MSA Safety (MSA) 20 Feb 202019 Q4 Earnings call transcript

Good morning and welcome to the MSA Safety, Inc. Fourth Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. is event this note being recorded. Please

now Elyse Lorenzato, would go like Safety, to to over ahead. conference the Director, Please turn Inc. I Investor MSA Relations,

quarter and Andrew. here me Treasurer. Senior Nish CEO; to morning, Vice you, and are call everyone President Ken Thank MSA's XXXX. Good today fourth and earnings Vartanian, With President, conference for and welcome Krause, CFO

the are on like of within Before everyone discussed excluding remind Securities I'd Private Reform meaning matters to of this we forward-looking historical Litigation information, begin, the that call, XXXX. statements the Act

statements all performance. but levels Forward-looking include, and future are not to, of projections limited anticipated

statements involve our from cause differ Forward-looking may materially uncertainties, risks, those discussed factors that results to other actual here. and

Form to with no call These MSA undertakes update SEC. publicly except XX-K law. filings made other risks, as in uncertainties, and on duty the forward-looking factors any statements are by this required our detailed

as and earnings as our non-GAAP at certain of discussion part investors.msasafety.com. included are release press as morning, this Investor well on available financial Relations We've our website reconciliations non-GAAP our measures the QX

over will that, call our President Nish With the Vartanian. turn CEO, and I to

Thanks, welcome Elyse, everyone. and

For all year largely strong bring the throughout another our XXXX of MSA, driven help consistently to performance, game lives us ability to innovations market of workers marked by changing financial that of the at protect world.

for want the people's levels and two Financial that calls. in mission dedication back highlights healthy for November flow, our with on the cash past entire their to York pace lives. times X%; to about discussed revenue, and the and growth I of protecting we City we grew our thank revenue our event our Day year engagement very of recognize of New MSA team Investor earnings in include all earnings at and had of expectations in-line

on in many for our initiative and advanced what making customers, before, those which develop productivity. highlight which of I've well key another success. safety passion the a As foundation associates' our both of levels most safety progress This is couple I'll our drives technology of we're as turn with solutions our our unique higher enables morning, mission times to progress. said It's as the

fourth first, a which our But forward. driving clear MSA's performance, of a is product our provide to that revenue indicator solutions quick quarter overview I'd are like business

We revenue a particularly currency, X% ago, from difficult in year of realized our segment. International growth in despite constant a very comparison

gained the choppy While environment certain protection from products the short remain gas and certainly and industrial we momentum choppiness. cycle that offset in products, fall detection that new helped

as strong, quarterly as two of like highly pace quarter texture had provide closer the our invoicing a more healthy, was and R&D we're in I'd of advanced the making products to returns the than move showcased greater provide we book-to-bill at Ken order invested the will on we was connected full-year quarter. our the ratio But into seeing. more insight only in in to financials. Not We heavily launch Day. that Investor were and investments we're the XXX%

voice departments. handheld wireless service cloud a GPS to and direction development and technologies. imaging, the ranging, fire that firefighter in we our through major device thermal fire continue detection the we In use of of with area quarter, business, advance In sensors, advanced customer the enables fourth of LUNAR, point-to-point sessions several conducted motion of

firsthand rescue search and how -- and we LUNAR help sessions, search time help of rescue reduce them firefighters observed during operations. rescue these During dozens saw and

it's mentioned this new year. earlier. so directly And This to the why passion bring lifesaving market to to later we and speaks that technology expect and LUNAR excited I to potentially we're which mission happen

worksite addressable detection ALTAIR for expands new earlier into devices, customers to with of allows our ioXXX connected we and establish network our this the of this On month. ease the gas of And launched technology device. a operating a side home market a smart product space. business, the area This MSA monitoring the connected detector gas thereby simplicity creating industrial of

nature customers trial ordering a time for it. device the end-user distributors to the we of period and expect the of Given before product,

than days, it'll the So a typical ioXXX gas key a times, life of use. the unparalleled innovative battery response measured include From have in sensor is an portable instrument. breakthroughs longer months adoption cycle perspective, for ease and detection ALTAIR that not faster

innovation driver discussed the our to past, market of customer leadership is in we've through ability key As to respond MSA's needs positions. a

the our by sales than driven XX% products from series over more fall and SCBA momentum MX five was monitors vitality, our lines. of V sales percentage GX gas protection Our series with XXXX strong years quarter in this developed the and last our

also The protection, SCBA, In they their XX the centers significant seeing years our in Taiwan capacity. over revenue segment. exciting investments protection. team SCBA increased from MSA It's our XX, with optional training see fall the specified We're products with launched to MX to but first with who electronics. three MSA's traction MX the International win our also XX% portion in three to fall returns Department units Americas an quarter advanced only of with those annual good in of not were we the Fire secured a tripled manufacturing new on growth great order

see SCBA half a encouraging XXXX, due order the in to we with momentum of While second International difficult a the comparison had the to it's in large MX.

that growth confident coming XXXX investments of be I'm in our years. drivers forward, Looking the R&D will

team International and improvement in International approach, that be highlight another cost it see growth in to will our optimize in program markets, and Switching quarter success; and rationalize the to was gears to our continued to continue drive full-year. structure. select to factor our roadmap our very encouraging segment entire a is the execute and a channels the continued Bob for Leenen margin

SG&A cost have revenue up up full-year revenue X% programs down product Europe reduction where is focused, been our on is and that In our core X% that was X%.

efforts. these restructuring from savings expected realizing we're So

XXXX. generating of improvement we segment was operating in basis and of And XXXX margins segment in International XX year, that's XX.X% points up to look additional forward points the progress margin basis XX the in to making For after International sales.

like the on to hand to discuss operations Ken, and I'd coronavirus outbreak over I an the our call Before in update China. provide briefly

our First and precautions and not this point, of case. of MSA following our the in at is guidelines and virus. the ensure and we're be priority employees colleagues aware health taking to any safety China to continues foremost, to We're the government that that contracting

discussed is we've As have China, a about plant and X% the revenue in of past, MSA's manufacturing in we Suzhou. in

reopened production. Chinese partial capacity at we've and the Holiday. imposed of Year extension factory New Our been And the after to ramp-up government working

of supply chain have global, are elements indirectly Like directly that from and source certain and we many we our other components companies, China.

this comfortable near-term, in to situation risk While inventory with unknowns our as will move through we the the evolve. assess navigating through the continue quarter. We'll we're the about positions first how we're

call a I'll financial review. over now the to Ken? that, turn Ken for With

good and morning Nish, Thanks, everyone.

I I'd finished mid-single-digit in excess more backlog. with basis with year is discuss constant revenue Before growth of of a orders great the for finish well as to this growth business a a healthy XXXX sustained the had like in in a quarter entering full-year book-to-bill on with performance. quarterly with X% strong we're X start It our to and quarter We of very We in time. well see the detail, highlights a and the our few both currency full-year.

number restructuring north favorable that operating incremental executed We of cost the and in remain year. XX% the of programs drove a equation for margins

result, from acquisition from dilution full-year of increased points about a Monitor. our includes margins basis basis Sierra As XX XX which XXXX points of

and for QX in results flow improving cash on focus ongoing the free strong capital. Our reflect our full-year working

balanced capital year-ago. the the of from deployed shareholders, strategy to $XX We and allocation XXXX. an to XX% representing We $XX million around a continue Sierra million acquisition execute for increase in funded dividends

gas to FGFD reporting our X% you a of leading and X% monitors great currency. our headwind series Quarterly revenue across on fourth as momentum currency see like our continue We walk revenue. had I'd through flame detection or Now XXXX we to driver results. with foreign segments. gas both in was growth constant a quarter increased Fixed

growth the family products and sales metric new V a protection to our contributor Americas, was major drive vitality in XXXX. in fall series to Our continue of

a U.S., at the in quarter SCBA rebound a SCBA manufacturers, delays saw we funding our significant product and Americas after approval performance. all softer business impacted in third by which Looking driven

quarter of quarters, we couple indicated over expected our what's and delays call, these third As to shake that a out on is happening. cause to revenue

was in Emerging markets year. for growth XX% the and the quarter X%

well-positioned to grew revenue to see our in to by have results and like margin more for for certain risks associated the results across continue the XX% we to growth were income quarter, the growth. year. at highlighted that long-term we than first emerging remain see markets impact markets. potential in while able an expansion which We value coronavirus China XX% our We important in good on China And in the operating drive and to leverage with China, across areas these

Quarterly profit was margin last points down XX from year. basis gross

New products nice continue leverage. pricing programs to provide and

an million quarterly based to improved of impact year-end XX was adjustment like point level $X unfavorable charge reserve profit. with on a had levels accounting LIFO demand adjustment an is basis areas there which impact protection. fall gross higher in quarter. had oriented that We a That in charge the However inventory on accounting at had our non-cash the a associated

points. our associated which impacted Monitor XXXX. with gross by incurred third $X Sierra accounting XX inventory also basis is the expense as to We margin which results an portion have not in fully We incurred The related largest and on is this impact now purchase amortized amortization well. about will million the in quarter of our acquisition, recent step-up,

SG&A quarter expense the was XX.X% $XX sales. million of in or

was leverage constant Excluding basis and year-ago. full-year corporate mid-single-digit revenue we was X% SG&A flat for XXX the currency of a to growth. gained in efficiencies development relatively costs, Sierra from other compared and quarter on SG&A Organic points the down

growth. while XX International Americas For points growth XXX that SG&A points the actioned segment constant X% the revenue the improved the basis in programs drove on programs mid-single-digit and progress on underlying XXXX International savings reflects SG&A improvement by by and XXXX. improved throughout Ongoing XXXX, productivity segment, from in were currency basis Americas revenue restructuring

XX% and track and our programs restructuring improvements great was across the quarter. most down productivity and it to business, on the in is in remain where Our notably SG&A Europe, see

rationalizing very programs productivity, on costs product and investing development. new we're we're focused in office heavily growth While including increasing back

moved exciting like ioXXX, we completed HX V-Gard closer points ALTAIR also The R&D on in of our was quarterly key of XX spending or Helmet. X.X% XX% revenue launch percentage the increase Safety Nish's in To is new we as the the some of the LUNAR to $X basis launch of revenue, a million and comments, progress increasing as reiterate and areas the reflective new technologies of spending.

in R&D pressure, are While continuing projects committed we the taking our growth. long-term to R&D approach fund quarter, and long-term in MSA's our investment incremental oriented support to a that margins

operating which the liability expense. was $XX of product in million income GAAP million quarter includes $XX

the liability or related of not associated compared year-ago expense a full-year, self-insured IBNR million related is incurred defense reported expense to costs. For and million we $XX with mostly The $XX product quarterly but claims. had to

filings liability review the in basis. in The actuaries portion facts our past, an on based As our a reviewed external and indicated the and we were ongoing is trauma reserve counsel. cumulative reserve of we've circumstances of that with product our on set IBNR

of recognize that underlying in our in reflected quarter. review, the changes charge model fourth part the assumptions As we in and

notes, $XXX million receivables, liability and approximately just our consists assets equal investments. product million. about assets Those year-end is of to reserve short-term total $XXX related of insurance Our at

of average without can impact without been our very the has insurance fund timing receivables. our past us material establishing vary of and More liabilities four for income, quarter-to-quarter, capital that a the years, flow impact cash product cash over we've exceeded from While streams to in specifically, these product the liability cash with on and net allowed do successful receivable flows insurance of and XXX% have allocation both priorities. liability and conversion

operating Excluding foreign quarterly currency liability margin strategic XX.X%. product and restructuring, was costs, expense, transaction adjusted

we delivering higher adjustment, While business. almost this XX% remain margin margin investment we points, committed that XXX incremental discussed XX% of the expansion the the and impacted for a tune LIFO to to quarter with charge R&D associated non-cash inventory to basis

Our was GAAP XX% in rate and effective for XX% the the tax about year. quarter

effective favorable slightly at we to our the tax While XX%. adjusted realized quarterly our items more XX% non-cash neutralizes related rate, of for the finished lower impact tax which expectations than XX.X%, full-year of certain rate,

mentioned net and quarterly and adjusted non-cash investments by finishing or earnings I $X.XX inventory impacted were GAAP per was income R&D million share. $XX million item $XX the higher at

year in the on were For X% revenue. in earnings and increase the adjusted reported up X% currency X% constant revenue, increase

multiple a at profitability intact. much growing very of sales expectation long-term is Our

want do million included pension and on an impact net This rates $X to income it expect in to XXXX. headwind I in compared expense will affect clarify With pension will in discount that in to XXXX. other mind, to non-cash lower that of P&L XXXX present we the our income GAAP the be

cash million quarter well was reflecting of liability. sales down $XX basis management. the free from working Quarterly of quarter. above focus million outflows about XXX which was finished or $X Conversion year in flow points includes product continued the our for net XX% capital on Working the third at XXX% capital

The stronger $XX fund on at us us quarter to flow which a the the million dividend gross in puts and basis. cash our down of million enabled debt X.X $XX debt-to-EBITDA pay times

business and flexibility provides pursuing sheet acquisitions. us balance Our with the continue in investing to our

cash of operating year our our continue of revenue expansion, flow continuing the business. mid-single-digit We for order of achieved to terms summary, in positions a us generated in to good invest full-year, levels finish drove mid-single-digit to had and while points growth In revenue to basis the activity healthy margin XXXX. and in deliver growth, backlog XX we

outlook were this there incremental and margin quarter to we business. those cash committed pressured We targets items our not our at the long-term quarterly November. for Day that improvement, While flow specific Investor items growth, in margins, discussed our fourth do change remain that

Nish? back concluding With that, to for commentary. call over some the I'll turn Nish

Ken. Thanks,

I'm with progress in the our pleased performance XXXX and long-term against goals. MSA's

continue in based current plan and positions. revenue For our on order to market mid-single-digit XXXX, we for And growth we're pace. confident our backlog

uncertainty. There great deal of remains macro a

if half been in We've active approaching with in implement slow number business that of the XXXX of the caution. the year. particularly initiatives identifying a can second were we're half the and second to we So

technology through innovation ongoing However, and we customer-driven remain profile. programs to margin maintain positions disruptive leadership strong executing focused on enhancing incremental our market a and productivity

questions time, Having said may glad And Ken Please be your that, have. to this we you that now guidance. will not I would Thank your up you any MSA attention does for remember at the for call this morning. open and take give questions.

will session. Instructions]. [Operator We begin the now question-and-answer

Stifel. The go of Please ahead. first question comes from Elliot Stanley

everybody. Hi, good question. Thank morning, you taking for my

Stanley. Good morning,

Nish, I brought just cadence kind the progress? up, terms I difference mid-single-digit back in also caution a that want of give I that know to I for of should since the mentioned ask you the growth of that how then don't is I off, mean year the in but you thought you guidance, would clarification? mean mentioned starting half. and implying you there's

Right.

China, some this to pipeline the as mid-single-digit things We of year-end the don't year-end by just the have and mid-single-digits, we play tightness quarter that with maybe out. year the here think Stanley. back-end business could disruption today know the we how we in the year, backlog expect like that. But will the spending. just We see we have past Election in continue and you half, then year with There's obviously by of in at back some growth and see first leverage

you allocation about bit XXXX? why of little the a talked and was, more little the where the should you spending need give think then color of a acceleration, about kind for sort what R&D And of us level Perfect. the expenses. we in Can

see You an know, and and see periodically, X% talked come spend R&D to uptick always X.X% you excuse quarter-to-quarter fourth Stanley, programs we've the spend. even that these and on might we're us as dip me market, for of up the quarter a below between the may about and upper basis And X%. products end in you on

as to a product. matter a product we just launch where the get it's we of the So of and development closer are a and of

XXXX. expect heavy. to X.X% in was to But fourth quarter So X% heavy, be somewhere in we range that fairly

deal forward exploring? you there What characteristics transaction potential continue about can And And noticed talk guess size asset? the bit a costs of kind the capacity move the leverage little environment? some the lastly, I you're M&A talk looking or to then maybe out an you up, I guys that higher? are of in then about are

comes Well, in very at some looking some opportunities. then to as But when we're Ken it we for to the about I'll more answer Stanley color. over past, initially active it inorganic and talked flip

success Our that in sheet a acquisitions some ensure continue stay and marketplace that there. mission nice very allows acquisitions we We'll disciplined opportunity past. add our balance to We've with of our the to support our approach to enhance with assets we lot had continue to for the position in what that and around do.

those to that continue product we've seen And core to product there's possible the extensions to effort we So core to-date the we results that serve equate markets in, And make standpoint, at valuations you at of fairly lot our looking the quite good that are a we've that disciplined effort organization know acquisitions markets been a to pretty around acquisitions can activity, been product we've the very we really line. the good that make don't look be a active, honest, put lines, cultural and exploration to from from a serve past return shareholders. provide darn that standpoint, we we're for sure within as or a from our and high. our and for are fit

going if for to that, we you continue to over Ken disciplined we're as opportunities. to that go So want color. and add to I’ll manner continue turn to in With some look it those be forward

also grade very balance maintain That make committed a in to would an we continuing of we mindful do that us. expectation I've to to investment strategically front. that the to where continue Yes, would only and be certainly willing be mindful sheet. on the our there, much of would very up very this sheet is add we continuing the and consistently current environment M&A lever I the on thing active deal. times have Nish, talked that would, in sense We're balance for this to are about two-and-a-half opportunities cycle for

that's mind top so with And certainly us. of

on sense. and with to move been a added as we that course said, have the of and of strategic M&A But follow has a that we It's portfolio record track has to strong made past bringing intend lot forward. continue to we that value

Richard The Robert W. comes go next of Eastman from question Baird. Please ahead.

Ken. quarter? with also repeat, just you the adjusted charge start of the a sense you Sierra Op I Could I'll us was that for in believe OpEx margin a the just talk you and give LIFO Could could includes Monitor simple one number? the what in

Yes, that's question, Rick. a good

we when basis. on about was XX Monitors adjusted R&D XX. that had points look with margin around so LIFO an around of was Sierra And dilution course, in We about it basis at impact quarter, in XX performance the XX.X% The the margin of And was basis then points. profile. associated

So things, on you consistently the a was basis. if those or reported XX% around margin you those if the in add three consider analysis, more

this Okay. basis, continue kind an improvement on assume that to of and XX%, seems basis pushing of XX forward, XX And we be just Ken, as to thought, the for Op then we consistent adjusted target points that could incremental. should we And towards maybe XX% again move structured of business XXXX? to kind profit

we a XXXX. growth an operating at XX%. But might improved let and mean incrementals, mid-single-digit that's through with overall of you we model and correct I'll you're margins on operating in continuing expect margin see what incrementals to to XX% for when basis. profile, profitability XX% look to with the should that to -- Rick expect XX% and expecting go

work there's no adjusted I the the again, with, reason expense assume to a threw little that easier of but metrics deliver incremental. -- Yes, to just out type line and any a because of there, to in operating that fall I it's

XX% are XX% to very to we provide still much No, structured incrementals.

LIFO quarter, $X that of fact look higher. had the income the of you operating that million R&D had you and we the we and in generated million $X we fact, In when at consider

those XX%. -- or those add the you in analysis margin around incremental margin your If your consider was

in all the growth. me by positions side, we find us we are and back point to on on profitability. It's the performance. on XX-plus-percent really where had productivity on work to good being driven the for a what's that of and So business cost structure operating time bring improve that's continue that very we're to much coming type X% hard side well business of the a is margins see seeing and higher to And our in with margins time go find profitability the levels International to

the direction. owe think I And your probably you, the we due International? when other were question actually I personally asked going on I

So the a acknowledge great doing you is that doing And I fact need are great certainly to Bob guys a job. job.

might, more carrying I stay at the your XXXX challenged if some Nish, up each think Is -- turns or and I Just where enter than have there's have that of inform you down other you we're do perspective, mid-single-digits product by the the each the maybe categories If look one more mid-single-digit how of I question, product to this look I backlog? to you in driver here. growth grow and some short new forward will we if of lines, year businesses the rates. should kind mean, from product where when of of businesses a thinking you target line? kind risk product has

a Rick. assessment, That's fair

look you short-term the or The hats especially stick being heavily to hard cycle right? short around hats, the out sure. focused you, hard I'm products As at industrial

is don't any been indications going that us. to that's so in have choppy XXXX. that around And for And turn very we

on or the market. will a protection, XXXX the a ramp-up we not little we're to go slower be that about of gas But lot excited like choppy of has somewhat will head the see that do offset choppiness but that's the HX market some a expect XXX detector. into on AXXX sell the some going of head bit head the be around industrial continue it we for that but industrial helmet adoption So to be the as Overall, to And new protection nice the huge ALTAIR it. tremendous. volume and a series a not protection that point year, we is

ramp-up be mean year product. XXXX, significant some that in XXXX, numbers will see probably a for XXXX we'll XXXX I on So that around

strong. into year. assessment. think markets, really backlog and gas FGFE that's the coming breathing a good In oil for the backlog for remains fair I apparatus that the is The So

those some with. good products, of shape other So we're pretty in

MX Does again you around a year? the for the the SCBA with mid-single-digit give for traction comfort

really in We very of out had have large the XXXX. large does, in had system. XXXX the It we we order that's that don't offset. order that And

comparables against getting So on we're good we're traction and some some nice a year-over-year evaluation. normal going and feedback and product

So some certainly us forward. will that that help give going

I'm contribute revenue One sorry; promised kind Sierra for Monitor, it questions. I just more did two quarter? on the what of

Yes, is on that in the the number in business. Rick that was about X% that revenue quarter, saw we growth what

last, come is wildfires, with And which that then Okay. where thinking but always historically know positives for pluses in you? top-line negatively out the that There's influence there the Australia, of no a your market nothing. and to that, minuses I Australia disaster been from the I'm any decent did than more business?

No, really Rick, wasn't didn't all, business there it at impact at our all.

Please The ahead. of Sidoti comes Company. next Edward from & question go Marshall

morning. good guys, Hey,

think Or targeting this will of think mid sophistication for I products the low about, the of that'll we think of a talked or kind at normalize the while? think back we you're continue you forward; the R&D? we do as talked to of Do down of higher higher look to the your range end new rollouts? as of at range the well that you R&D. for Investor the stay you're end target kind of you when X.X%. the X% you'll I'm curious spend Day, So Nish, know about were I do you within

mean opportunities. market see us a X.X%. see see getting to down that really really you've could things accelerate to much the range normalize if some I projects some back could don't that going past. far we But level. opportunities bring some I over to too the bit in think outside or XXXX I in we some us there sooner and could, new it'll But opportunity some it don't seen normal I be

less maybe if anything? I at it's just look Was just more than range spend is And XQ, past timing two this kind of guess anyway. that in X.X% of not, XQ you there more kind you it at maybe average the just if of quarters, in

Yes, aspects in and timing it's all are different a on where some it. of we project a matter of

Got this was book-to-bill, look has at certain in the for consistently pretty which business understand it, the service, has some bit When is across or more there I XXXX a backlog even uncertain given it. SCBA been was I events, think there's pretty it I'm the I number, lines cautious outlook wondering good. in than got overall a certain pretty decent but anything board because chunkiness normal. instance if the little around maybe periods been or

just to as seeing book-to-bill? from reflected I short an understanding and what try you're get to want that maybe to might So versus the how maybe be the businesses, cycle cycle long in

Sure.

both the XXXX and fixed And Americas. to then business nice that a So flame going continues really sized and apparatus around, mentioned strong. I into built International and the we're the coming for fixed the with of about saw flame a nice you we business into think detection gas and backlog backlog is self-contained in the Americas breathing fourth predominantly talked earlier, we quarter on breathing gas apparatus nice because detection, and build be

The good the refineries is and activity great pipeline taking both we're and really really nice gaining then gas major And the some in there's share some internationally, -- there marketplace. also monitor spend we're in they're and traction in opportunity projects seeing some so XXXX U.S. believe there. that Series on still we really these

picked The bit a within backlog Globe. up

we different off, in things Globe in and that a product we Christmas we the fourth a business the week of strength gave and compounded bit and which up, then had that had some line bit things there fourth nice down a the built year. the quarter had the this backlog quarter also nice supplier slowed some of So issue in was employees something

the in short-term Globe had a But XXXX. got coming it’s fairly our we other we've businesses, that business backlogs real most of So normal. -- nice backlog a the into and are

pickup versus got always operational much then the been in then initiatives already if sense there's in optimization. happens obviously, of been it might is curious this nations a channel Or have markets that been particular to curious, to I'm year. I'm you or it. the something that businesses emerging it's seasonal is get the And the couple a helped International look margin, it, changes and we've seen and rolled implemented I'm fourth as at larger operational any Got through? you've a that quarter, of growth. excessively how if quarter? developed there's in on fourth And in those you've particularly structural this trying kind purely working inroads

our Bob And and we operational period; over some through fourth to talked we of really improvements coming we those a and about continue channels in nice of see It's that you're a distribution changes then we And and the -- in those just and of see of keep our more that some five-year quarter it's obviously, the And go-forward And basis starting grind, have in grind to about, certainly of improvement XXXX. a the restructure, team pricing. through job in the a have point We've we've we focus Yes. we that. business office XXX basis. on his of do more on our and we you're to and talked savings some in come go-to-market go-forward as on focus more starting improvement. we as believe back have to a some made how restructuring operations.

are our we on program there. pleased So we're with really where

It's on your Thanks overdue, guess. good business comments. good appreciate I It's guys. line. job I long Great. see, to that

you. Thank

[Operator Instructions].

De Maria William The next Please question Larry go of ahead. comes Blair. from

good morning, Hi, everybody.

prudent mid-single-digit entire could the out anything but tangible year-end. slowdown bring as by would similar just anything clinical possibilities slowdown, you of your Are cetera pipeline, you Obviously, kind year thinking than by and we're that half project talked clarification. the and which from questions there mentioned, overall more a would et mentioned that seeing may Is that it? growth be implication customers, the The a about back how to a your cetera. little be mid-single-digit growth. bit you that would year-end flattish up the you Election, First, about suggest that it second et the caution, of down

of any our pipeline. at part all, Larry on our we getting customers, pipeline or and the or points, of we're lot a quarter. be slowdown first indication the through getting your clear of business, or real we're in organization a strong there Well, When our any half will not back definitely from indication of fourth a even not look data first our that even question, sales

spend. and But hear Election that in down talk into back community a budgets uncertainty the on the talk tightening of about going an on people the and awful of you business being lot said, some and pulling possibly there's lot

pull or business there segments. if period spend so our the for impact to in the in Election, that'll on fourth of back a time quarter of in due certain short the the certainly is And half some year second

some I service as the don't things But fully I year on think bit flow of back expect they why And on fire tap the comes some some grants it'll fire from. impact would the or brakes apparatus. see stop as that's a to slowdown a the that where business people flow. that's we releasing business caution. projects breathing have might some towards they're and we'll flow such and see service normally of in half you project or normal

that. preparing for we're So just ourselves

the side, half little about expect We to of we cautious its just a half do business first we normal do -- as pattern. we're just of through that year, into the China that year the go follow It's XXXX. our expect back

enough. fair Okay,

lot few about you about three this at years, LUNAR from obviously think how Secondly are mentioned looking of the think closer market market or today $X.X while to questions you years? getting maybe how out opportunity you do billion zero a you five the LUNAR, years, for about now There a just actual looking a launch. about talked

Right.

nice for unit. settled device, it's it's a a us, pricing haven't we So, still on opportunity $XXX a $X,XXX for unit; it's not the not

that of pricing devices be market will the The these have it the somewhere there. be So as opportunity, be significant several where on in trucks. -- fire market could imaging significant camera you could between as in could it thermal

and to those And more so you this display market stay we've into more fairly in imaging just don't devices. be with the of significant could us, be and and looked want this market XXXX, look as it, camera we some XXXX really speak and thermal for market And get it a follow until we of at grew at to significant that, a that number but the to market comfortable but could the to so sized get we adoption.

nobody signs how -- Well a thermal market imaging then?

thermal market the was MSA us. for The imaging time peak in million that $XX at range for

on you’re growth I is because the you as year? quantify how you jumped And China of this China obviously impact I far that China mentioned but best recently, do what's late, expecting Okay. source of to as listened kind it, then

as is we some production quarter about ramping-up we'll been to and the about offset hopefully talked we X% go in be in as disruption but be obviously some first And business. there As able about our it, that'll -- we hopefully the to our disruptions that the of here represents first lived about that quarter. we and production in speak here year. And we're China through China expect has see short

I expect this try that situation fully economy. expect stimulate and government would we to get us, the I the behind spending turn-off to once

So that half in business for back growth we've of China. the could year past the help some the nice our because had in overall

could positive spending. be look So if this improve on year. China continue of fairly half government negative the up and don't turns things as we back being heat year, in at the the to It the

there as So go-forward. there opportunity be some could you

conference to back I any session. over remarks. closing the turn for question-and-answer to like our concludes Lorenzato would Elyse This

thank again entire our you. joining us for morning. Thank of want you behalf team we here, On this to

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