Parker-Hannifin (PH) 1 Feb 242024 Q2 Earnings call transcript

Greetings, and welcome to the Parker Hannifin Fiscal 2024 Second Quarter Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Todd Leombruno, Chief Financial Officer. Thank you.

You may begin.

and everyone. Diego, you, thank good morning, Well, Welcome earnings release Hannifin's fiscal second quarter year XXXX webcast. to Parker

As Diego we interest and said, speaking. this day appreciate that is Todd Leombruno, your extremely an joining here Jenny We busy with us, this Officer, we is And everyone, Chief today our you Executive in Chairman and Parker. Chief for Parmentier. know appreciate I'm Financial Officer and

could financial vary see you'll disclosures forward-looking measures. our on Actual non-GAAP items results our On here. Slide X, the from projections addressing based forecast and listed

non-GAAP Our measures are presentation press section release, and this the under released reconciliations at and for morning all financial this parker.com. Investors were available

some starting the margin expansion The business our reinforce very of the increase in and to driving morning. how highlights that, second add Win system, I'm financial open our those are details we're Parker will released going position and agenda bright is and take going from our up And our members I that team Strategy, future. to on questions any this to after for going portfolio, Jenny Jenny to queue. our results we and few a lines, with a guidance the the for quarter. today and record She's color on the also the

to it I now ask you to X. And you. over move I'll turn to Jenny, Slide

call today. our Win driven a the Todd. to performance team you was Thank joining everyone, QX morning executing Good our of thank Strategy. members you, of excellent exceptional and quarter all by operating results, for

top been Safety incidents recordable over and reduction QX. with Starting XX% safety. will our remain A has priority. in prior

increase Record cash with of with in increase over XX.X% a free And billion prior X% all margin year-to-date expanding point growth with a over margins. quarter, margin. XX%, adjusted X%. prior operating flow organic year, segments of Record segment XX.X%, basis EPS along of sales year, XXX of $X.X growth adjusted the

driver fiscal significant We achieve million original a achieving fiscal remain this the in Aerospace of first million to strength And our 'XX, fiscal for guide $XX.X our million result, slide and, later had increase are We our now year. year as $XX the quarter. was a at to expect $XXX We billion. remains by synergies in finish committed to backlog resilient in strong $XXX a in cumulative year will this performance in half 'XX Todd year increasing 'XX. over go synergies the deck. a guidance, fiscal to

highlighting I'd Parker the please. portfolio. entire slide, Next like power spend few minutes of a the to

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that They solve customer technologies an of sales distribution problems. integrate are partners Parker's truly extension and engineering Parker Our teams.

we've time increasing sales basis past continue revenue markets. year XXX was since partners Building held again. and And the national December, about the several to great the with for North the to mix and teams. have of destocking was the drive of North Parker very divisions talking positive distribution XXX future. despite sentiment on everyone pandemic. This the our distribution we It first in American together tone overall meeting, America Nearly we success been the per attended along the points sales an for channel, meeting international quarters, for

slide, Next please.

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it turn Todd. back now to I'll

really Okay. QX to I'm 'XX and quickly I'm go summary. FY just on going Thanks, to going the through financial X, start Jenny. Slide

As fiscal records Jenny for quarter an quarter. was for was a of the It unbelievable quarter again, first mentioned, And of our year. to the extremely finish half an us. the team great set amount second the strong once

in net and slide, quarter new number a gold at that share. margin, look income set sales, margin, you every second EBITDA per for is We operating If this segment earnings record. highs column

sales was plus X% Total growth in the quarter.

impact that And mentioned basically X.X. of other. first each Divestitures at unfavorable this adjusted is That And divestitures reminder, X% a When XX.X. Jenny margins, versus increase but organic. full was quarter margin were EBITDA at prior points basis points year. current and this, Meggitt prior of that prior you an basis look currency periods. XXX currency The have was the year already slightly year. an All just was at reached in was the XX.X% versus of XXX booked favorable offset increase slightly X.X, net we of

did year. take a If a quarter, a is was was up prior. basis. at from return record sales. million on prior share, we $X.XX. earnings the That lastly, XX% a on That XX.X% $XXX That increase for net income, an XX% versus look adjusted you per adjusted And

on businesses, was it, all consistent that unbelievable about our And I an exceptional Just across shared second it slide. again, very quarter. of what expansion. last just Jenny And like margin really as

XX, share Slide quarter what to earnings the shows per go company. the was high-quality you And is this chart bridge. for this really If it a

share, $X.XX per in that performance. to driver amounted the per of earnings adjusted in XX% The this quarter. operating main excellent additional an be of earnings share to continues The

If in $XXX growth. accounted equated that at XX% quarter. the the quarter. income segment look per of little by earnings you And EPS increased just million $X That that that operating in a for share dollars, the over of to increased

is was in Systems really segment improvement. driver But businesses Aerospace is dollars. the income Clearly, contributed impressive increase major to what also industrial both a of operating

versus was items. a G&A just in that little some is the in count prior successful That just If was a versus $X.XX the of $X.XX really expense. the you was Corporate bit by efforts That Other just prior again, were reduce prior. mainly year. favorable of versus favorable pension I'll debt currency to deck. net favorable expense year, slightly $X.XX changes at result over driven was a outstanding last XX tax, prior expense some later look discrete result Interest favorable and our about that $X.XX. talk both months. share year, than and higher

outstanding just the in the company, components share. continue some performance Meggitt those great adjusted from it's Really, And per the margin across the business. strong earnings increase performance of with are

of XX, on schedule. Slide by you be me, are next Strategy. the slide, That's about but to I excuse driven Slide this, did increase If Jenny you XX. the couldn't number. expansion the ahead to go broad-based prouder that detailed really if mentioned our talk we'll of the go margin synergies Win performance. We segment synergy

very really remains demand very, high. Aerospace

all of businesses, nice across a our execution our across consistent just So members. team global

up page, XXX%. as can X And backlog remains of You that were basis increase remains levels. Jenny mentioned slightly year, And remains see at dollars Incrementals especially positive margin, near XX.X%, operating And segment sequentially the stellar robust. resilient. aerospace and at XXX remain at well. the total this, backlog plus backlog at really activity points. record orders prior did bottom versus Total but over

If at was off-highway versus and the prior channel was That markets. North look businesses, reached Organic really growth continued destocking, down some quarter. billion year. by you rebalancing, American driven in X.X% softness $X.X in sales volume the some

impressive That They in is great just driven the tight prior at remained some cost However, increase really by America operating did improvements points efficiency some second with of minus also remained execution, quarter. excellent to American a North adjusted X. North that was Orders controls. team XXX and quarter really basis down XX.X%. of the what out is margins record consistent

were slightly EMEA forecasting. essentially at If Organic look Latin growth billion, we in you did at was a China. impressive expand the America the But businesses, XX%. negative businesses, X.X, really just did there Pac were positive sales record positive and second did $X.X Organic growth adjusted versus year. at than pulled basis And better operating of was X.X. is Asia flat, finished X.X. positive was margins come which international prior recovery at at in it slower-than-expected points down quarter what's also also in these improve, in XXX by was being

international being be on low continues growth environment. improve. Very in did in the improvements, segment resilient productivity the international expanding results. team and a impressive margins, very That focused to segment even across Orders

If minus to minus they quarter, They X. you were remember, last X. improve did

billion, another a delivered year. Aerospace $X.X from Sales standout Systems, on reached XX% finally, And increase quarter. they prior

growth. was, is aftermarket of quarter, up to volume in just that driven organic be the XX% And commercial growth All by that continues XX%.

outstanding Really, the by increasing the from the healthy a these Meggitt performance really contributed reach Operating aftermarket XXX margins volumes, all to new to favorable record, margins. mix, record reached drive points XX.X%. business basis

rates went briefly. is Cumulative million to very order And increasing We to XX, from synergies. in $XXX plus that which over Jenny are remain million. aerospace continue the $XXX just were increasing synergies robust.

cash slide, next we'll the On flow. talk about

what Let's a there. done at take we've look

XX% from cash That's increase prior $X.X of year-to-date an of year. is XX% sales. flow versus billion. Our operations That is

flow cash fantastic Just performance.

cash up increasing at XX.X%, prior. billion. also $X.X That's XX% If you look from free increase that significantly, flow, was

Our year-to-date flow cash XX%. is conversion

We of being really generators remaining great great and have on cash. focused team the deployers

our You've That many times. of dividend. share. that say approved us Last dividend is quarterly a week, XXXth Board per quarterly consecutive our $X.XX heard

be deployers and of belief a that nice, testament great to Just cash. solid great generators we can our

free to our will year, over We've conversion midpoint at course, cash for billion. $X.X increased $XXX When to That's up $X.X the flow you cash that the be look moving million, And full XXX% free expectations are year. flow. billion $X we of to full the billion. range increasing approximately for

did by We let's since by reminder, in we've reduced we deleveraging. the leverage progress Meggitt reduce the look have debt -- quarter. over those our just X debt take figures $X.X next slide, are what ahead on a and we've just And million improved committed On closed of $XXX now originally another we billion at quarters a to. our X.X turns, ahead both ago, of both

of billion If by you we in expect adjusted $X X.X, of June continue to X.X. net debt year. on debt to we adjusted now forecast XXXX. the down achieve now look based at is performance pay And net EBITDA debt And fiscal of year-to-date, is we've the metrics, leverage just X.Xx to to gross the EBITDA approximately got

across board. performance Just great the

On details Okay. just guidance, a on few guidance.

increase You guidance. saw the to

earnings year year. We the for full are midpoint reaffirming our organic and per our share expectations increasing margin growth and

growth is half. sales for are for the modeled organic are X% we points be of by year. at they XX% or and range organic raising growth the reported XX% year second to roughly full to midpoint, midpoint Our basis XX% aerospace the the XXX to X% to In forecasted respect the growth, in X% half, first

the by quarter. slightly better basis you international points also raising what we gave are X. to That's growth midpoint than minus last XXX We organic

growth in decrease Full midpoint as minus remains X.X%. a by North growth entire the plus at offset organic for by company XXX the organic are to X.X. last basis same American the quarter increases year points Those

expansion year. midpoint. points segment a basis being the that would up basis, guidance basis to margin And is on at look Adjusted from XX raised prior be That's of if it points margin on to you operating XXX Moving prior margins. at guidance. year-over-year XX.X versus

tweaked unchanged synergies, talked million. a moving Tax that, a bit. that lot to our rate we've and we're Corporate other little about just are G&A, is interest $XXX from Meggitt relatively guide. prior

be XX.X%. to really the based performance on year first full the the expect in half. That's We

XX.X% be from expect tax rate the perspective. We a to half second

earnings as-reported adjusted and to year share year earnings share XX. and per to of those increased Full are XX the full Both at per midpoint. increased $XX.XX has

specifics share, per at And to earnings we've the some $X be more usual, midpoint. in as included expect And even finally, for appendix. adjusted that FY 'XX QX the we

Slide XX. Jenny, that's it to ask to guide. the back you it I increase the everyone will So to to and hand move on

Strategy. accelerate Thank you, the stated continue to was our first close Todd. out. and A as that using Win few performance closed key drive exceptional this times, an we many to a results messages quarter half. QX, positive strong We'll

strengthened X% and value the proposition, cycle. deliver secular portfolio organic along customer of over from to trends, Our will growth with X% growth

greater $XX per our to share billion targets We than 'XX remain committed earnings free and flow. $X.X of cash FY approximately

a We year another performance, you May our promising XX of to very expect look promising this on ahead We about of our we to forward at have future future record and talking of investor us. year. meeting

Back to you, Todd?

to are first and Okay. ready take Diego, whoever Q&A, open for the we is queue. in the we'll lines

first Sachs. comes question with Goldman Instructions] Our [Operator Joe from Ritchie

quarter. Great

I'd The to is around first start like just America. North place

though good clearly, and least guidance So the it But for color, growth the down looks took there, Todd, like the you implies. at order even rates what your now are stabilizing guidance year.

business. seeing seeing end any talk about or what So across your whether America you're on industrial a stabilization little bit shoots you're and just maybe green those markets North

Jenny. Joe. Sure, is This

X X.X% of Todd stated, decline remain last at quarters the negative with did minus as the same in had orders orders yes, X. see, now, negative We've as organic So did QX. but a said, as consecutive Todd quarter we

What is destocking We in heavy and and in I the transportation channel would duty. in automotive that continued. saw weakness in QX, primarily in say construction, some off-highway, weakness

but this about 'XX. did through quarter rebalancing go into destocking, only customers, with dealerships, the distribution, OEM last dealers, and year level calendar and at inventory we to also talk did that We this anticipate not

have in second that's So worse. the it's into North expectation It's America QX, it and we And our is what a to I since started, a but year guide. would was going with in overall, here. line been say, the destocking continue half just little for

remains strong. that, distribution horizon is backlog say We I longer this backlog strength. as would positive. sentiment I of mentioned But had earlier, And very

or seen out any haven't We major pushouts cancellations right there now.

X.X% this off-highway But ag the and this So quarter. we continue. guide and it again be about think will now. see was good going the guide, softer destocking, this the we're on We continued too lowered right feeling construction to we

this is would Todd. Joe, I just add.

industrial kind in the total expecting. If business, right? we it exactly you In total, were look at as of came

the highs there right, when volumes. to exactly to, shift total when international sales, markets. You're from was really at close little a we're what all-time into these very America to least it very, of guiding bit are a But look at North reported you comes

So the we what's really about choppiness continue order market. despite think good on feel We to we the expand can in going that. margins with

about good we that. So feel really

the you're quick color Yes. industrial growth I America That's weaker both there in the margin kind you. your follow-on been XX%. despite from performance, Last great North expectations of of of and my guess across quarters, incredible. is, above look, really businesses, has couple

the So baseline forward? businesses of I like, is is XX% guess kind going question the for industrial a new

of that. single of great it's rewarding numbers be is in said Win about the Joe, is put really the couldn't talk this question. win team. team all that comments, on a time, Every to And the like Strategy. the it Like I prouder up item I set see margin-enhancing the We a strategy tools.

there. out XX% be margin. at segment operating want set the target a have We to We company

not have achieved that We yet.

there But no X just doing we're obviously, the within on with of doubt. keep that that that, make sure our the we're eye what's And keeping to achieve top is an facilities walls happening we line. we everything higher. will number pushing We can

all And the the improvement. Joe, waiting using to be environment. for we're Strategy We're prouder add, just mean, the to continuous echo a growth job tools expand -- They're And I just just really culture a would downturn. is a couldn't one slower Todd's And team. of Win our in I nice we're again, really never I of have margins. comments, doing we in

to that expect continue. We

from with comes Our Julian Barclays. next question Mitchell

have I international X been for wanted down, the to just business understand in now. think, quarters Industrial. Orders Maybe on

couple then sort of What's help the changed are of the thinking quarters understand where of in on we Maybe those it's took regions You sort we the next us in international? orders are And and gradual floor very impression main slightly sales up guide. we a find your that of recovery thereafter maybe revenue very sort little in bit. a downturn? gradual, what a across a side of

This Jenny. Julian. is Thanks,

in it's saying flat been we've But been growth flat, just it, now QX. listen, in several for So organic call choppy international quarters.

in as X% did It organic minus than and As said, of orders in Todd really due business to better growth EMEA, X% in improve our QX you had QX. some business resilience said, positive X.X%. from was filtration Europe, minus forecast, favorable project to our timing.

and in again, see X.X% low single-digit decline. industrial Todd markets. a Asia did Pacific, destocking but did We the positive QX, in see mentioned off-highway China some against We last from comp see shutdown mean, softness it the year. much easier slow. COVID recovery China is growth organic some for continue. I still we was In

So Pacific, I Asia bright India transportation, Asia off-highway a would construction Pacific. remains say soft in remain truck, does spot in that

When points I Again, mentioned we saw the team region. growth Pacific. the improvement in slow, that a in to Europe that improved continue. do the basis orders destocking job recovery margin and doing but that continue and is look QX, markets, organic cost full expect forward, QX, Asia great controlling will year in XXX the really in still off-highway due that and will softness and industrial in performance giving We is strength an we China

now. pretty India look rest say soft when look you And I Korea Japan that the semicon. of and Asia again, in good Southeast at is would Asia, But still right and

of Aerospace. in in Maybe ahead synergies in for a bucket I help second people plan? price guide the than sort on of, aero? us That's helpful. understand is think stronger in Maybe on drove much of for came just or margin more that follow-up it those And coming my with kind perhaps commercial point, revenue volume Aerospace uplift understand of synergies Systems. And then quarter, the any it help that's expecting us were the

Julian, Todd. is line, across top Yes, you in demand the Aerospace could is business strong. extremely all obviously, the on increase I'll this see verticals to start the

in we the XX% If what quarter, quarter, half. been in at that you plus. the a gave has That to the did look second raise organic us the growth confidence big

within the If mix, was aftermarket. were you the business, at look forecasting. it's XX% we That than higher

was So of that that expansion. driving margin part a

for And a -- aerospace to on really it's is business. the our volume through we've certainly still starting supply side help little a The the in Meggitt comes year -- chain environment the that. really But aerospace working and team normalized now really the this perform a it when to that. business, it's is noisy the is on to is talked a the efficiency. about team base but it of

So that's comfort Aerospace. what gave us in

Yes. the synergies and the by great we're see organization to really now starting performance into of We've pulling getting really team. some obviously, we've Parker job a Win structure. We've division done it nice ahead, the the Strategy. the implementing And with had delayering benefits the

nice a So And team expect really continue. doing the job. always helps. Todd Volume as we is this said, to

question Our next from Davis Research. Scott comes with Melius

like nuanced it what more we from I'm I upside perhaps kind a -- there kind today, and that a be margin Pre-COVID But you points will today. up it's to you some is future is operating you expect leverage? balance has XX-plus kind but a feels fascinated just nuanced same up, guys weird, guess it, see, gone Just call with question, it's there? XX% XXX but even would that you've it excuse right? or than gross gross ton, basis your percent. of frame. could margin time do of of question, margins think of a shown kind improvement -- beyond margins SG&A the margin gone so have come Or if Op think

intensely Yes, something we at a Scott, question. great the across it's It's organization. look

you're be upside to you. totally on But I honest think both areas, there's right. with

purchase at depends if the is a over fairly and the look you're as-reported in was clean. you what it accounting this from quarter If last we've margin the on of looking noise year. at transactions gross done, lot But there number, there

obviously stay levels to high the at it expect quarter improved I at and was there. that So it from this

We we reinventing are ourselves everywhere looking business. SG&A at constantly do and that

is there in So areas. do think that I both potential really

The pile Todd Strategy business, So entire Win Yes. places. I'll agree right? be to apply bit on just both tools a in there. with the to I little

And And And initiatives I mentioned that initiatives that earlier at with X.X. and then Design, everywhere look by Strategy you some of Simple down. up benefits just better reduce around able serve Win demand, yielding the some came be of analyze allowing factories, of have our to really better, better our we demand are really staff the forecasting, customers. the us customer to service overall to cost the

a that's really plus. So

A reduction product first Defect there. then lot cost lot And around a that's and the a our of producing time, of XXX% activity quality Zero initiative.

teams. improvements just nice a And toolbox our of lends throughout So the all the work team a structure in organization. across to really of continue expand by board lot whole tools itself lot to done high-performance the margins. to The

not going area, just So board. to the one be across it's be in

going to at leave it I'm that.

doing You in a guys great and Thank luck you. XXXX. job, are of best

Our question next with comes Deutsche Bank. from Nicole DeBlase

Just the of year. starting EPS the maybe through with cadence

from I normal this the back second down half guess like XQ, want year? it? or the at either I takes at to look however looking more embedding at typically half what of you're think first you seasonality, in a and step are just a see the key the like midpoint you puts do step-up

first as put second like big What I is we We the question. at half, now guidance XX-XX, a no be is half the lot that great EPS concerning. evenly should that about together. so a split this looked that's in ramp there's it's Nicole, guide second half, the

QX, QX both and when that to those out EPS. obviously, call would it numbers were record comes I

little that's business think a there. Aerospace I remains driver the strong. So bit of

but it's softness we concerns business some whatsoever. little out in bit choppiness a see did And We still little obviously, But the American North have no got there. about businesses. international better, a that

went the our guide. really that that's elements into So

the second year, earnings guiding quarters at record of the levels If both at of I really half look those are we mean, share. you the and per still really of

of the Totally understood. order And some trends. to then back going just

sequentially that the you down going actually from the You in guys down the improved around X% gave revenues international what in color XQ? saw. But X% really to orders the good

[indiscernible]. orders in the improved That's quarter. Pacific Asia

Next Nathan question Stifel. with comes from Jones

capital going I'm start to off on allocation.

sheet that post the of better the of much end net maybe balance being to at a debt a back Meggitt, order leverage Now lot around the market? in Xx interest is we paying XXXX. rate you bought to than the willingness when of get about of We're into a your were environment in Can back bit Meggitt. down you different talk a M&A

You that. went up to of is different potentially to appetite a levering for leverage and M&A? buy X.Xx given little What interest priorities environment debt versus your over rate up for the

Thank you, Nathan. that This priority. are ahead we is number Jenny. Well, end first year. paydown schedule of achieving this all, Todd by our is as mentioned, of fiscal as for we've X.X said, #X debt But around of the

We're One companies how years. do never pipeline that in portfolio. That's say wound And with let We've lot of great built that. continue always over the we've working is dry. we the would thing our a we up go relationships pipeline. the these I to

secular And more opportunity of X We the We to to flow. out and property there. of It cycle, We be still build portfolio. accretive wanted like to an has have by entire on trends We our driven consolidator the longer be choice. have right EPS, to want the be that to be margins, technologies. all to cash to to faster-growing, see want right we to resilient deal. the We do businesses.

we'll And going. looking this So we'll right keep pipeline for deal. that be

given change given the the rate days a number I kind the ceiling to interest your do that, these of environment? leverage in something after like X.Xx interest willing and mean, would rate lower be again, Is environment? you of delever

I'll take Nathan, a stab this that. is at Todd.

to we shareholders. right deal Jenny So the not anything the listen, trying company, think, said make to do for bigger we're than sure the what it, very done. for we've trying do well, I we're

have we we've can the structured we've that that way we done What on quickly. think we've created like never allows I some We delever us we with we have flexibility cash those that. proven proven been is generate been deals is And before. what

necessarily but I to we we do did something wouldn't So if -- don't itself. it we we to present like have before, think that don't be doesn't what would do afraid

next from Mig Baird. Our question Dobre comes with

right. All

the currently you're just discussion with approaching are you to your have at this in you look you Just looking Or a more that? that broadly follow-up of sort on When are at first, that Nathan. technologies point, M&A willing beyond X portfolio?

think aerospace. you also, you're of frankly, And further how some sizable diversify your done are Is beyond exposure about you, at? do exposure? to specific that area willing in Or you You've that that to looking or your still things sort to? currently the have vertical look end-market portfolio obviously an end-markets

target. now, that We well. keep the like X to number Industrial well. mix as where a do we're have we business going We segments. really technologies. specific don't have that We think the Aerospace the core to nice that between But is we Right growing we a balance continue

we're going customers we're markets looking be So familiar to the at that and technologies that we know, that we with. know,

focus. current our that's So

But have expanded entire the throughout company. pretty are just that right, the And aerospace would same significantly. have we those exposure technologies the add, I we you're

in So applications they technologies. those end-markets. just happen aerospace X are to The part be of

X we technologies. why those like that's So

kind asked sort I'm on in those I'll margin me, of of Understood. And going about that's The stood ask And seeing then out the not should margins, more margins some that to If reacceleration, as point instance, doing something with in taking eventually fiscal back 'XX, I what know a lot we're Or are expansion really in markets. mitigation of we which a everything people for volume? Industrial to there one performance that this normal given Is that as of come on at out you're nature? you in assume well. that base? I more of incremental curious frankly, end see there? effectively and in environment we Or are, structural will this an volumes is costs great? cost these guess

driving morning. of you across our can lot incremental job with are still of Strategy to an well out. margins businesses. this about and I of and tools say teams effective continue we've margins. an think our We've supply costs chain, excellent It's business. The see a -- Win Win Industrial we we'll in are normal of very legacy can as continue times in doing lean Strategy said with a we'll to those expand what X.X as room that see couple it, that some some you the initiatives would acceleration. around newer the is And that talked all And has

Our of to Obin go next open, Obin, America. with We'll please next Andrew your is comes ahead. from Bank question. on question line move Andrew the

comes Jeff with Research next Partners. Our Vertical question from Sprague

Yes. know up out day calls. stacked there. I it's be might Diego, multiple busy on a people

question. next the to move We'll

We have Wells Joe O'Dea with Fargo.

Jenny, I wanted to circle back.

and months, that versus term several kind tone. broadly recent are and a distributors in the terms meetings to, bit Can that changed just tone has what understand sort of on how pointing picture elements expand near to last about with ground talking little of you about You bigger of folks on they're over little there? of maybe bit out talked a sort seeing a more trying what the thematic positive

on I but all and tone. and last in overall A would I've felt what have never tell positive distributors slowdown to negative in several talking a distributors bullish with was visiting an the orders, They've of never us. front rather of that, future. you over felt the quarters, concern

that it been positive a the almost and about lot very acceleration. seeing say in commentary about quarters was X would And usually now, return it it's would now is Not front turn of a there meeting that it has coming but see X quarters been of us. we just to I talk yet, in What December that come. on

very sentiment. positive So overall just a

walls up. on projects. of They've are them how of some these, of prep that being would with local site new call, participating national on the and CapEx some they're and we commented working some what in going are built, Some contractors plants mega

feel about really some So positive that.

again, about the good good really sentiment, future. tone So

margins. wanted I And then appreciate I also the international ask on to color.

progress you of I margins, in think commented distribution segment. North margin on about the the the side are too. ongoing pretty terms of improving those International International to margins But close America profile

think like North margin terms in look upside navigating specifically what So sort just of more about distribution if should of on does higher about the we think versus we How America? international distribution gap the International side, margins? much

distribution the sales our channel, part very slide of it's that the network from why direct Jenny through mix. are that shipments. kind been better went anywhere sort structure of of had We've -- that Todd. just value through that they XX is margin this And supportive nice XX add, is Joe, public, the to a that's of than go the the points of margin Yes.

many we're What to the that we've trying yet. was More on with increase businesses. that. think in room -- that the years grow for that not to We done well. to been on slide international do now as And is mix

be also to like that driver feel a out we that will into has future. So and margin still the room grow,

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

half think second Just I down. building. bit to Aero maybe on like margins, are synergies you're little guiding It seems flat a

your built think margins kind I wondering, historically, have of the Just through year.

half Just headwinds margins? first any about maybe versus within how thinking half Aero are second you

Yes, I would had and just in the start with, mix really first really QX favorable can and let aftermarket in We by then Todd. driven spares. half, I nice a

half, second forecasting of feel comfortable that is so that it. didn't So the it's into -- we some

That QX did were We didn't way. to one-timers obviously XX%, we margin quarter. right. great QX it guide but at feel in we out positive. that Jenny another mix was Yes. prudent is hope absolutely remains margin call there, some that

back you And numbers to, you we're there, again, at half look if just at those the guiding second go to. record are when what look I

There's that few confident. more a can So just we before see level at feel like achieve them. -- quarters to overly get like we we

backlog, at Okay, I that's think said then a it's great. you've And level. just stable the high

and around for and those we stats of at XX% seeing some that Are those given of Industrial running XX% kind levels? drawdown? you've Are backlog any kind was and same think XX% overall, Xx. I for

holding No. twice levels. is they're And seen it we've they're of at you those the in said, about what exactly what steady I mean past. just

about good a quality pushouts would really feel not I we it customers. our constantly analyze we So or the time. do you with of backlog. seeing at any we But major again, of the that checks lot and tell cancellations this

quality. it's good think of we So

America. of Our with next from question comes Bank Obin Andrew

earlier. the for apologize I confusion

does to general year, evolving? on what higher, inflation. that, pricing a what your are calendar expectations have -- question I say industrials? your for about of Any inflationary than I pricing sort about work power framework? and it your expectations pricing And we is are environment would In our Just channel just just expected. running the generally, guess think, fluid the how new suggests change

So Andrew, Jenny. is this

of of over we and couple a with pricing, times out some really early went of reminder years. inflationary Just last historical kind these often, the

power. consider at future. we are changes, that increase a our we And back see that's modest. now was And July. to it the fluid the We regular expect of just going did -- for pricing very January and that what cadence higher that's into increase any major barring just I I would we wouldn't what say

cost in And So inflationary we there's drivers to those inflationary still of aren't reverse. that going some times. are

right looking we is the continue to So tools always use but in we've pricing past. used see the we'll forward, that what now, this

just think, from $XXX Meggitt clarify, cumulative. the you've $XXX synergies. you. synergies million just to follow-up, Got And million I on a to I guess, raised

about what just pull higher you, the Meggitt has think understand clearly, So to going is $XXX because, forward? big formal Or it success should a the we million but a for framework as target is? been

Consider it $XX this pull for fiscal million We originally year. forward. a said

it's that be $XX to higher. going million Now

So we're by good 'XX. some We realizing $XXX that of FY just sooner. to the remain million a in committed We're here. position

good like Sounds news.

that last I'm being told the Diego, queue. Thanks, question in Andrew. that the was

anything will a So a little know wrap for bit I different, unless see out you early. day just there we everyone. it's up busy

Yan if our Huo, Relations; available Director and any need will do Miller, of be follow-ups. our Investor VP need you certainly, you Investor If Relations, of follow-ups, Jeff any

a we always, attention. you your Thank appreciate your support I Parker. Thanks. great day. everyone hope And as for has of And

Have great All may disconnect. that concludes And now conference. day. today's you. a parties Thank