Q1 2023 Ingersoll Rand Inc Earnings Call
With <unk> technology, which we now have expanded and scale across the entire P&C segment the.
The second lever with combined <unk> familiar with Ingersoll Rand existing channel knowledge to access lithium ion battery customers.
And we were able to bring a mission critical product to market in less than nine months.
While expanding our addressable market by over $250 million.
Finally, we have also integrated <unk> pump and compressor technology to accelerate accelerate product differentiation within the marketplace Michael.
By combining an air compressor recip ex progressive cavity pump. This patented technology enables our customers to better transferred materials with control airflow and improved energy efficiency.
As we move to slide seven M&A continues to be at the forefront of our capital allocation strategy.
We're pleased to highlight one closed transaction in one signed M&A deal.
These acquisitions are both market, leading products and technologies, while accelerating our addressable market with close adjacencies.
Let me walk you through these two deals first trades analytics, which is a leading provider of lab based testing and sampling for compressed air technologies.
This acquisition has strong recurring revenue and air purity and quality across attractive markets, such as life Sciences, food and beverage and pharmaceutical.
Next is galloping vacuum, which.
Which is a well established oil free vacuum pump manufacturer that expand our product portfolio in a very attractive and growing sustainable end markets across Asia Pacific.
Our M&A funnel remains very strong and as of today. It continues to be over five times larger than it was at the time of the RMT.
We currently have five transactions at the annualized stage and more importantly, we have several other transactions in process, which are close to the LOI stage.
Based on acquisitions today, the five transactions under LOI and our current M&A funnel, we are reaffirming our commitment to additional $200 million to $300 million in annualized inorganic revenue to be acquired in 2023.
Moving to slide eight while our results have been strong and we continue to see orders and backlog growth. We do acknowledge that the market is in a state of constant change and we need to remain agile and nimble in order to respond.
Over the past few years, we have transformed our portfolio to be more resilient than ever.
We have a large recurring and highly profitable aftermarket business that accounts for approximately 35% of our total revenue while growing at double digits.
In addition, we have divested almost $2 billion of highly cyclical assets in club car and high pressure solutions and in turn reinvest that into acquisitions that are better aligned in high growth sustainable end markets.
We believe that this along with a differentiated long cycle and better geographically balanced portfolio will ensure it.
Performance in the next slowdown.
We also have a proven track record of performance for example in 2020 during the global pandemic, we were able to expand adjusted EBITDA margins by 190 basis points year over year.
As you recall during the pandemic, we immediately deployed in merger related synergies to ensure we were out in front and controlling cost pretty quickly.
Also in 2019, the legacy Gardner Denver Industrial segment deliver 70 basis points of adjusted EBITDA margin expansion and grew adjusted EBITDA, 3% Inspite of revenue declining 3% organically year over year.
We're constantly monitoring for early indicators of an economic slowdown and we remain nimble and ready to act in the event that market start to soften.
We have highlighted in past earnings call, how we are able to pivot our demand generation activities towards market.
That are still growing and.
With an addressable market of over $45 billion. We believe that there is still plenty of room to take market share.
In addition, we have multiple levers to manage adjusted EPS as seen at the bottom right hand side of this slide.
On slide nine our commitment to become a market leader in ESG continues and we're very excited to continue receiving positive feedback from the rating agencies on our efforts in <unk>.
April Ingersoll Rand received an ESG risk rating of loan.
With a score of $12 eight from Morningstar just analytics.
These rating ranks second.
Second in the machinery industry group and places Ingersoll Rand in the first percentile in the machinery industry and sixth percentile of all rated companies.
This is a perfect example of how we utilize <unk> for agile execution across all aspects of our business.
In this case, we use our own execution process to grow for a medium risk to low risk.
And are now in the top percentile in the industry and regionally.
I will turn the presentation over to Vic to provide an update on our Q1 financial performance.
Thanks for centered on slide 10, despite the ongoing macroeconomic uncertainty we delivered solid results in Q1 through a balance of commercial and operational execution fueled by IRS.
Total company organic orders and revenue increased 8% and 20% year over year, respectively.
Book to Bill was 1.09, and we remain encouraged by the strength of our backlog, which is up approximately 15% year over year and up approximately 10% sequentially.
This provides a healthy backlog as we move into Q2 2023 and gives us conviction in delivering on our revised 2023 revenue guidance.
The company delivered first quarter, adjusted EBITDA of $400 million.
A 32% year over year improvement in adjusted EBITDA margins of 24, 6% to 190 basis points year over year improvement.
For the quarter adjusted diluted earnings per share was up 33% versus the prior year. This includes a <unk> <unk> headwind from increased interest expense.
Free cash flow for the quarter was $148 million, despite ongoing headwinds from inventory due to the need to support backlog as well as continued global supply chain challenges.
Even with these headwinds free cash flow was up more than 350% versus prior year.
Total liquidity of $2 2 billion at quarter end was down approximately $500 million sequentially.
And our net leverage continues to remain near all time lows at one one turns we are <unk>, one turns better than the prior year and <unk> three turns above prior quarter.
The sequential decline in total liquidity an increase in net leverage are largely driven by the timing of the SPX flow air treatment acquisition, which closed in early January .
Turning to slide 11 for the total company Q1 orders grew 13% and revenue increased 26% both on an FX adjusted basis.
Total company adjusted EBITDA increased 32% from the prior year.
The Ats segment margin increased 240 basis points, while the PSG segment margin improved 170 basis points.
Notably both segments remained price cost dollar and margin positive, which speaks to the nimble actions our teams despite persistent inflationary headwinds.
Corporate costs came in at $40 million for the quarter, driven by continued investments as well as the impact of incentive compensation adjustments.
Finally, adjusted diluted earnings per share for the quarter was up 33% to 65 per share and the adjusted tax rate for the quarter was 22, 1%.
Moving onto the next slide I want to highlight that our credit rating was recently upgraded to an investment grade rating by S&P.
This is a major milestone for the company and we remain focused on becoming investment grade across all of our rating agencies.
Free cash flow for the quarter was $148 million, including Capex, which totaled $22 million.
And as of March 31, 2023.
Total company liquidity was $2 $2 billion based on approximately $1 1 billion of cash and $1 $1 billion of availability on our revolving credit facility.
It is important to note that in April we amended and extended our existing revolving credit facility, including upsizing. The overall borrowing capacity of the facility from $1 1 billion to $2 billion.
This amended credit facility not only strengthens our balance sheet, but also supports the company's growth strategy by adding additional flexibility for M&A.
The increase also speaks to the credibility we have in the financial markets. As this was purely an increase in borrowing capacity with all the same favorable covenants and structure from the original $1 $1 billion facility.
Leverage for the quarter was $1, one turns which was <unk>, one turn improvement year over year and.
And cash outflows for the quarter included $566 million deployed to M&A, and we returned $85 million to shareholders through $77 million in share repurchases and $8 million in dividends as mentioned earlier approximately $520 million of the M&A related cash outflows were attributed to the SPX flow air treatment.
<unk>, which closed in early January .
M&A remains our top priority of our capital allocation and we continue to expect M&A to be our primary usage of cash looking forward.
I will now turn the call back to the center to discuss our segments.
Thanks, Rick on Slide 13, our industrial technologies and service segment delivered strong year over year organic revenue growth of 24% with volume growth outpacing pricing.
Adjusted EBITDA increased 40% year over year with an adjusted EBITDA margin of 26, 2% up 240 basis points from prior year with an incremental margin of 35%.
We continue to see solid demand for our products with organic orders up 10% and a book to bill of one one.
And note that on a two year stack the Ips segment organic orders grew more than 35%.
Moving to the individual product categories each of the figures.
Excluding the negative impact of FX.
Which year over year was a four percentage point headwind across the total segment on both orders and revenue.
Starting with compressors, we saw orders up in the low 20% and.
And we continue to see oil free products outpace oil and lubricant products.
The right portfolio Brian .
Dear utilizing technology, we have partner with a team take even the waiter to deploy a new system for industrial point source C O two capture.
The first units are being commission and monitor in the U S. And will include four Ingersoll Rand products image model.
Turn it cause like 14 revenue in the precision in science technology segment grew 6% organically.
Additionally, the PSD deliver adjusted EBITDA of $95 million, which was up 11% year over year with incremental margins of 64 per cent.
I just did EBITDA margin was 33% off of 170 basis point year over year Ah margins, where obsequence really from Q4 of 2022.
The year over year and sequential improvement in our adjusted EBITDA margins.
Or even primarily by price cost improvements and synergy than memory on acquired businesses like zippy.
Organic orders went down 2% year over year with a book the bill of 1.5.
Across a b at the segment, we did see strong organic order growth from all businesses with.
With the exception of the oxygen concentration business, which declined approximately $25 million, primarily due to non cycle frame orders, receiving Q1 2022 that they know repeating Q1 23.
Excluding the Nonrepeating oxygen concentration business owners Phds Thigpen group mid single digits organically.
R. B F think innovation in action, we're highlighting our new civics battery fluid pump.
Here is a perfect example of how we leverage our recent acquisitions and assistant portfolio to drive product differentiation and organic growth and sustainable and markets.
As I mentioned earlier, we combined sleep as technology with Ingersoll Rand existence channel knowledge to access these high growth lithium ion battery customers.
The unique progressive cabinet to be fine ensures zero contamination, which is mission critical to the production of precise hi period the coatings.
Virgin I, our eggs, we brought these new product to market in less than nine months and.
And expanded our addressable market by over $250 million.
As we move to slide 15, given the solid performance in Q1 Ah momentum from backlog, we're raising our 2023 guidance.
Oh company revenue is expected to grow overall between 10% and 12%.
Which is a 300 basis point improvement versus our initial guy them.
We anticipate organic growth of six to eight per cent were price and volume remains split at Berkman 70 30 per cent.
Ethics is now expect it to be relatively flat for the full year.
[noise] Mana remains projected on approximately $270 million, which reflects all completed and clothes M&A transactions as of May 1st of 2023.
Corporate caused our plan at $160 million and will be incurred evenly per quarter throughout the year.
They increase versus initial guidance is driven by investments for growth as well as the impact of incentive compensation adjustments.
Total adjusted EBITDA for the companies expect it to be in the range of $1.66 billion and $1.71 billion, which is at 5% versus our initial guidance.
At the bottom of the table adjusted EPS is projected to be within the range of $2.64 and $2.74, which is up 6% versus private items and 14% year over year at the midpoint.
No changes have been made to our guidance on the adjusted tax rate total interest expense or capex spending as a percentage of revenue all remain in line with initial guy them.
However, I don't want to provide an update on a recent development that affects the facing of the guidance.
Late in the evening on Thursday April 27th we detected I'm took action to contain a cyber security incident that resulted in a disruption of several of our I T system.
We immediately partner with external experts to assess mitigate and restored this system.
Hello, we proactively to immediate actions to maintain business continues to minimise disruption by isolating circle systems and implementing work Arounds.
We expect to begin restoring the impacted systems to normal operations next week.
We do not expect this incident to impact the full year guidance. We just provided on this flight.
Although it could result in some revenue shifting from our second quarter to the second half of 2023 and.
In fact, as a matter of courtesy we have kept the facing of adjusted EBITDA delivery between the first half of the year and the second half of the year consistent with our original expectations.
These will imply delivering approximately 45% of our adjusted EBITDA in the first half of the year I'm, 55% in the second half.
Which generally means that the balance of our adjusted EBITDA guidance raised in addition to the Q1 outperformance will fall into the second half of the year.
It is important to note also that'd be underlined amount environment remains healthy and in line with our expectations.
And while our investigation is ongoing at this time or not aware that any confidential customer information was exfiltrate it.
We become aware that any such information was it'll exfiltrate. It we will make appropriate notifications, we remain fully committed to our customers as we diligently work to resolve the issue and restored normal operations in a safe and secure manner.
I'm sharing these with you today as part of our commitment to transparency and because they seem to him is still under investigation I cannot provide further details at this time.
Three inches by 16, as we wrap up today's call I want to reiterate that initial run remains in a strong position.
We continue to deliberate record results on our update again is reflective of our queue, one performance and ongoing backlog of momentum.
We are monitoring the dynamic market conditions and remain very nimble and we're prepared for the challenges that may chrome.
To our employees I want to thank you again for an excellent start to the year.
These are sold show the impact each of you have as owners.
However, we are still in the early stages and need to remain focused on our commitment to meeting our financial targets.
And executing our economic growth engine through the use of Iras.
Thank you for your hard work resiliency and full connections.
As we are continuing our track record of market performance, our balance sheet is stronger now more than ever and with our discipline and comprehensive capital allocation strategy, we remain resilient and have the capacity to deploy capital to investments with the highest return.
With that I'll turn the call back to the operator and open up for CUNY.
Thank you.
If you'd like to ask a question. Please press one on your telephone keypad.
Like to withdraw your question if you stop <unk> as a reminder.
<unk> <unk> <unk>.
Last question comes from the line <unk>, Colorado.
Bad bad.
Please go ahead.
Good morning, everyone, who both as well.
So can you can you just help provide some more context on on on that.
<unk> comments about.
The kittens and changing so I guess twofold right I certainly understand the 45 55 per cent splits one age groups to age any help on this segment details and then when you think about what the underlying demand would look like is there any fun half backcast underlying demand cadency medicine, which shows up in the.
Revenue, but are you assuming anything.
Basically how are you assuming the underlying demand kittens.
Back out to you.
Yeah, Hey, Mike Let me, let me take a I'll take the first or the second portion of our under the the online and then they will pick up on the Kid and because you were asking I mean, the man continues to be pretty healthy Ah and we expect you saw a book to build above one here in in in the first quarter.
Which it speaks to the resiliency of what we're seeing out there in the market on kind of both book concern as well as long cycled orders.
Our expectation is Ah here for the rest of the year, we're going to we're going to continue to and with a book to Bill of one, which obviously assumes that the backlog continues to be pretty strong here through the the rest of the year.
Yeah and my to your first question in terms of Ah phase in and the the segment implications as of Sunday indicated we're expecting that whether you look from a total company perspective at our adjusted EBITDA or adjusted earnings per share using about a 45 55 first half for second half split is is is generally in line and I would.
Say the segment should follow a fairly close close split to that.
Same should be said for corporate which the corporate spend obviously is pretty radical over the year in line with our revised guidance. So I wouldn't say that there's dramatic changes in the context of the segments versus the the the total company and then you know as we've indicated before and I think it's still the case.
We're continuing to remain prudent in terms of the back half of the year, particularly on the organic volume side of the equation just given that you know you still don't necessarily have full visibility into the back half of the year.
Thanks for that Vick and then Saturday following up on the the first answer there could you maybe get some context of how the belong cycled trends of tracking the portfolio relative to.
Yeah. Some of the shorter quick return stuff is tracking the portfolio.
Yeah sure Mike you know I think the good news is that here in the first quarter, we actually saw good resilience, both kind of a short cycle and a long cycle. When she was very good news to us to see that continue momentum a boat, which is also the reason why on that shorter cycle, where we were able to even out deliver.
Some of the price right. So in terms of the motorcycle Ah Ah you know, we we think that the tailwinds of sustainability onshoring all of that continues to be really front and center and at least our expectation is that even things like iras the inflation reduction act all that funding.
Still have to come through we're seeing some early indications funnels, Luke Luke very strong and so also a load of communication activity around carbon capture.
So at least on a on a motorcycle side, we think that there there should be more to come from that perspective, well you know the short cycle. It seems to be a lifting arcades in in our business fairly healthy.
Gentlemen, really appreciate it.
Thank you Mike Nice bike.
Thank you next question comes from the nine a cute name Mitchell. Okay. Your line for my son. Please go ahead.
Oh, Yes, hi, good morning, maybe a first question if you could just size the the the <unk>.
Log in dollar terms at the end of March I saw you gave so the the percentage delta's, but maybe just give us a sense of the scale of the backlog.
And then there's been thinking about the cadence through the year are we assuming revenues are sort of laptop slightly sequentially each cool water and.
EBITDA margins up slightly sequentially, each cool too it's that time of the main framework to the guidance.
Yeah, maybe a Julia I'll talk about it on the on the on the backlog the backlog as you recall the last earnings call. We said that we have roughly $2 billion a backlog and that's a question that I have grown in about 10%. So I mean that can decide that right. There you can see [laughter].
Very simple math, so clearly above about $2.2 billion right.
[noise] baking mcadams, yeah, Julian on the cadence generally speaking I would say, we expect you know again I'll I'll refer back to the 45 55 splits.
The Sunday indicated we do see you know potential some revenues shifting from Q2 into the back half of the year as of Sunday earlier indicated, but generally speaking here. The way we would think about it is Ah you know with the guy with the guidance raised a strong Q1 performance and still a C N 35.
40% Incrementals, we do still expect to see margin expansion on a year over year basis in each quarter and obviously the second half of the year will you know as a typically is continue to be the strongest performance both on the revenue side as well as the margin profile.
Next question comes from the line Okay.
Josh.
Oh.
Morgan Stanley Your <unk>. Please go ahead.
Good morning, guys. This is Brandon on for Josh.
How much of the order of strength.
Was driven by particular it'd be inflection in process market.
And then as a follow up on that when would you put essentially see some of these major LNG and hydrogen projects that are being discussed.
Showing up near the pipeline.
Maybe Ah Ah Ah Ah Brandon.
On the on the orders [noise] as we said I mean, I think good good momentum good strength on both.
Kind of a short cycle on a long cycle, if if I get your question correctly I think you were asking about maybe how much was price versus volume.
Yeah exactly.
Yeah. So I think in the in the first in the first quarter price and volume is roughly 50 50.
As we go into the into the second into the rest of the year. We think is going to be more like 70, 30, and so that kind of give you an indication of all kind of how we're thinking about price price volume here.
In terms of the second question about LNG hydrogen are we seeing I mean, we're seeing definitely some clearly on the long cycle I would say maybe more continuation what we see the most is on air separation systems, and and large call. It a carbon capture activity.
So I think I think a lot of good momentum on these kind of good sustainability tailwinds that we have been speaking about for now the past few quarters and so again funneled continued to be pretty strong and and you know what like I said on the on the prior answer I don't think that we have seen the full scope of a lot of.
These iras or other green deal funds come through fruition, yet so that hopefully will give us a good indicator of that more and let it be more tailwind years ago.
You got it very helpful.
Thanks.
Thank you.
Our next question comes from the nine Oh Wow.
Why is that okay.
Okay, I just reset your line.
Go ahead.
Thank you I wanted to ask I mean, obviously Ics compressor orders are very strong and you've touched on a couple of aspects, but would you call. It heatedly talking about what is driving that order strength I know you have your oil free I know you've done a lot on.
And the reason.
Is this mega projects coming through.
C as it just <unk>.
General Capex renewal.
Eliminating the economy and you're seeing really strong order. So I'm just wondering if you could do you have any color around that.
Yeah.
[laughter], alright cause I do but I mean.
Pretty much of a really broad base and and I think it has to do for a couple of reasons I mean, clearly you mentioned in oil freeholder free strong order radar roughly as we said, 28%. So clearly very very strong odor and on a revenue perspective, even way above that.
But the mind generation as we clearly indicated on that slide I mean, we do have hundreds of demand generation campaigns and activities through throughout.
A quarter and you saw some example of somebody like things that we have dawn.
In the in the in the in the first quarter with kind of six example, six out of 100 that we do so that tells you that you know in our view, we continued to be solid momentum on M. Ql's the marketing qualify leads of them lead into.
Some of these auto momentum.
As it relates to two large projects I mean, clearly renewable natural gas, which is very continues to be a really great sustainable way.
Here in the U S, particularly.
Carbon capture we spoke about that on the on the prior earnings to as well with a large order, though we received the last time on the last earnings call, but now even this time.
Or even capturing some of these kind of new new technologies or new partners to continue accelerating carbon capture technology. So.
Really a little bit of everything stromboli concern as well and good pricing momentum. So, let's say, Rob I mean, we did a phenomenal job hidden across all aspects of the business.
Okay. Thank you and if I may do another one that's a little bit less directly quarterly related but.
The battery fluid pump you have on slide 14, Seatbacks nine months from start to finish on television.
I mean, that's fast even knowing how fast you guys move I Wonder if you could give us a quick sketch with just how that looks start to finish and how you how that process runs and how it goes so fast. Thank you all sounds like.
Yeah. Thanks, Thanks for that question I I tell you. This is the be exciting piece.
Speaks a tremendous me through a lot of the things that we've been saying in the past and this is just a clear example of that and that is that we're thinking basically product got ours call. It you could argue.
And their products and then we point demand generation cannon to specific and market that we're seeing some very good growth momentum and then we were able to attract customers to then work on various specific specific solutions and in this case, we took a configure I mean.
Items and components of standup products, and we were able to reconfigure that pretty quickly based on the request.
And from some customer I'm doing a lot of voice of customer and going to customer visits. So I think it speaks to to the process that.
That holistically connecting older adults from how we how we connect with the customer how we how we generate that the man how we used to get our customers to come to us to utilize the and processes then like I T V. They innovate to value process that we have internally.
<unk> really signed the product and then utilize all the other IBM impact any management, which is part of the area of irag to them execute.
Prairie rapid way in front of me all along the lines by making sure that we're satisfying that that customer.
<unk> need that is today in the market. So I think he is a is a beautiful example of how we have been able to connect all the dots and obviously many of these are happening throughout the entire company today, but this is just one that we thought it was great to highlight again new acquisition, but it's big tremendously about how quickly we can't continue to change.
The cultural perspective, even on new emanate.
Thank you.
Keep our next question comes from the company.
Okay.
My last.
Nine six go ahead.
Hey, good morning, everyone.
Miranda.
[noise] Sunday, the last couple of quarters and P. S. T. The average I think something like 70% Incrementals you, obviously gave us an update on the scitex improvement, which led imagine as a decent tailwind you imagine comparison is again I think pretty easy and Q2, but is there anything else going on within P. S. T. In particular that you're doing a really ratchet up performance I would assume.
Vice constants, helping and I remember some acute supply chain issues earlier last year, but you know maybe you could elaborate on what you're doing there.
Yeah, I think definitely price cost is definitely helping and as you also alluded to continue acceleration of of the M&A bolt on acquisitions that we have Don that's helping to as well typically being one, but even I point out to someone like Adi Air dimensions, which again, we acquired that.
At 50% EBITDA margins until the it's above kind of call at 60. So again, it's a combination of a lot of the things that we have put in action. So so yeah. Good good good price cost good synergy execution and and the teams.
As we have said before where where it literally delayed on getting things like I to be in place P. S. T D. But that is now ramping up and that's why we get the.
The excitement that there should be more to come here.
Maybe you can give us some more color into the M&A environment. Your final still seem significant as you said you reiterated the $200 million to $200 million inorganic Tigers between two but you mentioned you had decided otherwise left I think you're at 11 less quarter. Now you said you had several potential targets closely otherwise state. So is it really just timing you know Lord there.
Few in near term opportunities than usual.
Sure Yeah, I I think he sort of very well so.
Five allies, now, which is obviously it depends on what we said.
<unk> cause I mean, we we we are closed so we parked upfront.
But I think the good news is that we still have a good handful of those at the at the stage that is right before signing their lives. So.
That's why it continues to give us confidence that we will be able to reach the target, though we said and nothing that were worry about that in terms of the Ah. The activity. We continue to see strong momentum activity out in the market again.
Has to do it because of a lot of the the the self searching that we do in terms of finding good transactions that could be part of our company.
So so I think a momentum continues to be pre.
Pretty good on that M&A bolt on a strategy that we have.
[noise] appreciate it.
Thank you I mean.
Thank you next question comes from the line with Kathleen.
Alright, thank God.
Thank you good morning, everyone 1919 year, and sorry to hear about the cyber issues.
The maybe.
Just trying to square that some of the commentary on on.
Cyber security stuff.
To appreciate the caller that you gave earlier.
Just trying to size like the like sales and EBITDA impact and who knows whether my number right, but my my ballpark numbers were you know.
Call it like roughly $30 million to $50 million EBITDA impact. So I don't know maybe $100 million to $150 million revenue like.
[noise] ballpark.
Correct and and how much is shifting away from <unk>.
I think I think Julia are definitely on the high side on that on that perspective, I think if you do the math in terms of about 45 55.
You come with a much lower number I mean, roughly half of what you just said.
Okay Alright.
Well, thanks for clarifying and then and then I.
I guess, maybe the Sunday just.
Is there any concern that that that some of the sales you were expected to ship in.
<unk> pushed out is there any concern that that that does sales go away already have a high degree of confidence that you'll be able to be <expletive> chip in the second half.
Yeah sure I think none of these blowing because keep in mind that we are still living in a long long the time environment. So so I think maybe he didn't you know kind of a couple of a few weeks of Israeli time isn't going to create any impact on what we have in the backlog that.
So so I don't think I don't think you know the answer to that no and keep your mind that this is not.
This incident did not disrupt the majority of the company right. So.
Is is one that we think we have pretty good control sized and and working diligently to get back in normal operations you know a four by next week.
In the meantime, also as we said you know our team continues to minimize the disruption by by implementing work Arounds. So there's.
There's ways on how you can continue to support customer and with with different work around that you can do locally up some of the sites.
Alright, great. That's that's that's great to hear and what you gave a lot of a really positive order data across across your different businesses I guess [laughter].
I'll be the one that asked about power tools, it's really nice to see that [laughter].
A little surprising honestly.
Maybe maybe just kind of provide a little bit more color on what you're seeing in that business.
Yeah, I think I think for the question I'm sure. The team are the parts of the team will be glad to hear that you're asking a question about those you know.
I I can tell you that the team has done a phenomenal job on new product development Ah So believe it or not similar to the story than we talked about here on <unk> on kind of how we got the short lived.
<unk>, and then launching new product and audience solutions the power.
Powerful team has gone just a phenomenal job on bad kind of reinvigorating the line and re reinvigorating the channel Ah Andrey reinvigorating customers to comfortable so so I think it's been an innovation story.
And is basically what we said all along but first we need to fix the cost situation and then we're going to start accelerating investments to keep the business growing and and with the help of by our ex we've been able to accomplish the first step which was fixing that a lot of the cost although compared to to see improvement on bad and then move pretty quickly to innovation and that's what the team is doing I mean, they're they're they're.
[noise] doing a lot of good nice products Ah and munching mounting the market.
Okay, great. Thanks, guys.
So.
Thank you on that.
Question comes from the line of <unk> 959. Please go ahead.
Hi, good morning, Thanks for taking my questions [laughter], good morning, or an I.
I wanted to start on the updated guide and and back half of the year expectations. I think you know going back a few months ago talked about embedding. Some prudence at the time, just based on sort of macaroni certainty sounds like a continuation of that.
But the way things sort of transpired over the course of the quarter you know certainly evidence pretty strong demand. So if you take the cyber item aside.
I think you talked about you know still seeing some are still sort of applying some prudence to the guy but.
Anything changed in your underlying backend of for your guide relative to sort of three months ago.
Yeah, Joe I'll I'll start with that I think obviously when you look at the at the at the it'd be revised guidance you know now with the mid 0.7% organic guide versus our previous guidance, which is about 4% of the mid point 300 basis points of improvement and I think the way you can think about it and just broad strokes isn't it.
Two thirds of that is driven by the by the Q1 beat with the other third really coming in the back half of the year. So the answer is yes, we are actually seeing you know.
Slightly better second half growth than than our original guidance would have applied and as the Saturday indicated in his opening comments were still seen a split up you know approximately 70 30 price versus volume and I think we would also say that at this point in time, we're still continuing to take a prudent view on volume in the back half.
Half of the year still continues to probably be the biggest source of potential upside backlogs.
Backlogs are still strong, but like I said before still don't necessarily have folders ability off the back half of the year. So we're going to continue to execute and if that continues to be a source of upside.
And it will execute them.
Thank you and then I also wanted to ask on cost opportunities and as you see sort of raw materials coming down and supply chain and seeing how you're approaching that in terms of the cost of opportunity set and going out to suppliers whether or not.
And that you've seen applied.
Apply to you on the sort of the the sourcing side of things you you've got some opportunities to push back on that and then similarly.
Are you seeing any of that from from your customers and and any sort of more more active kind of negotiations on on the pricing side.
Yeah, I don't think.
Thanks for the question.
The cost of opportunity absolutely we see.
We see a lot of cost opportunity and as you can imagine we're leveraging some of our I R X tool to drive it weekly kittens on how we go after we call it price Clawback.
Which is kind of looking at 2019 prices from you know some of our suppliers on how how do we want to get as much as possible as we see some deflationary market happened in some in some in some areas and I will say two as well that there are some areas that we see some continuing price inflation.
And and reason why we continue to do some some pricing activity out in the market. So so there is not a a button that we see stability may be going down onto your point absolutely. You can expect I mean, we started this process I would say maybe a couple of quarters ago going back to suppliers I started doing a lot of what we call a reverse auctions.
Through our process in terms of our customers are things are slightly different because as you know our customers. They don't buy our product basically every week or every month or thereby compressor today, they're not gonna buy a compressor until a few years later on the road and in many cases is configured to this specific orders. So so it's difficult to compare.
Price surprised so difficult to argue for a price reduction when there's different features on different.
Options that are being selected so I would say as long as we continue to add incremental value to the product with the innovation that we are launching we should be able to steal continued to generate price.
So helpful. Thank you.
He.
Next question.
Comes on the line.
Oh <unk> <unk>.
[laughter].
Your line is nine please go ahead.
Good morning.
Hello.
Maybe starting with price costs. So I know it was how's it has on a dollar and margin basis for the corner what is the expectation like of how the cadence of price cost benefit Chinese Judy are you kind of at your maximum price cost benefit at this point or is it spread kind of evenly throughout 2023.
Yeah, Nicole that's a great question I think the the answer is you know.
First of all your your your your commentary on Q1 quite accurate, we do expect to be priced cost positive and margin accretive for the balance of the year. It is worth noting here that obviously the pricing levels in the first quarter quite strong remember we did take a number of our pricing actions in 2022, you know and that.
First quarter timeframe. So now is a start to anniversary the price realization as we move into to keep in the back half Thier, obviously does step down, but our expectation would be that so does the inflationary levels as we're now copying that so they actually kind of move someone in tandem and that actually speaks obviously to the fact that we took those actions really either in advance or an <unk>.
Concert with when we saw those inflationary levels rising in the first place. So I think the answer. Your question here is we would expect to continue to see good price cost delivery and the requisite margin expansion with it as we moved to the balance of the year.
Got it back and then just with respect to the order Chinese through the corner did you guys see like acceleration into March how did things go from month to month, and if you're willing to comment on April that would be awesome too. Thank you.
Yeah.
I was saying that you know throughout the quarter. Yeah. We continue to see in in Q1, we saw.
I'd say, maybe a little bit more sequentially prevent yes, that's that's I mean, but that's I think a typical that you see in the quarter in Q1, particularly write offs people kind of come out from vacation December amounting to January so, it's I think but that I mean, nothing of note that I will kind of call out to be just a massive acceleration into March.
Just basically the regular kaden that we see in a usual typical Q1 Q1 quarter in April I mean continue to be the same as what we have seen here so far.
And the first quarter.
Thank you I'll pass it on.
19.
Next question comes from the 909 <unk> research per line Alright, then please go ahead.
Thank you good morning, everyone. Thanks for the question.
Hi, So we kept a little ground, but maybe just going back to the cyber attack I mean, any any more kind of.
Of which you know business lines and geographies, perhaps that'll.
That'll be an impacted by this but this unfortunate incident.
I mean, I'll I'll tell you that the only thing that will.
Only only certain items systems were disrupted the.
That'd be not impact the majority of the company and and as I mentioned, you know where where things were impacted or proactively.
Took immediate action to maintain business continue to minimize disruptions and we expect to begin restoring the impact of systems to normal operation here coming next week. So so I think it's it speaks volumes and I think you can read that as well in terms of what you were saying that you know we don't.
This incident to impact a full year guidance and we felt it was prudent just to kind of give you even more call. The rest of what we see here in the second quarter, but but yeah. That's we're not probably going to get into any more specifics on that.
Okay, that's fine and and then Vicki on the 45 55, obviously you know simple math gets you to two Q EBITDA.
Slightly below maybe flatly blow one Q.
Obviously, very you know abnormal compared to normal seasonality and there's been a pretty pronounced pick up you know in the last coupla years.
[noise] monkey two Q. So is this just the ciba incident with Peptidolytic consider them baked and as well was there some one keep pulling from two Q in any sense on just how would you think about that.
Yeah.
I'll add to that you know in the in the context of your second part of your question were there any were there any pullins into one key or any of that nature of the answer is no I think the way you described it as very accurate you know we we we mentioned that we're being prudent in terms of the phasing as a result of the the the the cyber incident and as such I think the way you were thinking about it and and even how are ya.
Kind of you know thought about the EBITDA levels is fairly appropriate so I wouldn't I wouldn't read into any more than that.
And since you answer the question to the Cookie kind of just throw in one more piece you know on these reassuring projects in the U S. But still you know this has been quite somebody to do.
This quote I mean from your perspective, you know how much roughly of these large projects I've had the compression you know a bit up at this stage note intends it kind of would it be seen so far in terms of the order book I'm, what's on the come.
Yeah.
The only thing is that it is difficult to quantify specifically only because I mean whenever we think the order you know it can be restarting where it could be something else I mean, clearly we know what goes into the chips Act as an example of what goes into other things like that.
But what we can tell you is what we said about the Buffalo facility right that we reopened Buffalo facility and in that business or you know over $40 million in orders last year pretty quickly and the momentum continues on that on that facility to as well and a lot of that has really driven by the regime.
[noise] great. Thank you very much I'm sure.
Thank you next question comes from the lineup Christian I Die a P. P S.
Okay go ahead.
Thank you volume growth for the company really stands out first responder industrial it seems like it was that low double digits range or so for Q1, and then we kind of look at the the rest of the year. It seems to imply you know not much in any volume growth over the next three quarters.
Yeah, I think the way to think about it as as as as far as well first of all I think you read it to Q1 is quite accurate I'd say a couple of things one remember.
The cops as we move to the year. They they do get more challenging right. That's just the reality is kind of last year, and then the math and the cops.
The only thing I would say it and I'll go back to kind of what we said before particularly in the second half of the year.
Or or some other commodity numbers that way.
Deal and things like that now.
Now we see the re inflate.
Inflation same things coming back up again, yeah, we definitely stay pretty nimble and we'll go out in the market with more price yeah, absolutely I mean, that's how we did it as we were seeing the inflationary markets and we'll definitely do it again.
Thank you.
[noise].
Final question comes from the lineup Nathan can touch my home in line for my son.
<unk> go ahead.
Good morning, everyone.
Or a question.
Okay I have a question on SPX Love you guys are you know highlighted many examples of the last few years.
Of leveraging the portfolio to accelerate growth and significantly improving the margin of acquired <unk>, maybe you can give us semi.
What kind of organic growth acceleration, you're expecting and margin expansion, you're expecting to be able to generate out of that business.
Yeah, but.
First of all I'll tell you we're super excited with our business only roughly about a quarter into it and and any anything that we see is really exciting I mean, five incredible brands within that portfolio that we're leveraging I'm doing a lot of work as you can imagine on demand generation I to me and the team is super Super engage on on really accelerate.
And then I would say you know where is it that long is it today.
Yeah, We said it was largely when we had diamond acquisition largely in line.
With you know kind of Ips segment margins. So it's it's fairly close in line with the overall idea segment margins that as I thought they said we have.
Has that changed or is that still the plan here at some point in the future.
No no changing plans I mean, we still continue to be the same Ah line in terms of our long term strategy.
Okay fair enough. Thanks for taking the question.
19, Oh seven no additional questions at this time.
Okay. That's it that's it thanks bye now.
<unk>.
Yeah. Thank you Kathy.
Once again I mean, the English team has demonstrated their own match ability to execute this by these ongoing micro economic volatility, we're very appreciative of our teams.
Nathan gentleman.
<unk> <unk> <unk>.
Have a great Guy had you may now disconnect your line.