Applied Industrial Technologies Inc (AIT) 2023 Q1 法說會逐字稿

Welcome to the Fiscal 2023 First Quarter Earnings Call for Applied Industrial Technologies. My name is Bridget, and I will be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.

歡迎參加 2023 財年第一季度應用工業技術財報電話會議。我的名字是布里奇特，今天我將擔任您的接線員。 （操作員說明）請注意，本次會議正在錄製中。

I will now turn the call over to Mr. Ryan Cieslak, Director of Investor Relations and Treasury. Ryan, you may begin.

我現在將把電話轉給投資者關係和財務總監 Ryan Cieslak 先生。瑞恩，你可以開始了。

Okay. Thanks, Bridget, and good morning to everyone on the call. This morning, we issued our earnings release and investor presentation detailing our first quarter results. Both of these documents are available in the Investor Relations section of applied.com.

好的。謝謝，布里奇特，大家早上好。今天早上，我們發布了收益報告和投資者介紹，詳細介紹了我們的第一季度業績。這兩份文件都可以在applied.com 的投資者關係部分找到。

Before we begin, just a reminder, we'll discuss our business outlook and make forward-looking statements, which are based on current expectations subject to certain risks and uncertainties, including those detailed in our SEC filings. Actual results may differ materially from these expectations. The company undertakes no obligation to update publicly or revise any forward-looking statement. In addition, the conference call will use certain non-GAAP financial measures, which are subject to qualifications referenced in those documents.

在開始之前，提醒一下，我們將討論我們的業務前景並做出前瞻性陳述，這些陳述基於當前的預期，但會受到某些風險和不確定性的影響，包括我們提交給美國證券交易委員會的文件中詳述的那些。實際結果可能與這些預期大相徑庭。公司不承擔公開更新或修改任何前瞻性陳述的義務。此外，電話會議將使用某些非公認會計原則財務措施，這些措施受這些文件中提及的資格的限制。

Our speakers today include Neil Schrimsher, Applied's President and Chief Executive Officer; and Dave Wells, our Chief Financial Officer.

我們今天的演講者包括 Applied 總裁兼首席執行官 Neil Schrimsher；和我們的首席財務官 Dave Wells。

With that, I'll turn it over to Neil.

有了這個，我會把它交給尼爾。

Thanks, Ryan, and good morning, everyone. We appreciate you joining us. I'll start today with some perspective on our first quarter results, including an update on current industry conditions and our performance as well as our expectations going forward. Dave will follow with more specific detail on the quarter's financials and provide additional color on our outlook and guidance, which we've raised this morning. And I'll then close with some final thoughts.

謝謝，瑞恩，大家早上好。我們感謝您加入我們。今天我將從對我們第一季度業績的一些看法開始，包括對當前行業狀況和我們的表現以及我們未來的預期的更新。戴夫將跟進本季度財務的更具體細節，並為我們今天早上提出的展望和指導提供更多色彩。然後我將以一些最後的想法結束。

So overall, we had a solid start to fiscal 2023. Sales, EBITDA and EPS all hit record first quarter levels, with respective growth of 19%, 34% and 45% over prior year levels. Demand remained strong during the quarter. We continue to benefit from our industry position and internal growth initiatives. This is driving new growth opportunities across both our segments.

因此，總體而言，我們在 2023 財年有一個穩健的開端。銷售額、EBITDA 和每股收益均達到第一季度的創紀錄水平，分別比去年同期增長 19%、34% 和 45%。本季度需求依然強勁。我們繼續受益於我們的行業地位和內部增長計劃。這正在推動我們兩個細分市場的新增長機會。

We're also doing an excellent job of managing inflation and controlling costs. This consistent performance is supporting robust operating leverage, helping further expand our margin profile and resulting in meaningful earnings growth despite more difficult comparisons. I want to thank our entire team for their ongoing effort and focus on optimizing and positioning Applied to achieve these results.

我們在管理通貨膨脹和控製成本方面也做得非常出色。這種一致的表現支持穩健的經營槓桿，有助於進一步擴大我們的利潤率狀況，並在比較困難的情況下實現有意義的盈利增長。我要感謝我們整個團隊的持續努力，並專注於優化和定位 Applied 以實現這些結果。

So several key points to highlight in more detail. First, as it relates to underlying demand. Customer order and spending activity remained healthy through the quarter and exceeded our initial expectations. We saw some normalization in sequential trends following robust levels in recent quarters. However, bookings and order trends remain firm and highlight a productive and steady demand environment as customers work through record backlogs, reinforce supply chains and equipment across their production base and make required maintenance and growth investments.

所以有幾個關鍵點要更詳細地強調。首先，因為它與潛在需求有關。整個季度，客戶訂單和支出活動保持健康，超出了我們最初的預期。在最近幾個季度的強勁水平之後，我們看到連續趨勢出現了一些正常化。然而，隨著客戶處理創紀錄的積壓工作，加強整個生產基地的供應鍊和設備，並進行必要的維護和增長投資，預訂和訂單趨勢依然堅挺，突顯出高效和穩定的需求環境。

Our diversified end market base is providing further support. Positive underlying demand and sales growth have continued into the early part of our fiscal second quarter, with organic sales, month-to-date in October, approximately 20% over the prior year.

我們多元化的終端市場基礎正在提供進一步的支持。積極的潛在需求和銷售增長一直持續到我們第二財季的早期，10 月至今的有機銷售額比去年同期增長了約 20%。

Within our Service Center segment, organic sales growth was above 20% for the second straight quarter. This is on top of 16% in the prior year period. So very positive trends. Segment orders and booking rates remained firm through the quarter, and we continue to see encouraging order patterns into October.

在我們的服務中心部門，有機銷售增長連續第二個季度超過 20%。這高於去年同期的 16%。所以非常積極的趨勢。整個季度的分部訂單和預訂率保持堅挺，我們繼續看到令人鼓舞的訂單模式到 10 月份。

Break-fix MRO activity remained steady at healthy levels, within most of our core end markets. In addition, we believe the level of growth sustaining across our service center network partially reflects various secular growth tailwinds and supply chain requirements facing the U.S. manufacturing sector today.

在我們的大多數核心終端市場中，故障修復 MRO 活動保持穩定在健康水平。此外，我們認為，我們服務中心網絡的持續增長水平部分反映了當今美國製造業面臨的各種長期增長順風和供應鏈要求。

Our scale, local and consistent service capabilities and technical knowledge of motion and control products and solutions are driving greater growth opportunities across both legacy and emerging end markets as these tailwinds persist.

隨著這些順風持續存在，我們的規模、本地和一致的服務能力以及運動和控制產品和解決方案的技術知識正在推動傳統和新興終端市場的更大增長機會。

We also continue to benefit from sales process initiatives and ongoing pricing actions as well as increased traction from our cross-selling efforts. Earlier this month, our broader U.S. service center leadership team gathered in Cleveland for the first time in 3 years. The excitement and energy surrounding our core business today is meaningful, and our teams are making significant progress deploying a number of strategic actions designed to further catalyze our growth and margin profile long term.

我們還將繼續受益於銷售流程舉措和持續的定價行動，以及我們的交叉銷售努力增加的吸引力。本月早些時候，我們更廣泛的美國服務中心領導團隊三年來首次聚集在克利夫蘭。今天圍繞我們核心業務的興奮和活力是有意義的，我們的團隊正在取得重大進展，部署了一些旨在進一步促進我們的長期增長和利潤狀況的戰略行動。

Sales growth also remained solid in our Engineered Solutions segment, which as indicated in our press release this morning, is the new name of our former Fluid Power & Flow Control segment. As we continue to strategically expand this segment, including the scope and capabilities of our Fluid Power, Flow Control and automation businesses, we believe the new name aligns better with our core value proposition and leading technical capabilities across these higher engineered products and solutions.

我們的工程解決方案部門的銷售增長也保持穩定，正如我們今天上午發布的新聞稿所示，這是我們以前的流體動力和流量控制部門的新名稱。隨著我們繼續戰略性地擴展這一領域，包括我們流體動力、流量控制和自動化業務的範圍和能力，我們相信新名稱更符合我們在這些更高工程產品和解決方案中的核心價值主張和領先技術能力。

These specific elements are integral to the solid growth we're seeing across the segment. Of note, Engineered Solutions segment organic sales growth of 18% accelerated from 14% last quarter. Growth in the segment continues to benefit from firm demand across longer-cycle industrial OE, off-highway mobile and process flow verticals.

這些特定元素是我們在整個細分市場看到的穩健增長不可或缺的一部分。值得注意的是，工程解決方案部門的有機銷售額增長 18%，高於上一季度的 14%。該領域的增長繼續受益於較長周期的工業 OE、非公路移動和工藝流程垂直領域的強勁需求。

Our Fluid Power team continues to see healthy demand across many of our leading Engineered Solutions, from customized manifolds and industrial power units to pneumatic automation systems and advanced solutions tied to IoT, telematics and the electrification of Fluid Power Systems. In addition, MRO activity and capital spending on process infrastructure remains positive in our core flow control end markets, with incremental support from new business tied to our customers' decarbonization efforts.

我們的流體動力團隊繼續看到我們許多領先的工程解決方案的健康需求，從定制歧管和工業動力裝置到氣動自動化系統和與物聯網、遠程信息處理和流體動力系統電氣化相關的高級解決方案。此外，在我們的核心流量控制終端市場，MRO 活動和流程基礎設施的資本支出仍然是積極的，新業務的增量支持與我們客戶的脫碳工作相關。

We also continue to see healthy order growth and backlog across our automation platform. Our automation growth strategy and value proposition is gaining further traction across the market as customers manage through structural labor constraints, and evolving production considerations in the post-pandemic industrial economy. We remain very excited about the potential of our automation platform, including an active pipeline of strategic M&A opportunities that we expect to further scale and optimize our competitive position going forward.

我們還繼續在我們的自動化平台上看到健康的訂單增長和積壓。隨著客戶通過結構性勞動力限制以及大流行後工業經濟中不斷變化的生產考慮因素進行管理，我們的自動化增長戰略和價值主張在整個市場中獲得了進一步的關注。我們仍然對我們自動化平台的潛力感到非常興奮，包括積極的戰略併購機會管道，我們預計這些機會將進一步擴大和優化我們未來的競爭地位。

Overall, the momentum sustaining across Engineered Solutions segment is encouraging, particularly when considering ongoing supply chain constraints and component delays, which are impacting the timing of system builds and shipments. Our industry position and supplier relationships provide the ability to manage through these ongoing constraints near term, and we continue to work with our suppliers to optimize component availability going forward.

總體而言，整個工程解決方案部門的勢頭令人鼓舞，特別是考慮到持續的供應鏈限制和組件延遲，這會影響系統構建和發貨的時間。我們的行業地位和供應商關係提供了在短期內克服這些持續限制的能力，我們將繼續與供應商合作，以優化未來的組件可用性。

In addition to sustained top line momentum, we had another strong quarter managing inflationary pressures through channel execution and additional countermeasures. Combined with our cost discipline and efficiency gains, we grew EBITDA nearly twice the rate of sales growth and expanded EBITDA margins year-over-year for the eighth straight quarter, while EPS grew nearly 2.5x the rate of sales during the quarter. So really solid flow-through once again with strong contribution from both segments.

除了持續的收入增長勢頭外，我們還有另一個強勁的季度通過渠道執行和額外的對策來管理通脹壓力。結合我們的成本紀律和效率提升，我們的 EBITDA 增長幾乎是銷售額增長率的兩倍，EBITDA 利潤率連續第八個季度同比增長，而本季度每股收益增長了近 2.5 倍的銷售額。因此，在這兩個部分的強大貢獻下，再次實現了真正可靠的流通。

At this time, I'll turn the call over to Dave for additional detail on our financial results and outlook.

此時，我將把電話轉給戴夫，以獲取有關我們財務業績和前景的更多詳細信息。

Thanks, Neil. First, just another reminder that our quarterly supplemental investor presentation is available on our investor site for your additional reference.

謝謝，尼爾。首先，再次提醒您，我們的投資者網站上提供了季度補充投資者演示文稿，供您參考。

I will start by reiterating Neil's comments on the solid quarter and the ongoing execution by our team. It's great to see the momentum. So now for a few more details on the quarter.

我將首先重申尼爾對穩健季度和我們團隊持續執行的評論。很高興看到勢頭。因此，現在了解有關本季度的更多詳細信息。

Consolidated sales increased 19.1% over the prior year quarter. Acquisitions contributed 20 basis points of growth, which was offset by a 50 basis point headwind from foreign currency translation. The number of selling days in the quarter was consistent year-over-year. Netting these factors, sales increased 19.4% on an organic basis.

合併銷售額比去年同期增長 19.1%。收購貢獻了 20 個基點的增長，但被外幣換算帶來的 50 個基點的逆風所抵消。本季度的銷售天數與去年同期持平。扣除這些因素後，銷售額有機增長了 19.4%。

As it relates to pricing, we estimate the contribution of product pricing on year-over-year sales growth was approximately 500 basis points in the quarter, consistent with last quarter. As a reminder, this assumption only reflects measurable top line contribution from price increases on SKUs sold in both year-over-year periods.

由於它與定價有關，我們估計本季度產品定價對同比銷售增長的貢獻約為 500 個基點，與上一季度一致。提醒一下，這一假設僅反映了兩個同比銷售的 SKU 價格上漲對收入的可衡量貢獻。

Turning now to sales performance by segment. As highlighted on Slides 6 and 7 of the presentation, sales in our Service Center segment increased 20.3% year-over-year on an organic basis when excluding the impact of foreign currency. Growth remains broad-based across our core end markets, but with strongest resumed food and beverage, mining, metals, pulp & paper, energy aggregates and lumber and wood.

現在轉向按部門劃分的銷售業績。正如演示文稿的幻燈片 6 和 7 所強調的那樣，在排除外匯影響的情況下，我們的服務中心部門的銷售額同比增長 20.3%。我們的核心終端市場的增長仍然廣泛，但食品和飲料、採礦、金屬、紙漿和造紙、能源聚集體以及木材和木材的恢復最為強勁。

Within our Engineered Solutions segment, sales increased 18.4% over the prior year quarter, with acquisitions contributing 60 basis points of growth. On an organic basis, segment sales increased 17.8% year-over-year and over 35% on a 2-year stack basis. Segment sales growth has been supported by strong order rates and backlog across our Fluid Power division, sustained customer MRO and CapEx spending in process flow infrastructure and ongoing healthy demand for our next-generation automation solutions.

在我們的工程解決方案部門，銷售額比去年同期增長 18.4%，收購貢獻了 60 個基點的增長。在有機基礎上，分部銷售額同比增長 17.8%，在 2 年堆棧基礎上增長超過 35%。我們流體動力部門的強勁訂單率和積壓訂單、持續的客戶 MRO 和工藝流程基礎設施的資本支出支出以及對我們下一代自動化解決方案的持續健康需求支持了部門銷售增長。

By end market, segment demand during the quarter was strongest within metals, mining, agriculture, chemicals, technology, food and beverage and machinery. Extended supplier lead times and inbound component delays continue to weigh on segment sales growth during the quarter, but the overall impact remains limited to date.

從終端市場來看，本季度的細分市場需求在金屬、採礦、農業、化工、技術、食品和飲料以及機械領域最為強勁。延長的供應商交貨時間和入站組件延遲繼續影響本季度的細分市場銷售增長，但迄今為止的總體影響仍然有限。

Moving to our gross margin performance. As highlighted on Page 8 of the deck, gross margin of 28.9% increased 24 basis points compared to the prior year level of 28.6%. During the quarter, we recognized LIFO expense of $9.1 million compared to $3.6 million in the prior year quarter. The net LIFO headwind had an unfavorable 52 basis point year-over-year impact on gross margins during the quarter and reflects supplier product inflation and ongoing inventory expansion year-to-date. Overall, underlying gross margin trends were in line with our expectations during the quarter.

轉向我們的毛利率表現。正如第 8 頁所強調的那樣，毛利率為 28.9%，與去年的 28.6% 相比增加了 24 個基點。在本季度，我們確認了 910 萬美元的 LIFO 費用，而去年同期為 360 萬美元。淨後進先出逆風對本季度的毛利率同比產生了不利的 52 個基點影響，並反映了供應商產品通脹和年初至今的持續庫存擴張。總體而言，本季度的潛在毛利率趨勢符合我們的預期。

Our team continues to respond well to macro inflationary dynamics, with broad-based channel execution, pricing actions and ongoing margin countermeasures. As it relates to our operating costs, selling, distribution and administrative expenses increased 11% on an organic constant currency basis compared to prior year levels. SG&A expense was 18.8% of sales during the quarter, down from 20.3% during the prior year quarter.

我們的團隊通過廣泛的渠道執行、定價行動和持續的利潤對策，繼續對宏觀通脹動態做出良好反應。由於與我們的運營成本有關，銷售、分銷和管理費用在有機不變貨幣基礎上比上一年水平增加了 11%。本季度的 SG&A 費用佔銷售額的 18.8%，低於去年同期的 20.3%。

Despite ongoing inflationary headwinds, including higher employee-related expenses, our teams are doing a great job of controlling costs in the current environment as we leverage our operational excellence initiatives, shared services model and technology investments.

儘管通貨膨脹的阻力持續存在，包括與員工相關的費用增加，但我們的團隊在當前環境下控製成本方面做得很好，因為我們利用了卓越運營計劃、共享服務模式和技術投資。

Overall, our solid sales growth, gross margin management and cost leverage drove a 34.2% increase in EBITDA over prior year levels. In addition, EBITDA margin of 11.2% increased 125 basis points compared to prior year levels. This includes an unfavorable 52 basis point year-over-year impact due to LIFO. Lastly, reported earnings per share of $1.97 was up 45% from prior year earnings per share levels.

總體而言，我們穩健的銷售增長、毛利率管理和成本槓桿推動 EBITDA 比去年同期增長 34.2%。此外，與去年同期相比，EBITDA 利潤率為 11.2%，增加了 125 個基點。這包括由於後進先出法造成的不利的 52 個基點的同比影響。最後，報告的每股收益為 1.97 美元，比上年每股收益水平增長了 45%。

Moving to our cash flow performance. Cash generated from operating activities during the first quarter was $25.9 million, while free cash flow totaled $20.4 million. As a reminder, the first quarter is typically our lowest cash generation quarter from a seasonal perspective. Ongoing demand momentum and sales mix were other influencing factors on working capital during the quarter.

轉向我們的現金流表現。第一季度經營活動產生的現金為 2590 萬美元，而自由現金流總計 2040 萬美元。提醒一下，從季節性角度來看，第一季度通常是我們現金產生量最低的季度。持續的需求勢頭和銷售組合是本季度營運資金的其他影響因素。

Looking ahead, we expect easing working capital trends as the year progresses, including some benefit from the conversion of working process, tied to our Engineered Solutions segment, as well as continued benefits from our working capital initiatives.

展望未來，我們預計隨著時間的推移，營運資金趨勢會有所緩解，包括與我們的工程解決方案部門相關的工作流程轉換帶來的一些好處，以及我們的營運資金計劃帶來的持續好處。

From a balance sheet perspective, we ended September with approximately $148 million of cash on hand and net leverage at 1.1x EBITDA, which is below the prior year level of 1.7x adjusted EBITDA. Our revolver currently has approximately $490 million of available capacity and an additional $500 million accordion option. We also have incremental capacity on our AR securitization facility and uncommitted private shelf facility.

從資產負債表的角度來看，截至 9 月份，我們手頭現金約為 1.48 億美元，淨槓桿率為 1.1 倍 EBITDA，低於去年調整後 EBITDA 的 1.7 倍。我們的左輪手槍目前有大約 4.9 億美元的可用容量和另外 5 億美元的手風琴選項。我們的 AR 證券化設施和未承諾的私人貨架設施也有增量容量。

Turning now to our outlook. As indicated in today's press release and detailed on Page 10 of our presentation, we are raising full year fiscal 2023 guidance to reflect the strong first quarter performance and increased assumptions for the first half of the year. We now project EPS in the range of $6.90 to $7.55 per share based on sales growth of 5% to 9%, including a 6% to 10% organic growth assumption as well as EBITDA margins up 10.9% to 11.2%. Previously, our guidance assumes EPS of $6.65 to $7.30 per share, sales growth of 3% to 7% and EBITDA margins up 10.8% to 11.1%.

現在轉向我們的前景。正如今天的新聞稿和我們演示文稿第 10 頁所詳述的那樣，我們正在提高 2023 財年全年指引，以反映強勁的第一季度業績和增加的上半年假設。基於 5% 至 9% 的銷售額增長，包括 6% 至 10% 的有機增長假設以及 EBITDA 利潤率增長 10.9% 至 11.2%，我們現在預計每股收益在 6.90 美元至 7.55 美元之間。此前，我們的指引假設每股收益為 6.65 美元至 7.30 美元，銷售額增長 3% 至 7%，EBITDA 利潤率增長 10.8% 至 11.1%。

Our sales outlook continues to take into consideration broader economic uncertainty as well as ongoing inflationary and supply chain pressures. We are also mindful of the potential of some moderation and normalization of order rates driven by the slower industrial activity and growth as the year continues to play out. We have incorporated these assumptions into our updated guidance, particularly within the second half of our fiscal year.

我們的銷售前景繼續考慮更廣泛的經濟不確定性以及持續的通脹和供應鏈壓力。我們還注意到，隨著今年的繼續，工業活動和增長放緩導致訂單率有所放緩和正常化的潛力。我們已將這些假設納入我們更新的指南，特別是在我們財政年度的下半年。

In addition, based on month-to-date sales trends in October and our near-term outlook, we currently project fiscal second quarter organic sales to grow by a low to mid-teen percentage over the prior year quarter. Please note that sales comparisons are more difficult as the second quarter progresses, especially as we comp against the strong sales growth we saw last December.

此外，根據 10 月份本月至今的銷售趨勢和我們的近期展望，我們目前預計第二財季有機銷售額將比去年同期低至 10% 左右。請注意，隨著第二季度的進展，銷售比較變得更加困難，特別是當我們與去年 12 月看到的強勁銷售增長相比較時。

In addition, we expect potentially more subdued scheduled maintenance activity into the seasonally slower late fall and winter months of this year as customers manage calendar year-end budget spending in an uncertain environment. Lastly, based on our low to mid-teen organic sales growth assumption, we expect second quarter gross margins to be relatively unchanged compared to first quarter levels and SG&A expense down slightly on a sequential basis.

此外，由於客戶在不確定的環境中管理日曆年末預算支出，我們預計在今年季節性較慢的秋末和冬季月份，定期維護活動可能會更加溫和。最後，基於我們的低至中青少年有機銷售增長假設，我們預計第二季度毛利率與第一季度水平相比相對不變，SG&A 費用環比略有下降。

With that, I will now turn the call back over to Neil for some final comments.

有了這個，我現在將把電話轉回給 Neil 以獲得一些最後的評論。

Thanks, Dave. So to wrap up and summarize, we feel good about the sustained momentum we are seeing in the early part of our fiscal 2023 year. The performance is providing strong evidence of the favorable position we have as structural and secular tailwinds persist across the industrial sector. From critical break-fix MRO support at a local level, to an expanding portfolio of emerging technologies and specialized engineering solutions, we believe our capabilities and strategy are significant as customers reconfigure and reinforce supply chains in support of their own growth strategies long term.

謝謝，戴夫。因此，總結一下，我們對我們在 2023 財年初期看到的持續勢頭感到滿意。由於結構性和長期的順風在整個工業領域持續存在，這一表現有力地證明了我們的有利地位。從本地層面的關鍵故障修復 MRO 支持，到不斷擴大的新興技術和專業工程解決方案組合，我們相信，隨著客戶重新配置和加強供應鏈以支持他們自己的長期增長戰略，我們的能力和戰略意義重大。

The underlying fundamental backdrop is further supported by increasing evidence of reshoring and localizing production back to North America. This is evident when considering U.S. manufacturing capacity utilization was at a 22-year high in September. At the same time, U.S. manufacturing infrastructure is aged and our customers' technical service and support requirements are increasing. We believe this backdrop could present an extended period of structurally higher break-fix MRO activity as well as ongoing investment in the refreshing and expanding industrial production infrastructure and capacity across North America.

越來越多的證據表明將生產轉移回北美並將其本地化，進一步支持了潛在的基本面背景。考慮到 9 月份美國製造業產能利用率處於 22 年來的最高水平，這一點顯而易見。與此同時，美國製造業基礎設施老化，我們客戶的技術服務和支持需求也在增加。我們認為，這種背景可能會帶來結構性更高的維修 MRO 活動以及持續投資於北美更新和擴大工業生產基礎設施和產能的持續時間。

This will require strong channel partners, with leading technical capabilities, next-generation solutions, strategic supplier relationships and industry-leading talent. Our strategy and growth initiatives are strongly aligned with these trends and requirements.

這將需要強大的渠道合作夥伴，擁有領先的技術能力、下一代解決方案、戰略供應商關係和行業領先的人才。我們的戰略和增長計劃與這些趨勢和要求高度一致。

As Dave mentioned, we remain cognizant of the uncertain economic backdrop near term, including the potential impact of higher interest rates on business investment globally. While potentially slowing demand industry-wide in coming quarters, we believe our industry position, diversified end market mix and notable self-help opportunities can continue to drive above-market growth going forward.

正如戴夫所說，我們仍然意識到短期內不確定的經濟背景，包括高利率對全球商業投資的潛在影響。儘管未來幾個季度整個行業的需求可能會放緩，但我們相信我們的行業地位、多元化的終端市場組合和顯著的自助機會可以繼續推動高於市場的增長。

In addition, as we've shown in the past, our business model and operating discipline provides the playbook and flexibility to easily adjust if need be, while simultaneously generating significant cash flow. And lastly, our balance sheet and liquidity provide strong support for ongoing organic investments and pursuit of strategic M&A opportunities in the current environment.

此外，正如我們過去所展示的，我們的業務模式和運營紀律提供了劇本和靈活性，可以在需要時輕鬆調整，同時產生大量現金流。最後，我們的資產負債表和流動性為當前環境下的持續有機投資和尋求戰略併購機會提供了強有力的支持。

So overall, it's great to see how the year started, and we remain very focused on what's ahead as we progress towards our next milestone of $5 billion in revenue and 12% EBITDA margins. Once again, we thank you for your continued support.

因此，總的來說，很高興看到這一年是如何開始的，我們仍然非常關注未來的發展，因為我們正在邁向 50 億美元的收入和 12% 的 EBITDA 利潤率的下一個里程碑。我們再次感謝您一直以來的支持。

And with that, we'll open up the lines for your questions.

有了這個，我們將為您的問題開闢道路。

(Operator Instructions) And our first question comes from the line of Chris Dankert of Loop Capital.

（操作員說明）我們的第一個問題來自 Loop Capital 的 Chris Dankert。

I guess, first off, just a very genuine congratulations to you and the whole team over there. You should be very proud of this result here. So kudos.

我想，首先，非常真誠地祝賀你和那裡的整個團隊。您應該為這裡的結果感到非常自豪。太讚了。

I guess first question, thinking about the guide, I mean, incredible 1Q from reading kind of the (inaudible) you gave on 2Q correctly, are we assuming kind of the midpoint of the guide organic growth drops to flat in the back half of the year? Am I reading that correctly? And just how do we think about how you're -- the shape of the year, I guess, baked into guidance today?

我想第一個問題，考慮指南，我的意思是，令人難以置信的 1Q 從閱讀你在 2Q 給出的那種（聽不清）正確，我們是否假設指南的中點有機增長在後半部分下降到持平年？我讀對了嗎？我們如何看待你的情況——我猜，今年的形狀已經融入了今天的指導中？

The guide at the midpoint would imply flat to up modestly second half organic growth based on that uncertainty out there. So clear vision obviously the backlog position through the second quarter. So just be prudent in terms of kind of that uncertainty that's still out there as we think about the macro and kind of that outlook for the back half of the year at this point.

基於這種不確定性，中點的指導意味著下半年有機增長將持平至適度增長。如此清晰的願景顯然是通過第二季度的積壓職位。因此，在我們考慮今年下半年的宏觀和前景時，請謹慎對待仍然存在的不確定性。

Got it. Understood. And then just to kind of move down the line a bit to SG&A and EBITDA margin, impressive execution in the first quarter here. But typically, in the past -- in the recent several years here, first quarter EBITDA margin has been kind of the lowest of the year. Is it fair to say that, again, based on guidance, we're taking kind of an inverse shape just again kind of 1Q is a high watermark given the level of growth we've seen here?

知道了。明白了。然後只是稍微降低了 SG&A 和 EBITDA 利潤率，在這裡第一季度的執行令人印象深刻。但通常，在過去 - 最近幾年，第一季度 EBITDA 利潤率一直是一年中最低的。公平地說，再次，根據指導，我們正在採取一種相反的形狀，鑑於我們在這裡看到的增長水平，1Q 又是一個高水位線？

We did suggest here, again, second quarter, consistent with the first quarter. The big factor is the LIFO headwinds continue to weigh on as you think about, once again, the random demand in this business as some of those parts hit the radar in terms of remeasurement. So we're going to see a longer tail on that, so seeing some of those economic increases come through.

我們確實在這裡再次建議第二季度，與第一季度一致。最大的因素是 LIFO 逆風繼續影響您再次考慮這項業務的隨機需求，因為其中一些部件在重新測量方面受到關注。因此，我們將看到更長的尾巴，因此看到其中一些經濟增長得以實現。

So just be cognizant of that continued LIFO headwind as we think about the guide here and how that plays out. We would expect that to ease obviously, as we move across the year. So good point a little bit of upside then as you think about from the current rates, but Q2, consistent with Q1 as we have it bad right now.

因此，當我們考慮這裡的指南以及它如何發揮作用時，請注意持續的 LIFO 逆風。隨著我們全年的發展，我們預計這種情況會明顯緩解。從目前的利率來看，這是一個很好的點，但第二季度與第一季度一致，因為我們現在的情況很糟糕。

And just a follow-up on that. I guess, forgive me if I've missed it, but is current LIFO expected to be like $20 million drag on the year right now?

只是對此的跟進。我想，如果我錯過了，請原諒我，但目前的 LIFO 預計會在今年拖累 2000 萬美元嗎？

No, it could be upwards of $30 million right now is the way we're calling it.

不，現在可能超過 3000 萬美元，這就是我們所說的。

And our next question comes from the line of David Manthey of Baird.

我們的下一個問題來自 Baird 的 David Manthey。

Thanks for renaming the Engineered Solutions segment. It will save us all a lot of trouble going forward. Dave, on your second quarter comments regarding gross margin being unchanged, I didn't catch it. Were you referring to a year-over-year or...

感謝您重命名工程解決方案部門。它將為我們所有人節省很多前進的麻煩。戴夫，關於你關於毛利率不變的第二季度評論，我沒有聽懂。你是指年復一年還是...

Potentially from Q1.

可能從第一季度開始。

Got it. Okay. And then I hate to get too granular here. You beat the Street by what looks like $0.36. I don't know exactly what your outlook was, but you raised the guide at the midpoint by $0.25. I assume we shouldn't read anything into that given the October strength. Or if you could just talk about are there any leading indicators that are more troublesome today than what you saw 75 or 80 days ago? Or am I just reading too much into that?

知道了。好的。然後我討厭在這裡太細化。您以 0.36 美元的價格擊敗了華爾街。我不確切知道您的前景如何，但您將中點的指南提高了 0.25 美元。鑑於 10 月的強勢，我認為我們不應該對此進行解讀。或者，如果您可以談談，今天有沒有比您在 75 或 80 天前看到的更麻煩的領先指標？還是我只是讀得太多了？

Yes. I would say, David, not anymore. We're just trying to be mindful of, hey, the various cross currents and things we read that our customers read as well. But our dialogue with our teams, with our customers continues to remain constructive. We're pleased with the solid start thus far in the quarter.

是的。我會說，大衛，不再是了。我們只是想注意，嘿，我們讀到的各種交叉流和我們的客戶也會讀到的東西。但我們與團隊和客戶的對話繼續保持建設性。我們對本季度迄今為止的良好開局感到滿意。

We know that the comparables get a little stronger as we go through and especially, we think back to last December. And then after that, we've got it potentially being relatively flat. As we think about broader market, is it going to slow a little bit? I think we can build the case that the general market could, but we are definitely working on how we perform above market and take advantage of our own growth initiatives, plus our position for what we feel are very unique, very strong secular trends that I don't think our business has seen or experienced quite some time or if forever.

我們知道，隨著我們的經歷，可比性會變得更強，尤其是我們回想起去年 12 月。然後在那之後，我們已經得到它可能相對平坦。當我們考慮更廣泛的市場時，它會放緩一點嗎？我認為我們可以建立一般市場可以的案例，但我們肯定正在研究我們如何超越市場並利用我們自己的增長計劃，加上我們認為非常獨特、非常強大的長期趨勢的立場，我不要認為我們的業務已經經歷了相當長的一段時間或永遠。

Yes. Okay. We do appreciate that conservatism. Here, just a couple more slide in here. So first, on the strength in off-highway mobile, you've been seeing that for some time now. Is there an infrastructure demand pull there? And are you seeing any other kind of these programmatic kind of government spending pull forward of demand in any of your business segments? And then second, Neil, just -- and then I'll hop off. Automation, can you talk about what industries you're having the most success in automation or applications?

是的。好的。我們很欣賞這種保守主義。在這裡，再放幾張幻燈片。因此，首先，就非公路移動設備的實力而言，您已經看到了一段時間。那裡有基礎設施需求拉動嗎？您是否看到任何其他類型的程序化政府支出推動您的任何業務部門的需求？然後第二個，尼爾，只是- 然後我會跳下。自動化，您能談談您在自動化或應用方面最成功的行業嗎？

Sure. So if I think about the Fluid Power and off-highway mobile, I don't think there's anything unique in driving it from general market conditions. I think we are growing in the segment as we expand our solutions and capabilities as we bring electronic controls in, as we expand the offering and capabilities that many of these mid-sized OEMs are introducing new features on their equipment and participating in a good marketplace to pull those through. So we feel like we're growing and broadening our solution set with them. And collectively, we're both doing well in the market.

當然。因此，如果我考慮流體動力和非公路移動設備，我認為在一般市場條件下推動它並沒有什麼獨特之處。我認為隨著我們在引入電子控制系統時擴展我們的解決方案和能力，隨著我們擴展這些中型 OEM 中的許多在其設備上引入新功能並參與良好市場的產品和能力，我們在該領域正在增長把這些拉過去。所以我們覺得我們正在與他們一起發展和擴大我們的解決方案集。總的來說，我們在市場上都做得很好。

And then on the automation side, it's really the full range. If I think about the cross-sell potential, given our embedded position and very important capital equipment with the service centers across those segments and whether they be food and beverage, machinery, paper, more automation solutions are coming in. We think about robotics and machine tending and how that's helped or material movement with mobile robots inside of plants and facilities. That's helping with labor bottlenecks that can exist for our customers.

然後在自動化方面，它真的是全方位的。如果我考慮交叉銷售的潛力，考慮到我們在這些領域的服務中心的嵌入位置和非常重要的資本設備，以及它們是否是食品和飲料、機械、紙張，更多的自動化解決方案正在出現。我們考慮機器人技術和機器照料以及如何幫助或在工廠和設施內使用移動機器人進行材料移動。這有助於解決我們客戶可能存在的勞動力瓶頸。

And then vision systems are really increasing output and the quality control around consumer goods and packaging and other industries. So we feel like many of these industrial segments are about 30%, 35% penetrated with automation solutions. We're not naive. It doesn't go to 100, but we feel like it materially steps up from here, and we plan to fully participate.

然後視覺系統真正增加了消費品、包裝和其他行業的產出和質量控制。因此，我們認為這些工業領域中的許多領域大約有 30%、35% 被自動化解決方案滲透。我們並不天真。它沒有達到 100，但我們覺得它從這裡實質性地提高了，我們計劃全面參與。

(Operator Instructions) Our next question comes from the line of Ken Newman of KeyBanc Capital Markets.

（操作員說明）我們的下一個問題來自 KeyBanc Capital Markets 的 Ken Newman。

Congrats on the quarter. Curious, if you could you just expand a little bit on what you're expecting in terms of industry consolidation in the back half? I'm curious how much you think or you're assuming you're going to outperform the industry?

祝賀本季度。很好奇，如果你能稍微擴展一下你對後半段行業整合的預期嗎？我很好奇你有多少想法，或者你假設你會跑贏這個行業？

Yes. So if we would look, probably for the first half, we think market conditions and industrial production could be up mid-single digit. And then as we think about the back half, there could be a potential that there's a decline of mid-single digit in that side. So that's forming some of our views on the general market conditions and the guide. But with that, we feel like we're well positioned. Our locations, our service capabilities, are broadening, expanding Engineered Solutions to perform very, very well.

是的。因此，如果我們看一下，可能是上半年，我們認為市場狀況和工業生產可能會上升中個位數。然後當我們考慮後半部分時，可能會出現中個位數下降的可能性。因此，這形成了我們對一般市場狀況和指南的一些看法。但有了這個，我們覺得我們處於有利地位。我們的位置，我們的服務能力，正在擴大，擴展工程解決方案以非常非常好地執行。

Understood. For my follow-up, there was a large acquisition announced this morning between 2 of your larger suppliers. I'm not sure if you've gotten to take a look at that, but I'm curious if you have any initial color on just how much product overlap there is between Altra and Regal Rexnord and whether we should think about this as a net positive impact for you going forward?

明白了。在我的後續行動中，今天早上你們兩家較大的供應商之間宣布了一項大型收購。我不確定您是否已經看過它，但我很好奇您是否對 Altra 和 Regal Rexnord 之間的產品重疊程度有任何初步看法，以及我們是否應該將其視為對您未來的淨積極影響？

I did get to see it come across and exchange some congratulatory notes. I mean we, obviously, know both suppliers and the businesses. I'll assume it will take a little bit of time for the regulatory review and approval, but we see it as positive. Again, strong position with both as it goes through. And I think as they take out those extended solutions, we would view that as additive. So no adverse opinion on it from our side.

我確實看到它出現並交換了一些賀詞。我的意思是，我們顯然既了解供應商，也了解企業。我認為監管審查和批准需要一點時間，但我們認為這是積極的。同樣，兩者都處於強勢地位。我認為當他們拿出那些擴展的解決方案時，我們會將其視為附加的。所以我們這邊沒有反對意見。

Okay. One more if I could just squeeze it in. And I'm sorry if I missed this, but did you quantify how much the automation business was up organically in the quarter? And curious if you could just give us an update on where run rate annualized sales are?

好的。如果我能把它擠進去，我會再做一次。如果我錯過了這個，我很抱歉，但是你量化了本季度自動化業務的有機增長嗎？並且好奇您是否可以向我們提供有關運行率年化銷售額的最新信息？

Sure. So I'd say the growth rate was similar to what we saw last quarter, kind of that mid-single digit up organically. With that, order rates and backlog did grow. So as we mentioned in the comments, that the segment has experienced some backlog or delays of certain components that have held up systems and going out. We continue to see that.

當然。所以我會說增長率與我們上個季度看到的相似，是有機增長的中個位數。因此，訂單率和積壓確實增加了。因此，正如我們在評論中提到的那樣，該細分市場經歷了一些積壓或某些組件的延遲，這些組件阻礙了系統並退出。我們繼續看到這一點。

Our September number was very strong in doing it. So our expectations are that the segment will continue to perform and perhaps outperform what will be the overall blended conditions for the business as we think about it going forward. So encourage to continue to work, and it is one that we will look at making the appropriate organic and inorganic investments to grow.

我們 9 月份的數據非常強大。因此，我們的預期是，該部門將繼續表現出色，並且可能會在我們考慮未來的情況下超越業務的整體混合條件。因此，鼓勵繼續工作，我們將著眼於進行適當的有機和無機投資以實現增長。

But even with that, still up north of $150 million in terms of annualized run rate at this point, Ken.

但即便如此，Ken 的年化運行率仍超過 1.5 億美元。

Understood. And then is there -- sorry, maybe just the M&A pipeline within that business. I know you talked positively about it being active. Any color there? And how do you think about capital deployment amid higher macro uncertainty?

明白了。然後是那裡 - 對不起，也許只是該業務中的併購渠道。我知道你積極談論它是活躍的。那裡有顏色嗎？在宏觀不確定性較高的情況下，您如何看待資本配置？

Yes. So overall, I mean, obviously, we're continuing to do a nice job with our financial position and our priorities remain where we can make organic investments in the business. We (inaudible) do the M&A acquisitions or opportunities that we have. And in these times, we're busy to our priorities that we've talked about in the past. So those would remain -- are big ones. And then obviously, we're still always be committed to the dividend, and then share repurchase will be a view more opportunistically to look.

是的。所以總的來說，我的意思是，很明顯，我們的財務狀況繼續做得很好，我們的優先事項仍然是我們可以對業務進行有機投資的地方。我們（聽不清）進行我們擁有的併購或機會。在這些時候，我們忙於我們過去討論過的優先事項。所以那些將保留 - 是大的。然後很明顯，我們仍然始終致力於分紅，然後股票回購將是一個更機會主義的觀點。

And we do have a follow-up question from the line of David Manthey of Baird.

我們確實有來自 Baird 的 David Manthey 的後續問題。

Yes, a quick follow-up here. Could you remind us the differences of the company in terms of mix and business in general relative to 2015 and 2016? We saw a retrench in IP of about mid-single-digit amount back then. And of course, that was accompanied by oil rolling over hard in '14 and '15. But could you just remind us the key differences of the business make up today versus back?

是的，這裡有一個快速跟進。您能否提醒我們公司在組合和業務方面相對於 2015 年和 2016 年的總體差異？當時，我們看到 IP 的縮減幅度約為中個位數。當然，這伴隨著 14 和 15 年的石油翻滾。但是您能否提醒我們今天的業務構成與過去的主要區別？

Yes. So I don't have it all compared to that. But against that time, David, we've clearly grown Fluid Power, Flow Control and now automation on the side. So as Engineered Solutions approaches 30%, 33% of the business, we expect in time we look down the road, the company mix could be -- would be 60 to 40 and perhaps even further out 50-50, with a strong focus on growing both.

是的。因此，與此相比，我沒有這一切。但在那個時候，大衛，我們顯然已經發展了流體動力、流量控制和現在的自動化。因此，隨著工程解決方案接近 30%、33% 的業務，我們預計，隨著時間的推移，我們展望未來，公司組合可能會是 60 到 40，甚至可能進一步超過 50-50，重點關注兩者都在增長。

I've been very impressed with service center performance in the time and media of those secular trends benefiting. So in that time period, we think we had managed decrementals well then, and we're continuing to demonstrate that capability if we have that tight pullback that we can manage decrementals just like we've expanded our incrementals going forward.

我對服務中心在時間和媒體中受益的長期趨勢的表現印象深刻。因此，在那個時間段內，我們認為我們當時已經很好地管理了遞減量，如果我們有緊縮的回調，我們將繼續展示這種能力，我們可以管理遞減量，就像我們向前擴展我們的增量一樣。

And certainly much less oil and gas exposure, double digits at that time, David, kind of less than 4% now at this point.

當然，石油和天然氣的風險敞口要少得多，當時是兩位數，大衛，現在還不到 4%。

I just would add to the exposure that we have around areas like food and beverage, aggregates, a greater exposure there today as well as the category that we talk about around general industry, I think, as you know, that captured I think that's 4% or less of the business and a much larger percentage of the business today than in prior cycles as well. So the diversification of the end markets is a notable element of apply say, certainly relative to prior cycles.

我只是想增加我們在食品和飲料等領域的曝光率，聚合體，今天更大的曝光率以及我們圍繞一般行業談論的類別，我認為，如你所知，我認為這是 4 % 或更少的業務，而今天的業務百分比也比以前的周期大得多。因此，終端市場的多樣化是應用的一個顯著因素，當然相對於之前的周期而言。

At this time, I'm showing we have no further questions. I will now turn the call over to Mr. Schrimsher for any closing remarks.

在這個時候，我表明我們沒有進一步的問題。我現在將把電話轉給 Schrimsher 先生，請他做最後的發言。

I simply want to thank everyone for joining us today, and we look forward to seeing many of you throughout the quarter. Thank you.

我只想感謝大家今天加入我們，我們期待在整個季度見到你們中的許多人。謝謝你。

Thank you, ladies and gentlemen. That concludes today's conference. Thank you for participating. You may now disconnect.

謝謝你們，女士們，先生們。今天的會議到此結束。感謝您的參與。您現在可以斷開連接。