Enerpac Tool (EPAC) 24 Mar 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to Enerpac Tool Group's Second Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded March 24, 2021. It is now my pleasure to turn the conference over to Bobbi Belstner, Director of Investor Relations and Strategy. Ms. ahead, go Please Belstner.

Good Tool thank 'XX Group's Call. Operator. us Earnings for for Enerpac Second morning, you, you and joining Conference Thank Quarter Fiscal

the with Chief Rasetti, Bryan Financial results and Jeff Officer; the and On Fab Operating General Executive Barb Officer; to Johnson, Officer. Bolens, Chief Officer. Baker, Strategy Also Chief Dillon, and Randy are Chief President company's Rick Officer; Schmaling, today call us Counsel; are Accounting present Chief

today's call Our available and earnings presentation for in section. release website our Investors enerpactoolgroup.com are at slide on the

recording it also are this our We call and archive on will website.

call, earnings. measures such today's as adjusted will and margins During reference we adjusted non-GAAP profit

find schedules can measures reconciliation morning's GAAP to in to You the of release. a non-GAAP this

making not call presentation We also would facts like historical to remind forward-looking in be that and statements statements. are you are will and considered that today's we

statements may with call safe law. questions the conducted an allow as We we ask that today's X follow-up in to cooperation. and you hour other we've possible. that from address factors advance practice Please as are Consistent results anticipated forward-looking from in results you prior statements. our or forecasts, many provisions us securities risks to Thank SEC keep our to X also order your see pursuant follow calls, question, to making participants for filings for to differ cause of other federal materially how those the actual and harbor

turn will I over Randy. Now call to the

Enerpac's recovery global to provide on And quarter, like Thanks, going overview start the before of Bobbi, to X. on we today good review progress pandemic. the from and Slide details We're our morning, I'd the and an everybody.

broad we sales and this in we to able by XX% for Middle both Despite is of results. were Unfortunately, within East. to quarter responded is our resulting affected worldwide, for typical returning spikes have We a our using year the the border factors, regional these quarter, offices. processes infection, as #X in in the throughout working we've the approximately did we always, our fiscal performance the have lockdown progress. been still employees in closures not In with as our parity is recovery to the a our quarter impact pandemic. full first the home near slowed our normally safety by This As cycle low concern and from sales on the were second and profit. quarter an improve today, point

margins, efforts our which cost to expectations with XX%. our XX% Secondly, continue are support positive decremental in very of line to

prior coverage long-term As quarters, our our ability I product discussed in to we and development, new including sales priorities. the allocation have capital protected strategy, execute

to ensure mind, to We And improving Our which pandemic, Enerpac. Enerpac the execute everyone is engaged, programs the the us and focusing enhances our focus on down is debt and team an balance we retain strategy. enabled from successfully believe further on pay company. Enerpac. firmly in have And well-trained quarter, to cannot launched million and as of develop lastly, employees, in with that in recruit, we part members sheet proud be $XX of without performance we our long-term emerge additional has developing the

Moving over to Slide X.

a with operating we most actual our range monthly And and prior sales graphical results is progression the metrics weekly of towards the understand and Our consistent this normal our representation quarters, monitored in recovery. use to experienced full provides quarter. the chart

X. fiscal near balance Flipping through we normal range Enerpac and can of and Slide back within the the third progress continue as a the year we normal second believe quarter. We was position progress operating of As you quarter fourth will expect. at upward the with the year trend firmly this the over see, levels to through

second in the quarter, flat The in Core comprised earlier, and with recovery. our down infection of increase sales line countries, XX% prior in have XX% to rate mentioned XX% factors, quarter the products quarter service. experienced our Eastern in I first declined was essentially sales. the in by these results. the year quarter resulted close Absent would in several been As in very border top achieving slowed which closures our Middle

Our adjusted And have of was the XX% low expected margin result. EBITDA a end decremental range. decremental our achieved we at XX% or year-to-date,

border low prior affected we prior towards normal with this quarters. in East improved to than of down range. And pay strategy. is a operations closures, during not the double-digit on regions have million year. cost improved versus year-over-year. was pay by earlier protect flow This with exit sequentially result The our our consistent and on decline in Mid been and quarter but in still a Overall, second resulted to ability year-to-date Europe profitability. typical leverage focus dividends consistency progress are were are the of volume. towards quarter. and progressing a decline increasing sales controls in by the operating And $XX and the quarter continues but more enabled have mid-teens positive, Free sales Our help in basis, mentioned, year-over-year which terms our cash quarter our Asia results the Sales flow free execute and $XX an Americas region additional Pacific to million varied which X.X. in delivering by cash was best-performing normal as we ranges Enerpac for in debt the

some market back to over call and review over projection and with Now details the quarter, and I'm the to to Rick Jeff, you. I'll on guidance. the going to turn the forward Jeff then come

a Enerpac I'll the Thanks, then of some And touch detail key Cortland and perspective verticals on about from few distribution. and add as on our regional finish business. on QX well I'll up some a Randy. comments as operations

still in more OEMs contributed is the levels. the and we that February look in and and surprise starting account to dealers' seeing a levels to how we saw caught of responding in-stocking this confirms quarter, We positive as the sales encouraged our ship that Starting various think our start our our our a dealer I service for The there's by the are our weather are consensus national rates, activity did by strong normal about we're both January primary that as the markets. X. the sequential another how and the being activity quoting continued you'll most In quarter positive, accounts see see which and and in markets in in the will We'll As sentiment our to on Americas. improvement turned challenges some that also past distributors well from some the a an pre-COVID product both Despite coming missed which we're and from confirm drop regions and getting in is decline severe pandemic. quarter. in significant improving. Gulf. this in see We're global to months. in second has and seeing continues in increase to general as more to overall Slide indicators we're comment, said, their countries total, orders feedback the February differences business, noticeably with businesses in pre-COVID also these year-over-year, general our like backlog back year-over-year around service confidence Texas product be further I increase down And recovering pleased serve continued sequential that revenues

Some offer we the in the some of -- quarter. these may third into strengthening issues, or of recover strength as however, the opportunities oil coupled move with continuing to prices some this

growing and our construction Peru to general mining power markets, well and copper as pricing opportunities iron continue vertical in and our oil Brazil. the Western continues customers. at and in our Looking distributors in specifically gen, give in Canada ore to sands demand mining improve demand Chile, and U.S. as Strong wind,

However, we restrictions to continuing in Mexico. with bit struggle COVID are a

improving, dealers and once visit ramp to customer continue and anxious get vaccination ability traction. we're to and the Our up sites continue to to reopenings slowly efforts more is

quarter suspension to connecting supply products. of The torque on did expect both call of quoting Europe, the repair. on what this more to Europe. on the and related we our bridge kind headwinds our positioned world, markets remain and general at some first back I'd glimpse But and us off by in X heavy COVID slightly near robust, continue late to traffic the in in countries you go various bridge minor picture project products both strong Europe, Brexit key we region slated performance, the of really of were challenges spending restrictions primarily in Government and sort driven longest the and the see Strait. projects, too nice in as in shipments, quarter, and Dardanelles well and will a on Istanbul but year-over-year distribution of carry to lanes are bridge as and each from a in cylinders, controls XXXX. included Moving in this a turned expected in through do continued off a project ease be into specific lifting that look quarter. we these heavy and strong in highway this tension give of cause the in Dardanelles half, is the normally lifting second detail much bridge in Coming delays regulations. machining. Taking wins here gets the to is to construction as some will we of capture direction the late but sides wind in infrastructure Enerpac's some wins excited. in solid not pumps especially I've core wins well to quarter sector a enable will construction work project open Various new the these in to about and

While of spending this problems show sales challenging company strong is us. to this project increase infrastructure the does our really with total unique is example of customer work could from an material perspective, bring that project a the for and good in type solutions not in capabilities really

pricing, on -- ore in started providing and Investments faced Australia. strength tailwinds prices on along and be their region in and And iron us starts for showing to mentioned as Asia both and improving and recently well market challenge, fairly Moving lift. us previously stops New mining particularly services and quick Malaysia due gen response it to Zealand, that's due struggle signs of are to improvement a some with just to products lockdowns. are Conversely, APAC. region. some for has quoting that lockdowns strong in power continues Thailand oil sales Australia, recovery as in the China infection Southeast border some with wind remains this as relates to flareups. This stable. and driving multiple and also I are in to to driving ongoing

out to utilize some we to led This of closings notice. drop-off border and Overall, the to to areas region. also some a quick the OPEC's until MENAC Moving some and cuts our projects several on and our some spikes to work of year. pretty moved a at That the team short did other oil did into quarter turn saw mentioned, half improvement strong of X the meaningful This from our Slide see revenue production as to being and quarter. several We price year Randy of into fiscal our and sequential East. When, us supply the the projects Middle has relatively which January improved February. opportunities cause pushed unexpected forced had the we some resources, back actually right efforts underutilization. crews Despite projects well, to turning said, for COVID going offer the completely service may be quarter. as out key of suspended product early continuation of

construction, gen oil and both on we're any and region, related improved heartened success to some customers really a and as working take So quoting up. by beyond work staying been are product in aerospace. close advantage diversifying gas comes rail the exposure and perspective in to product service we've in to phase recently hard as power our of work it our From as emergent this well

of begun order in Switching part new the target to our for consecutive early and about we talk quarter our products. the several like we see launched through metric for some our development product NPVI QX products and progressed here, new to We strong improvement meaningful at to as products, regions year-over-year have QX we've another quarter. sixth As new from XX% rates. was maintained product

world several to in the common trained only dealers materials can not collateral the Our QX of and engaged, and event get our launch that we're to included customers new offerings. drive on get marketing parts more but number languages continuing also leverage partners and to programs our preorders of translations our up we increase and

global our comments a of couple Just operations. on

pandemic the commitments All during of on-time were quarter. Continuing delivery, and complexities to really a safety, positives of sites which our our well. the operating for quality to continue on to deliver navigate all

we to December, as volume we normalized returns our On did which that quarter. the increases improved call September increase roll price regions. remain both the a X of As focused last utilization, taking the earnings and QX level, out here we in our back our about steady through talked on not we fact all typical in in commodities progressed costs, But year. freight our will be pricing in we given

we business sequential to of the in we increased chain down right little business our the extremely the seeing nice a that talked the growth that impacted year. production issues that demand supply have we our of by and of match the signal in to resolved, Cortland the it's last half quarter. back staying versus some operations In we year-over-year switching is opportunities in our port the bit improvement, also combined to year, the working enter And our Speaking another our about touched core been normalized lift the And a the to we look ahead lead experienced renewables. the to to on times the win don't burden we on the our and our for a needle chain environment, as clearly did start again any with of products just at this as supply outlook. needed. forward fiscal pleased level, weather we're report quarter portion suppliers and balance ensure seeing the back inventory hard threading XX% and as We're saw of make of main that a we're for orders. inventory, last pandemic, XX% And now are the the business. offshore with to ensure supply the excess expecting COVID-related encouraged, activity now chain with products. we we're heavy support but activity shelves, down not sure our the increased teams where returning Cortland this I we're continue can We we overall half on in industrial however, and I'm are have sheet call quarter. definitely to we bit challenges tightening and customers ropes in Texas, inventories

we York in terms of as of into business, see in Cortland to an our starting New In were the began side and their inventories, facility increase relocation activity completed. our the replenish activities medical January new did customers

diversify applications, our Rick and expertise. half, uptick into some February really the new to to of that, move that in some for new sales I'll continue the we're the bolstered our customer turn over that about wins base excited and and to expect as us customers second With were med continue future this some the business quarter We we efforts into to call past the by financials. nice put leveraging our

HTL. the EBITDA We XX% the the start in million morning, quick $X XX% Service Good quarter. down XX%, The to first I'll here Slide prior tools the quarter approximately quarter. rate compared The impact reported XX% were down margin prior and the slightly is recap and down improvement or slightly first XX% in down million acquisition year. quarter. for XX% had was Jeff. to XXXX Core product a from down first tax adjusted on the increased the XX% Cortland was Thanks, year. X. first from the the in first prior adjusted compared quarter from from quarter Fiscal an versus XX% of the $X year. second were and were in that's quarter was down that's for XX%, everyone. when and sales which quarter sales our sales an And XX%, down up in down from with

adjusted in of to our to expect XX% year the effective tax We full be XX%. rate range

seeing dollar covered We with million region, from we're favorable already to and few comments a just by I'll make impact Slide the $X we what expect currency, to see back would a continued half weakening If here. rates turn had in X. of additional from during tailwinds Let's the hold, current of the well. quarter. year Jeff foreign the FX the currency continued as

to region As delay Those closings Jeff of and discussed, the service quarter. an our by impacted service million, $X here would 'XX impact our on were sales project It a million region. from $X service about as parity the border revenue important that good in but is that fiscal is for in results. our closing of projects both note in 'XX revenues includes MENAC quarter the were reported second large fiscal the revenues with and recovery that This impact, 'XX. the XXXX of exclude we for in the have indicator had included

a our XXXX QX quarter. sales in results, quarter, of XX% core year-over-year. QX our the was our and on is terms strongest usually QX also lowest down impact is As reminder, historically trough with COVID

As at sequential the we to year year-over-year the accelerated quarters. X of as half COVID-impacted in going expect the quarterly we we see look recovery pace of worst our would anniversary and growth back forward,

the on XX. moving in on EBITDA to So waterfall Slide adjusted

We stated the the back the lower improved impact we turn XX% noted, to of half anticipate sequential XX%. leverage to margins in incremental will the As margin, as continues have of structure our provides our increase. at of XX% our currency, high end that range and cost in decremental excluding was reflect volumes be

impact this the facilities in our on and sales favorable at heavily mix, As million elements: margins that's value-added from offset basis work. QX. our reported continues volume volume continue service service year-over-year sales Jeff Manufacturing service freight million, pandemic, seen we as service approximately higher the It EBITDA costs through to weigh lower XXX -- more $X about with adjusted Cortland have under-absorption higher focus of totaled comprised points product was and profitable on and a The quarter globally on X variances up margins. just the down sales -- we utilization, $X volume of on increased to is by lower that discussed.

under-absorption the stabilize have not disruptions our minimal result, manufacturing to the quarter. in million $X worked of facilities And quarter. see the as we in COVID We first a with did tools reflected

that's saw in is the expectations underutilization quarter first our down we our $XXX,XXX, consistent coming $X service service Our about the million on from and and with quarter. into

as manage our projects labor through As our mobilization, pandemic, and to timing which resources Jeff discussed, recovery the have we permanent labor existing temporary of service closely been for us our has allowed we monitoring and demand. rightsize

our second was increase This year-end. at in both air this quarter. the rates Air fiscal we continue in the rates. to and Xx and freight from quarter we freight levels, is freight we air more first normal $X had through expect about the spend quarter our demand, Our With million. incurred $XXX,XXX on up in remain volume

in We costs, steel commodity demand, rising aluminum. suppliers seeking continue with And particular, price rising and to see increases. now are

see costs. parts $XXX,XXX expect to or increase a steel in We in to machine increase X% to X% $XXX,XXX

we beginning in of aluminum increases have since increased the the Although the will back on to approximately spend limit the have fiscal our impact prices aluminum-driven which of negotiated suppliers, the X% with in year. our half cost range XX% X% year, our

regions actions Jeff As that will through these all pass costs. in ahead moving targeted inflationary pricing noted, with are we

winding government and temporary travel last As million our in both furloughs. discussed quarter, the we savings SG&A includes funds $X that's approximately and outside evenly cost of reduced actions international costs and consulting. international split between stimulus with quarter, favorability down we remaining COVID are

resulted to expense to as costs about region. travel that commercial margins of year-over-year. our expands or increase expect by EBITDA and retracts activities match $X and continue sales an impact this also XXX(k) plan combined million we quarter. in reinstated reflect We fluctuate bonus The in

crisis. oversized the for our expense during important it in the commitment the historical of impact to level is terms employees tremendous of bonus recognize is at While us EBITDA, this of

-- in quarter. restructuring savings resulted approximately for announced previously second in actions million in the $X the Our savings

liquidity in quarter $X free we on due generated an the this the during generated demand was cash balance first flow in by able over to timing XX. flow cash our Slide now over in X just second A inventories and receivables management. striking to quarter, years. Turning time We million increase free were the capital million payables. increasing offset increase hold and between to and working was flat, $X in We

the in on revolving million monitor the demand. do look conjunction we the paying quarter the quarter will with that's of after We $XX in hand, million our in levels but increased increasing of credit we borrowings to half third anticipate the As inventory to $XXX continue cash and levels, agreement. back under ended the down with year,

X.X, Our that's from first leverage the X.X the is end of at at the quarter. and up

and with pleased perspective. are from liquidity sit where We cash we a

through X us the our as progress leverage allocation. execution from disciplined worst position back should continue off over it turn capital our we you I'll we As as significantly half drop trailing Randy, year, of should XX-month and back strategy to to This our EBITDA. the look now. our well COVID-impacted we improve quarters

Rick. Thanks,

to over turn Slide Let's XX.

the and XXXX and we year. the conclusion near sequential position about Enerpac As sales our year we've economics progress as that to sales volumes at parity fiscal the levels the normal the come our exit improvement with both of and we profitability, core towards think balance will

have which sequentially recovery towards the year XX% the we as in support core of and expansion of we sales. weeks fully are March. outlooks fiscal cost This focus will And margins increased All is incremental pointing and few the first the to control forward economic up expect executing Secondly, margin lastly, in our our booked on to strategy. exit range continue XX% to supported current XX% we full projections. further by and are be on our orders,

the As the resurgence of virus. always, concerning we potential are cautious

of sense However, the creating advent vaccines a of wide optimism. our distribution is of

the Slide us XXXX. our Moving brings to for fiscal over to projections of XX. remainder This

million, $XXX sequential to improvement. the sales accelerating projecting to $XXX be are of in million with range We

year range; in projecting the to XX% as projected the half rates in XX%. high XX% to Cortland follows: of the growth back to is be up is in low projected improve mid-XX% to are and should service the products the range; We be by low up

should high profit high cost actions end from the from normal sales. gross at to margins incremental our be the and Additionally, generated of benefiting range tool of XX% XX%,

Our assumptions remain interest with earnings. to consistent our objectives maximize reduce expenses and

As recovery companies, to long, difficult has well the our under performed conditions. with many has road but been very team extraordinarily

We results. vitality with the have see can of Enerpac Operator, basic achievement. the operating to the Tool leader we concludes prepared and difficult highly the remain objectives our most from and you And and Group proven slide, in as that strength their with high-precision tools to conditions. and committed are remain an remarks. under final today's X consistent, profitable that, industrial even best-in-class remains Enerpac quality strategic

open up for Let's it questions.

Instructions]. [Operator

first with Our Mig Baird. comes from Dobre question

Yes. around we're too. It's guidance. because of of lot morning. the at Joe go Very Grabowski on to looking shutdown. now color difficult and year-over-year for Thanks it, helpful against COVID the Mig about It's much this toughest a for right the so

first what half XX% half, on the at maybe half your So second 'XX drivers 'XX. half. X in business kind sales first there improve half your second I improvement your of you are think that half midpoint, second guidance versus XX% from improvement? it half versus Slide X% sequential seasonality first is end about The half that when But as second X%. first year looking in a for was versus And markets show half geography at implies or the to the to normal key second a chart

the back some percentage tool you I the recovery because discussed side. broad our vertical Jeff, about the the profitability the sales growth the don't broad high if then, But comes business, then which And to certainly, of gross rates key cover you our service me includes from, of in Let that and in we specifics. rental. service are why serve, full the think profit of markets on jump that's half where

vertical our at looking markets. all major we're So

last see in in seeing construction, activity great maintenance. activity backwards civil markets, when And you trending As think this bridge the times gas oil metals we saw Jeff about and in certainly the very We're direction. commodity are we well direction. specifically it's we're And also which pointing about the energy level, a all strong the includes seeing in which think and mentioned, go were right commodity the bridge and right in But you agricultural market. markets. prices not very products, also activity, if alternative at base good time if

So that's growth feel drivers at, the I supporting fundamentals probably we of look that macro they and one are are. rates, those the

that's want you and some so specific? Jeff, do to there. in then, drivers the give And And jump more

Yes. Yes, as see kind to commodity ramp starting work. enter of construction, leapfrogging infrastructure-type onto we're we QX, your story. in Normally, up especially

-- well. and during OEMs lot us. frankly, But comments to pandemic. a as -- are that's the a sequential spoke seeing activity through thing So a in a of increased seeing I to our of activity, increased But for we're normal been variety after, that kind verticals of quiet service due my we've as period

starting to project, as enough an although lot U.S., in to but serve. of spending verticals in prime of We're the quote see of especially infrastructure, not there's ESSA. bridge So I We're in yes, type some highlighted here well. improvement those nearly uptick log that in looking overall, we some quite of our that. an the awful But yet. just all in forward that kind the

Great.

first rough EBITDA my the at the Okay. half. color. versus a it same second math. And about If XX% the guess an second I follow-up in EBITDA half margin stick EBITDA That's half, in really I question, first XX% math, implies with I'll look of kind versus helpful half

and are to like the second incremental headwinds the talk healthy first pretty sequentially. margin Maybe to cost maybe some half So hurting that drive tailwinds helping EBITDA just of or about improvement? that cost half

Sure.

will improving -- tailwind I saying, as be product the been biggest think think volume. the we've I

biggest be And the going improvement half. that driver so half to first second to to that's

like You'll see hope to incremental you'll less of We incremental about QX. bonus the of improved little And underabsorption get some the -- you benefit a see saw in level. continued you'll bit savings. see expense at utilization,

QX, the have to up, product will So We I that think, a and going be favorable biggest will the kicks to biggest our tailwind that's volume do think product volume. mix as the play QX be -- improvement. I of driver be biggest

Our next Jeff comes with KeyBanc Capital from Hammond question Markets.

price another I on, guess, just at So cost. cut

I the manufacturing And to shift variance about How doing issue first and something the variances airfreight manufacturing are you about are thinking think you in airfreight away half? over also, in from you talked kind time? then second of this half.

things. of couple a Well,

in I just think kind the inventory bigger demand. global levels. and our our of airfreight not is it's And a -- business, because rise factor of it's our now managing

as more the So QX. saw in on said call, you I

As balance inventory little you'll airfreight bit see than more normal. we carefully a levels,

here as is to minimize I kind lot and we've a on time, over about, do the to needle -- we've period goal the airfreight, us we're think ourselves planning threading focused an and This of you that. on see because talked is unusual think level normal just you of we that met we which flood the how to end we'll demand opening of a talked sustainable of without get quarter. about, back the in much Randy by inventory until gates kind see the

favorable still have a a absorption. back believe absorption, from think will half -- neutral and we cost utilization or to perspective I

with facility, those all favorable front we we by took covered that that, operating such back of talked where As incremental certainly to pricing. look And would half associated cost costs pricing any inflationary we targeted then half. the our as be commodity/rate, at the about,

a be perspective. neutral should an that net from EBITDA So

of there resizing I of you get have just the I with think And high And level, seem of pre-COVID. at its line you a were sight back to kind mean, Okay. pieces kind -- simplification. of to of kind to that, company were restructuring, for lot predating moving levels demand then a

-- how are and base, you as maybe you these Just structural rate to back feeling at cost get -- look kind the as get on step to your back track long-term to back you more starting targets? margin about this of normal

Sure.

is There from We be to steps. really that. talked and of to define at out. continue we always good taken structurally, efficiency, consistently look that. margin $XX drive million in volume. As we We really about worth to feel a it this we've continue cost the think, I And about, X will opportunities perspective, about

Based to our -- target, us would back to And set that back million that margin value-added the top -- and $XXX NPD, which leveraging on work in further margins to not in and final flow, recovery it the XX%. of getting we top line. the which If is X back this if kind that by take that believe as then us of of XX%. we the to what market better. that when to that, to in improvement should done, to First, mark, XX%. XX% be And And driven is driven drives sooner normal to kind you've then us on take recovery. the focus we've the get XX%, volume excess sequential getting work we on by view as million $XXX of then we the got continues, which rental, steps those is service growth and

half, we we need things bit in normal XX%. drive done we've record, that believe sets half. to the getting We little to we're rate We We back of And it the up EBITDA run our and improvements all EBITDA a in still the the to to margin see us quarter. it back do. to the gets So see XX%-plus first us of broken objectives. committed think margin

question Popson comes with Brendan Securities. Our next from CJS

up then case. And the that's expect a the you with obviously, like I QX. exit the also back is want half comment the of your year, at just in the the to levels on at sounds that, of pre-COVID sequential QX just be commentary that it ask, year. you recovery, want strongest. a to you on expect, had to But typically confirm growth I given following

a any guess, out further that of is 'XX, FY hiccups, is I beyond about outside way year? looking revenue that -- exit we think potential good as So to the your

what the accelerate. elements last so didn't exactly that, the we the drop that's March. interesting one very that inferring, Yes, with of orders sequential you all, And of off the in big that improvement watching until we're year, we're last that date happy seen of inbound recall occur to March. first is is the will if And week were we've or

an is prior accelerate, supporting already And of our up in that typical were XX% or that somewhat going off-cycle to and it's fact the year have we going really so projections we're to versus March a that the -- peak, fourth. will each year be quarter. be believe where cycle by occur sequentially We third month will each it'll that the that quarter followed that, not and this is our better year,

and you company, months months achieved And we achieved that a accelerating. so slides a we've year. particular of the the history worst is over operating normal and been wave the if And remarks, look range we're think pressure and back you slope that earlier on the our of prepared best gives have line that see that the do range about you what can we the that I been in of gave the has that in at you in

the year, So all of at We as through. bring and business. we beyond our at our major hard, conclusion look that certainly this the just us of economic balance company we now We're strategies, how looking are Jeff very walked organic booked our well back orders. things around said, performing that look we're us to we've factories that the growth vertical exit the inbound reports. well which in our on markets then at factors look And accelerating at our the start other we worked point And to story. positioned very, sheet is very Rick those

be peak. terms QX, look that thinking when Slide wave normally, in how on QX has at about you the should here, obviously, versus pressure QX, Quickly you of X

getting to time will the You back by be the look This improvement. If sequential normal at dotted can it line, order end speaks rates on you it the to kind of see wave. of that get clearly to QX. pressure we

into that's back pressure mean the we normal, wave. by our And So expectation.

improvement, slide. the of can Randy continued see described, also question it your this you on So sequential as

question next with Our comes from Ann Duignan JPMorgan.

how I'd just go on you that going pricing I'm the to products much trying Is decrementals, like how you've quarter? back on And talk you if it Is this through gave to could. incrementals. get distribution? guidance all we and it about to said products on will Can just that the to pricing all Is you services? issued sense for a cost, products? price contribute much by? did you of increase pricing

this did that targeted we when back tariffs. These similar costs we are we're specifically to view the products by were what I as were targeted looking So pricing impacted seeing. at for

it wasn't the board. So across

talk with the we anywhere But high it's X%. tariffs, to those as again, to costs the As it's impacting from, call X% it, products. specific as

what annual the these net when pricing And to on -- like an what read-through said that costs. think generate the normal look earlier for I and neutral read-through X% pricing on actions offset looks of continue this we'll roughly going forward a in half So -- But will to will of here pricing, year. are cost-specific back was net read you basis. of about basis, half would to the we that take back

guess appreciate I I that. follow-up And same is my lines. the along

cost the purchased had On of your then, lot a where assuming, steel aluminum got side prices though, today. a they you to and I'm earlier of are lot that your before

increases? of on price into quarters for quarter you further pricing cover X next may how will So be the without current or But in year forecast. the based terms neutral your next cost-neutral you for price long

historically some do I nearly near what's should is different parts, this say, of little the purchased, have steel maybe sitting than year while had. we we've bit that the levels anywhere inventory historically Well, machine we're or not a

costs. back So really to price the the being offset numbers taken I gave those are kind half-focused, with of

or really ops point, we're down, we're So a at to But this, talking go in going then And right we've some there a basis, prices should demand. planning. down meet sales and up factoring inventories cost benefit. go-forward now, when back the associated will about manage with on how to bringing be both been go prices

demand and to lower seen, should So our historically purchases inventory see will accordingly. you you've be much levels than the closer

I just quick was a also. flow. et appreciate the cash flow that. then inventory, And Okay. QX? just half expect comments be to cetera, on first Just Would but in cash helpful. given negative follow-up you adding That's unseasonable on unseasonably,

the provide We think timing the I inventory the you we and of QX. have have to hit through Right. and didn't the And monitor it guide demand to QX, really because monitor cash. demand on

approach we demand QX. carefully As you capital, accelerating be of biggest this we to an is talked which of will earlier, see be as Obviously, end definitely lots the but the going favorability EBITDA, about working managed. from about the the to get is you so got capital driver. working

like it's will to So a that hard look -- quarter-by-quarter say what on those basis.

Dray question comes with next Our from Deane RBC.

grid in think missed that impact come of there much extreme a weather lots the it? any opportunities that are in quantify new the turbines. you And of Can Texas? of out some said coming terms and new Any guys? that of How in the was will wind of business interruptions. out You in of investment we for catch-up? contribute come to you that? quarter? in were opportunities We're hearing quarter are construction Can the going hardening will How the opportunities, the that you recouped do circle on much back there that

perspective, quarter in Sure. the it, it from I'll -- somewhere I roughly, a there. million top $X on quarter. impact start line, call The with -- say, would

flip between QX. QX, it's QX, So QX, a likely and definitely --

those margin So pretty impact is The good. work not nonetheless. a huge an products impact, flow-through on but that on

QX, in quarter. see did is We impact between So It of to a online kind come work as QX. that's timing. that of what see back we we the flip terms navigated start through

think from So how to we Texas. in about impact the the want opportunities? weather do about talk you that's Jeff,

we little We was impact product relatively Yes. a bit impacted quite of rent I it We biggest labor, didn't Again, margin of obviously go out We just needed where didn't. out. bit Deer to of go which the a had couldn't tooling to, from jobs and that of on our a to was impact, some impact. lack what guess normally Park products. on. But mainly was Primarily, the were in rentals. scheduled out out some We was get trucks the ship logistics facility, minor. some we

we are a terms specifically, in little think our to down going We're opportunities rentals back, In question perhaps some here. pick some to seeing start equipment of plus to QX there. for rental forward, some And I going up, yes, request it's lot already some pick grid up. and the repair of your for strengthening our a longer-term on come seeing of

on QX side. a primarily probably the So impact plus

orders hear. pretty out All if way verticals? terms I color break missed for I there. March to good in it. additional would is business of any at this that uptick impressive. And said right. XX% The apologize and geographies, Just That's in you you And

that since think I would that is gauge this can we're anything we pivot helpful. now, point be that at

very Jeff, It's to it's and in me we of improvement. you start broad, do And Let needed regional lot want off. A what good jump just see. to there?

a highlight Yes. across and orders includes of it that a across It's of It's I regions, lot distribution. from of the that's one. lot verticals. mean,

that little me So overall pinpoint that big good for the widespread contributor is we a more news one uptick. it fact positive can't is a

And that also includes geographies?

absolutely. Yes,

Fargo. Our with next question Wells comes Michael McGinn from

every to just I you Central into saying not a about manufacturing it's York. Yorker, by investment off as incremental Cortland, day New start hear want native New

M&A Historically, with stated on to addressing been now So your reasonable within long-term the relates in Larzep question appreciate guys you that. leverage the like algorithm have place. different first My growth brand. tooling has focus a geographies

different regional looking Going stands model expansion? where anything closer factory room automation? floor is and out Or think there's for to geographic get now? Or you're maybe tooling for with you this do the that still a guys you to forward, right

we've and things has with that about question past main your me focused we've been tools vertical markets. back on talked and just that it those in thing the of Let try then the associated some geographies. to go vertical then recap to bring The about the the

been interesting was So tool a torque still is acquisition. believe already We expanding we've year fit torque things benefits our the X-tiered -- markets, that tension highly of have ago, good our and which acquisition product has we our a to a of full last And product lines. now been expand which in And that seen we a line. very that have that, wrench was us acquisition, that in essentially to platforms. great based just I thought the

go So we intend that's example more from in tools a the of how view participate it, then of types vertical vertical market. that market good both to into a that and we

in handle peripheral industrial torque like that obviously, now, directly right us And need Asia for in believe things your an as at brand be and question And geographic a relative some answer be would the to said past, tension, we interesting. devices the also markets then the so are then tools Pacific Pacific-manufactured are to valuable. to move really And the would we quite Cutting in bending aerospace very the tensioning very make, And devices interesting. we've general very are interesting. that's geography, market, also still are major point, last Asia brand.

has that And just I offered the have maybe that with to development been the it. I Appreciate peaks? you've probably differential that you're into of maybe been similar of coming you have margin that make quarter. the the on under kind I'm simplification up like ITS by want to breach within rolling sure something efforts prior lot legacy XX/XX but a moving your margins. Great. fourth what if numbers, terms platform new to -- have par discussed know operating And margin already, that from products you then product I Is going threshold have are with that lower help us the can on to versus the I correct. back previously. margin SKUs in the off frame been XX%

when QX, run have margin saying, we XX at a QX QX, going supports I XX% think we're order an we'll a rate forward. from I progression, least margin perspective to that the rate -- relative the think end

you So margins back NPD there? half describing want of and our about do the through Jeff, that's year. how to talk we're progression the

mean, our is new we innovative bit be at Yes. always line average they're develop as really products, a little to above least new if at certainly, and products. and target hopefully, I

see products. So new launch interruption continue as we in I that any don't to

to those So be certainly, the intent is for all incremental.

them And quickly. with getting there we've start at any target, always NPD, fairly had success don't they but in

your as where the up something more Okay. then has a opportunity. want a more one application? market? of see, Are is and conjunction on track? come to in Or little I Rail business on you market. and railcar if could this who couple compete like times an can working kind incremental what end specific the a frame just what like looks it I And of just sneak within with in Wabtec Nordco you rail you're in you is that manufacturing facilities

rail is our that the that. kind primary We've suppliers space, maintenance Sure. that activity partners side Yes. system. have of of hydraulic to several we rail to really help rail competitors, products The our and and several are competitors side that the of operators. things got install the normal maintain on big new like Most in and designed specifically

through users. it distributors targeted sell but So relatively that to end distribution, specific is it's those

opportunity to and So out bringing that we've into of product we current the we year, space. But orders are our already age uptick there's that's space that a And this nice line. some there. a given updates new infrastructure, fairly do think seen products that some in

[Operator Instructions].

Our next question from G Research. comes Justin Bergner with

I step margin to start, Just to that XX% of back wanted sort and look EBITDA at guidance.

normal the with to $XXX $XXX difficulty what incremental of of thinking revenue, you end and on drivers beyond EBITDA, normal there? If on which beyond an of you that get fiscal sort of current EBITDA million you $XX order XX% the incremental $XX million to million million of of incremental an incrementals of that $XX allow adjusted are million of just allows translate $XX to I'm year some to basically get million benefits to sort revenue? that the would range the at to margin having the million of revenue $XX something the

margin When of $XX at look we Sure. think We've out cost at XX% XX%. now to incremental, to, gets it that rate. EBITDA midpoint call XXX-plus at the cost coming XX% above which all leverage between run million normal results cost million $XXX that around of And combined be definitely revenue, million the the taken of guiding, -- the and normal it, exiting million the to $XXX of was go that out right of that At 'XX, guide. you we out, say somewhere level, $XXX original I with if margin to we call cost, a end. revenues, EBITDA that -- in in it, that -- that on that getting that $XXX to million you high were also

say And it's volume, it improved Product also and talked product, product. what's I so of growth includes Jeff happens, product that's right really now. about earlier, this -- in when missing rental really what And terms value-add And as service facility to utilization part And approved then do the yet our we come well. the from activity -- are manufacturing as have that get really. improved sorry, continued of benefits volume. rationalization you

those we all margin combined, you So consistent $XXX million with original our that lock, mark. roughly think hit

up things And You've us driven the drive work to done our value-added that million all XX% off point and really get to -- of that to efficiencies XX%. manufacturing XX% above plus to above facilities. done XX%, NPD, within market is we've to $XXX self-help continuing

to demand Europe. the Okay. question infrastructure My relates second in

more think today I at that a this is emphasized or you new something least emphasized lot today.

revenue much How sort your European of there? with legs? would drivers a different helpful. demand of background lot subregions. the are is countries tied what Does Europe's So have provide at this you Obviously, present? base any of be and Just can infrastructure-related up

many -- bridge are we've to a really been project, There's months numerous start just to numerous the had and it's those on bridge for Yes. kind award for numerous that quotes encouraging book seeing have come projects, of I especially. of We've projects. got quotes emphasize that we open of stage. had transportation-related we that been quotes

since on think bullish fact that spending to I has as I talk that pretty the Europe, starting they're the So planned been pre-COVID my released. team is -- in to for get

you revenue over distribution, a our general hesitate up that. So projects to of amount meaningful through in our going between sales give our percentage business. that's But tied it's I of the a and those there

well also demand new there's there, on. but So think get there's information been I some some we're some as projects that pent-up starting to

frankly, news, around. good So all

to for That's turn management all I'll closing the now questions back today. it remarks.

you Thank for everybody, we'll joining follow-ups. forward very us today, to and much, look Okay.

Thank a disconnect. you. today's day. now great concludes conference. can Have This parties All