automation price/cost from and employee higher benefits approximately XX.X% adjusted

Consumables increase X. percent and Slide sales. We from higher increased to increase organic portions strength activity X% Middle the with segment as higher in sales activity Pacific XX% sales challenged modestly declined Welding of growth Asia X% industrial on Pacific. mid-single-digit a of of Asia volume project portions equipment. strong Europe. achieved in pockets and approximately This Europe well Southeast reflects automation East, as in International Moving The in

sales XX% point growth Higher EBIT basis on margin productivity as adjusted Adjusted a improvement XX.X%. teams in favorable exceeded international with volumes, project performance and approximately increased improvements drove their as mix $XX XX% to far EBIT strong efficient contributed plan completion. margin segment. XXX Acquisitions million the in to

effective benefits adjusted which impacted points driven efficiencies, of higher construction remain organic Harris weak The operating by lower metal increased EBIT primarily pricing costs, Group X% price the prior $XX XX% challenged X% from higher from on management increase volumes and by XXX the million. Slide unfavorably to performance on approximately lower actions. to EBIT Products Their to and XX.X%. Harris' declined trends. persistently adjusted X% margin reflects quarter leverage and volumes. Volumes quarter performance. Moving increased residential Fourth basis X. sales was silver were operational price Fourth on price/cost

to to sales with payments. on higher conversion flows cash quarter Cash fourth levels. a operating cash seasonally income. for $XXX compensation XX% to Moving adjusted lower XX.X% million working ratio in operations Cash flow uses inventory We from capital due cash free improved of to on lower the Slide average increased conversion incentive ratio is to our XX. net X%

year $XXX quarter, a to return invested generated quarter spend higher payout. invested to million XX. approximately Slide million shareholders to We to We in bringing in capital record CapEx in $XX in CapEx on dividend million. Moving XX.X%. $XX returned share We our $XX of the repurchases million the of full

mode growth and of into Coming sales order XXXX, in operating margins We conditions. have and to and year and assumptions. in several expect choppy our dynamic Slide XX remain XXXX. seen earnings organic Turning we trends expand to XXXX months full

assuming organic Americas, Europe, rate partially residential to momentum digits, from offset assuming construction We're are low- half XXXX we volume more in volume continued price. environment, year the this and conservative from in retail channel. range Given in weakness and half in mid-single full a by sales growth the

growth and automation is Our product our by from trends, elevated encouraged quoting in team PMI XXXX improving new activity launches.

As accelerate second growth are we as slightly this half expecting in steady inflection versus sales year. we in quarter, year the to towards quarter lower the automation with the sales prior start year first to the seasonally of a stronger back performance an

neutral in our actions We inflation. are continuing have taken Welding segment to first manage to and quarter pricing a mitigate price/cost to this modest position in

benefits mature We to second expect fully the quarter. these in

to in Diligent leverage with incremental operating improvement management, mid-XX% from million and transition. range. the $X million a rate year expense deliver full our in cost long-term incremental expect margins in with CEO combined to price interest an first year costs corporate incentive $XX quarter, anticipated prior to mid-XX% the $XX In a to versus the we continuous consistent initiatives associated low- the are compensation million of expecting tax range. and range low- We're expense

are in growth investments and efficiencies. on $XX both million operational $XXX to million to We investments fund CapEx initiatives planning of

are income. performance we expectations year and working earnings at capital continued percent Given efficiencies, of cash targeting adjusted margin net XXX-plus conversion strong of and full

fast include our X nor assumptions in growth are newest still as commercializing XD printing/Additive upside DC platforms, we charger, Our manufacturing our do from initiatives. early-stage business not growth possible these contributions technology Velion, our

in are year to market ahead. we our navigate Overall, confident position very successfully the and ability our

and a long-term in delivering managing remaining solid record have while term. agile short track the value of We

opportunities ahead Higher Standard our upon growth results We progress us towards our to and built capture Strategy we as targets. are of excited many XXXX the record

now And over the would questions. call I turn for like to

Jefferies. [Operator We'll Boroditsky, take question Saree Instructions] our first from today

any seen would contracts Fori thought guess margins. incremental provide on how we about older thought the from I from incremental higher guidance comps you the less low headwinds margins you Harris, potentially mid could So just have to maybe could have and I details easier there. for some

the offsets? what So are

the the our fourth Saree, the from of quarter and some I in it's So early obviously, Fori. year. in And mentioned automation pull of business forward automation -- activity in

We're posture. posture of a conservative conservative we potential to as early optimistic just want it's the year, being short-cycle in progress. So a activity. keep But we

good. always is Conservatism

So capital the in lot believe see quoting the some did you of came investments although strong I positive some also quarter. growth you from from a backlog, highlighted that activity.

could you capital you or customers investment expand are for XXXX? So hearing just side seeing from what on on the

Yes.

So lot and a Steve of quoting we've mentioned mentioned, got, as I activities.

we it's is about So saw industry, strength activity. for Then think in fairly broad-based. we example, automation driven by general the

the the point one that to of level on investment drivers this year. and was bullish we're So progress we continued of as growth we into capital

Saree, it's the equipment money us order side despite productivity the to And signaling to interest that but invest quoting capital are in rates. people not activity, still the on only also is the intake spending higher

Bryan Oppenheimer. will hear from we Blair, Next up,

And revenue growth does outlook Also what growth so I'd the there mix a love see automation what we backlog should hear project end kind the on healthy you the in market against strategy impressive. trends, $XXX was rather order based the and in some or more the your to pipeline? base, team of million comp think XXXX? going the then about forward? How for expect about momentum

Yes.

and go was in just XXXX, would I Bryan, organic back for growth So X%. emphasize automation

the with really of coupled acquisition just that, progressively. postures strength so the impact And for

XXXX. of strength to the about opportunity bullish the lead growth quoting continue So be orders in would and automation us to

flattish Okay. versus That enough. in constructive take we net very Fair consumables outlook. comp. The if of there, were compression a being having albeit bit to elevated strong -- a and little an quarter And what costs trends on specific consumables? year-to-date activity, to to you're expecting and optimism understandable. sales, trends of kind area. seeing be would choppy mentioned general, You Maybe QX speak but in that's the there's short-cycle

can on be you side, So there it color would consumable additional offer the any great.

Yes.

would an Bryan, segment Americas So I example. that add for for the

of South business You that pull up some American our out comments actual the was when America, heard slightly fourth dynamics quarter. is in in you our North the

about part our the when in business a of Americas. think you So mix steady state our in the biggest consumables

pull So as to see and side. PMI area we'll new and some activity. see start measures in the short-cycle forward to growth consumables start we hopeful we're that That's the that orders

have we bit that's open conservative start business. in in So little and as posture, see I as we activity, our mentioned, in expansion but a consumables, up, to general things of upside particularly a industry a potential

comes from Dobre, Mig question Next Baird.

about you well? And to been How to we're about is and catch-up auto that that strike? in this, exceed from to range clarify we some growth talking to from same you vertical to mid-single-digit the do the Deere about that you've others. growth you for activity automation overall? heard have automation. post low- to contraction my think you think instance, that today markets, So think where Are that's I about production on return just versus And potential do discussion there like seeing given as equipment, Is that to we understand here, heavy here expect your you're going XXXX 'XX declining at guess in cuts, end you you time, going the are then growth? to follow-up hearing as think

Yes.

that we was So was automation part terms the more business if maybe XXXX, assumptions XXXX. overall highlighted growth our expect and up up you with our of in of first we about of X%, just mix being do in think organic question the your in X%. our automation for accelerated as growth, And

automation. growth accelerated we So do from expect

versus When with you some to point think about half XXXX. XXXX we've the end you large automotive, the in challenging projects some markets, back of had comps

at on still we demand feel investment both good we've of lot you and So ICE a got -- EV. look that capital but when strong

-- around bullish automotive investment. we So we're look

so of cautious about were a industries to when that in more point markets, operating exposure in few But of, that or it's the heavy pockets think whether You that areas confidence in ag I and us provide. end we the think construction. do balance, you many we assumptions gives have

it summarized well. I think you Mig, Yes,

automation the business, the we the see in look based expect we growth continued today. As at market we activity on

the would overall that above guidance for So be business. the

terms early parts in in that in seeing are innings indicators, there's those the macroeconomic of a Europe. It's parts? lagging. obviously, So are of What particularly the business turn

on So things are consumer We're Europe. cautious we're on that cautious facing.

retail from business is So HVAC that our focused, the on Harris we're that. and portion cautious

you And large are pointed some are about users out, outlook cautious themselves there their as for that XXXX. then end being

And so teams that to just conservatism. our it. a people tempers pressure our of conservatism lot on overall approach outperform our There's our still to and

see the that that well. improve hope as accelerate, so as we'll starts business to And we economy our global

Fair enough. yet, and Nobody I'm charger the surprised. has fast question

to it. to going ask I'm So the guy be

how you We this from are evolving. opportunity in of to update of sort terms quantifiable yet see is

expectations our your time to in can point are a in maybe you should what this? clarity a XXXX? maybe it? on provide little And So you what on At be thoughts where in more be going position

product. commercialization into the market. Mig. We're the in Yes, still We're entrant this process for a new

I of the think vaporware we've very lot a cutting out done through that's the clutter a the of industry. job in and good

dozens We're with through they spend capital whom people. decision. a We and to customers, recognize. working protocols. and to based potential all testing We're potential the their large making wrong long are need validation of It's risk the a right of you'd engaged to that them selling of on cycle make the talking

to I ramp get how on more up the able expect that through second balance to and then will the should the half. take we'll in half first clarity think the you So that of of we year provide be we that process,

question. Loop Dankert has next Capital from the Chris

of we volume how do kind here? much basis guess I'm that that. needs first XXX of points? XXX, guess standards, much margin, is this you inside additional work, Or still control, excluding on volume get still Lincoln of that I I glad just spot really one some highlighted need the to higher off, nice so how execution international

that Well, in on executed I would XX% Chris, this point fourth side. international quarter to a the we

to So more we're consistency. looking

for range. in the XXXX, So were full we year the

slide that XX%. we the within just we're With the point range. in at on So deck to while over current volumes, average, we're we're

to confidence range. we'll we that our volumes end be So just more improvements business in the shape as the gives us continue on higher of

about, And in model. strategy continue some see time through our spent navigate continue as XXXX the longer just we've thinking improvement to to shaping that we things we

So existing with we're volumes, that we're within comfortable very much range. that

the maybe here Understood. year-to-date of as of I saw and the concerns here, and some of fourth Europe kind update the we international as quarter. been the concern other too, held guess kind in us around trends Middle I cited on had India up you East the with just what

Yes. Chris, sectors in energy strength in India the drive is Middle -- what we've there to and profile. and seen just continue strength East continued strength demand

next from Stifel. We'll from take Nathan the Jones question

see I've got second EV said testing some I in first a you the ramp-up in Did mean response ramp-up in Mig's in in question follow-up also that charger potentially stuff. through guidance could that on the you've that half, of working I none to XXXX? you included the hear XXXX. procedures the half of the say

correct. that's Yes,

And 'XX, when guys have sell of at $XXX there looking kind that for 'XX, to think have of million capacity Are you of might expectation be 'XX, when you that any level? that can get stated kind like those I you EV expectation mean filled? you of at capacity you previously we any chargers. Is

our many control capital control our permitting are in so factors Nathan, prospective that hard terms and own civil outside grid plans. their customers' in It's so there you, and particular, to factors of because and connections deployment forecast construction and for us outside for even really many

able as I horizon be that would way end the this of after process. give for we work really. So first it's to the premature our half you we more really ramp-up through expect a know to us

our proposition fortunate customers spending these for about capital and execute a also can value share We're with them detail more of plan. lot are prospective have asked so with they in their us us to that enthusiastic NDAs

don't in year. visibility to that more we have So I just the later share you will I'm hoping with have now. visibility

products, standpoint. that just add things right I Nathan, confident, commercialization, would doing the we Nathan, we from we're from -- an from our capacity all a operating that So are

bit really it second product to how half, a And insight continuing give is to as more progressing. point nurture Steve's to, the to about So to progression of little as then by offering. be the that's able

to a than still one that allocation automation years. The And strong deployment has last X, priority Or then like complete somewhere Do Leverage you for the and the is feel dollars? allocation. few capital less free for ahead. capital maybe over outlet capital really just on portfolio automation is flow M&A else? cash tend is mostly portfolio been priorities

believe Well, to we've is automation. the have automation of growth before, and lots acquisitions, of outside to We opportunities as we continue fragmented. market talked drive very inorganic Nathan, through

investment lot So But we'll to we return we're we allocation capital pipeline the robust and think to then pursuing. a internal prioritize through acquisitions continue of and of shareholders. to have opportunities, that acquisitions actively cash very balance a

just And it's clarification, just It's hunting add of been Nathan, just not would the has years. the been for couple in for last I necessarily M&A. for automation us priority ground the that most been fertile

We be us. active our M&A looking robust of as mentioned, sit pipeline business And continue fairly in investment looks Gabe very and we the for for as rest today, opportunities. the to

disciplined capital we're approach that So effectively the strategy able our to with and our deploy consistent to and investment. we'll capital allocation productively, optimistic be

Walt a from Seaport Liptak, question now take We'll Research Partners.

Can hear now? you me

Walt. Yes,

low- to some us? wonder us of guidance, digit. help regions are? about what about the and wonder if you through weakness wanted markets. just if the mid-single hearing for seeing assumptions you I ask your in We're Europe to I could run the I So international the -- understand some

Well, assumption, of Walt, from of full the don't we detail but a of a lot year you typically, I'll give color. points couple give

we side Americas within do our Americas. we of have lead automation and expect portfolio the to business XX% So in

the see side. We continued pressure retail do Harris on So on construction in expect you that leading. can residential

think caution a we've the of of pockets international So about strength parts Middle that. East a Europe, in when just and you of Asia. bit And side, considered little in continued

XXXX. But signs that start some there in down down expecting to I Harris, just turn, understand, things then you're And are price Great. be of might the the in and revenue going to so are volume was going to be Okay. XXXX.

into volume down We XXXX. put coming while -- the being

So bit Harris a up, segment. type as caution a particularly that's you're positive But potentially construction. and be that just things should the residential on on retail the HVAC of right, open for demand

Okay.

then a I in little February you've Sounds about think it, talked cetera? or and great. bit this orders, is January of but of terms to And the looking how alluded et the trends

coming first down. prepared Well, the Walt, in points as mentioned based to year, highlighted. that It's I've quarter remarks, into the we of my on expect of be slightly some flat to mix we've the

if last you We're March, again? And strong that Okay. to February, a sort going that thinking March. guys Are recall, in I January, of in trend maybe year see pickup had then a March? we're weaker we

typical into end spring of of year. But beginning our season we've see the we the built Well, the of that the the considerations go we're as first all is quarter. how in to strength that into

KeyBanc Barger, Steve Markets. from question next the Capital take We'll

customer [indiscernible] question longer-term is automation around for investment. My

be CapEx that's that customers think But I investing in past, you that about resilient productivity through going how more do we've slowed as the the cycle? could for patches. proactive forward, think talked a be some decision may soft more about in down

be that We operations, just agree wage of base Yes, at with right? own inflation. with assessment. Steve, to continue looking And that I labor our would I would view really challenged our

we high so yes, be was it's on We environment, And you hard look it's interest the elevated need the rate make interest an at our to factories can with the continue demands rate years our reduce challenged when not obscenely from in but ago, X environment. jobs employees. it where to the easier

look still very factor. in that in factory say rate are that absorb So investments. ability I'd the becomes into high-return own the investments for a customers projects lot of to look factories for our our factory we the limiting parallel at really and your their It's those that

pursue? like Steve, like settling want any you that but just and it's teams the initiatives changes you know the organizational or other do role, to into how running thinking are And way things now to I the sales are about Understood. you're you incentives any Or for organized it? you

for improvement, room We always there's have Steve, continuous mindset. a improvement Well, right?

elements evolve. and make particularly our as global organizational in of we'll and And like continues to as model scope, in we look to grow on capitalize to things So our tweaks various scale business the R&D. more particular,

And we've got opportunities momentum. front a in today, comments, strong procurement. and growth team my got in on catalysts as got solid many of I global for us. But and as alluded to that very capitalize We've we experienced sit that. We've can

really I and it's forward. enable we're really to like few next the the us a to take our step position fine-tuning approach So to things in, just

to next UBS. up, And back Jamieson, we'll go Robert

So just incrementals gave are It year really the full 'XX. you solid. of the for was guidance above high end

guidance that ex-Fori us be us baked incrementals Just been curious would year? gauge for what that your or if helpful versus have what's you could give how would in and looks next provide just kind of to of kind

Yes.

improvements And incrementals I you're executed Robert, we'd Fori, we without fourth be have Fori, the right. we think and strongly just mid-XXs the business. and our quarter expect that is in to progress business. to model with do assumptions mean for XXXX range, Fori without Fori. our automation So with But did within drive for continue mid-XXs, well. We being to in on low this that's that in I traditional operating very

And target automation. be is corporate you at for just remind to that average the I'll our

teens the low ended profile So XXXX of in in automation. EBIT we the

So of points it XXX when holistically, you potential there. look basis at

on our So XXXX a about model. coming we posture feel developing into focus with good business our continued really

about I last nice of one the just then some probably And to you're guess is are other what and it's seeing expand, lot I and you're but mean, you efficiency underlying where just which on can of continued drivers some benefits? curious there margins that? LBS I that know and on of working to a initiatives the there helpful. else the automation, That's guess one. talk see. I productivity,

Yes.

have point the double-digit acquired And I EBIT our into clear our a overall automation system business it about Fori, we were developing remember, we that we When type low profile, automation. of So that would we you in strategy. an to about in Lincoln and of sight model if into is on think line execution. discipline

managing the So capacities about and projects the around in cost discipline execution, it's the group. labor managing efficiency, the the and

driver. the that's So

we long-term develop to to confidence drive capabilities we're Lincoln us that system will So going automation. targets continue our that around business our our to in gives

follow-up Mig We'll now Baird. a from Dobre, take

All get I the call, normal. than since Steve, this can't your you is I right. earlier first let hook figured off

to fine. it I our want follow that's in I'm to use you early so thought want but you up. relationship, surprised up

right. All I to about Harris. wanted ask a question

and were the compression you too. So as relative least expectation well. about issue consumer relative HVAC my good, being actually pretty arguably in the weak being consumer But history, portion and 'XX talk speaking and at an can to to margins you volume had being --

should business? Can So mean getting this about to high growth, the back we're this be think I margin teens going XXs, XXs, volume this what's potential can if somewhere we here? segment we how margin forward? a high look above

held the very Mig, the pleased model. you've high low within right, pushing have with range, how we even team towards the And in has softness volumes, the but we're end up our us XXXX. you're end throughout despite of our Harris developed improvements seen

long-term we on focused continue the we'll moving is our that we're that, that team And be to model bullish exceeding we're discussions in as yes, our shape range those So ranges. strategic having.

get That's some trying was really volume what of happened you mean, essentially compression? to have here at. mean I takeout? offset I had to kind the I what structural cost

the Mig, team Harris were would that portions of Harris and the to a retail of there's that also the made tend business business be business. I point that to efficient. the you in lower more business us down, drag HVAC make within to the in different in margin segments Yes and the improvements operational number consumable has

that tends margin. gas equipment So be the higher was to part performing

mix well. favorable some there's So in as there

And we'll Stanley. Castillo, question take from our today final Angel Morgan

Grace This is Song Angel. on for

So but so, acquisition onetime what drove a you color more it levels here? contribution XXXX? for think from if the off for volume increase sequential I margins for XQ those mentioned the could come the was provide And thing? will business? you just in international equally international, And

driven international our projects as by focus to as and ended I execution performance. Fori Grace, I the we strong the the make want you very is acquisition, backlog acquisitions within to know, just sure It on question. understood That year. seemed on

So those of execution the of outstanding onetime projects. they're customer projects, but not types are progressively

ongoing development business. our that's international an just So of

to caught we as When continue Fori well. but and mentioned And about fourth estimate We as up. strong a business, I level performance that Americas in the $XX did and lag that's million expect about caught in have, my business we XX-XX international you comments, lag mentioned, X-month the driven we of would think and that activity. will X-month the between I by quarter, the in acquisitions, of perform I up

no at closing this And are the further back I to questions. there Gabe remarks. to Bruno for time, would like turn call

and us We for Lincoln to discussing continued call on much. the of everyone today initiatives the I'd forward look Electric. thank to the you like very progression joining for strategic in in interest your future. our Thank

Again, that you conference. today's all does for participation. Thank conclude your

may You now disconnect.